NDAs in California: What Is Still Enforceable

Where NDAs cross the line

A clause defining confidential information as 'all information relating to the company or the industry' effectively bars a departing employee from using their general knowledge and skill. Courts look at effect over label, and that clause can be read as a restraint on trade.

The same problem appears in customer non-solicitation provisions dressed as confidentiality. If the practical operation is to prevent the person from competing or from serving customers who choose to follow them, California treats it as a restraint.

Drafting a California-safe employee NDA

• Define confidential information by category — pricing models, source code, customer lists with non-public terms, unreleased product plans — rather than as everything the employee saw.
• Include standard exclusions: information already public, independently developed, lawfully received from a third party, or already known.
• Preserve the employee's right to use general knowledge, skill, and experience.
• Add the Defend Trade Secrets Act immunity notice, which is a prerequisite to recovering exemplary damages and fees under that statute.
• Carve out reports to government agencies and disclosures about unlawful acts in the workplace, as California law requires.
• Include a severability clause so an overbroad term does not take the whole agreement down.

The notice requirement employers keep missing

Section 16600.1 required employers to notify current and former California employees, individually and in writing, that any non-compete clause in their agreements is void. That obligation applied to employees employed after January 1, 2022, and the deadline has passed — but companies that never sent the notice remain exposed, and each violation is an act of unfair competition.

Section 16600.5 goes further: an employer cannot enter into or attempt to enforce a void restraint, and an employee may sue for injunctive relief, actual damages, and attorney's fees. That is the provision that makes recycling a Texas or New York template genuinely expensive rather than merely ineffective.

Commercial NDAs between businesses

Business-to-business NDAs get more room, particularly in a sale-of-business context where narrowly tailored restrictions are permitted by statute. Even so, be specific: define the purpose of disclosure, set a term (three to five years for general confidential information, indefinite for trade secrets), and address residual knowledge.

Watch the operational terms as much as the legal ones — who may receive the information, whether it can be shared with affiliates and advisors, the return-or-destroy obligation, and the compelled-disclosure procedure when a subpoena arrives.

What actually protects information

Trade secret protection depends on reasonable secrecy measures, and an NDA is only one of them. Access controls, offboarding checklists, device returns, and departure interviews carry weight in any later dispute.

The cases that go well for companies are the ones where they can show a specific, identified secret and a specific step taken to protect it. The cases that go badly are the ones where the only evidence is a signed form nobody followed up on.