New Rules for Noncompete Provisions and Releases in California

In Edwards v. Arthur Andersen LLP, the California Supreme Court has confirmed that even limited noncompetition agreements are not enforceable in California. The Supreme Court also held that release agreements are valid even though they do not exclude nonwaivable statutory claims.

On August 7, the California Supreme Court issued its long-awaited opinion in Edwards v. Arthur Andersen LLP. The Supreme Court held that section 16600 of the Business and Professions Code means what it states—that noncompete agreements are void under California law unless they fall within the limited exceptions expressly set forth in sections 16601, 16602, and 16602.5 involving the sale of a business or a partnership or limited liability company interest. The court also held that a release of “any and all claims” is enforceable even when it does not contain an express exclusion of statutory claims that cannot be waived.

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