California physician non-compete law

Who it covers

Any person restrained from a lawful profession, trade or business, including employees and contractors; covers physicians, NPs, PAs and other clinicians. SB 351 (H&S Code § 1191(d)) covers providers in physician or dental practices managed by, or selling assets to, private equity groups or hedge funds.

Exceptions

• Sale of the goodwill of a business, of all of an owner's ownership interest, or of all/substantially all operating assets with goodwill (Bus. & Prof. Code § 16601)
• Partner, upon or in anticipation of partnership dissolution or the partner's dissociation (§ 16602)
• LLC member, upon or in anticipation of dissolution or termination of the member's interest (§ 16602.5)
• Under SB 351, an otherwise enforceable sale-of-business noncompete survives, but a private-equity/hedge-fund contract may not operate as an employee noncompete (Health & Safety Code § 1191(d)(3))

Effective date

The current rule took effect 2024-01-01.

Notes

§ 16600.5 (2024) makes void covenants unenforceable regardless of where or when signed and gives workers a private right of action. SB 351 (2025, effective 2026) voids competition clauses in private-equity or hedge-fund practice-management deals. The upcoming item is a stay-or-pay rule that the statute treats as a void restraint of trade; it reaches sign-on and retention repayment terms.

Sources

• Cal. Bus. & Prof. Code §§ 16600-16608 (Contracts in Restraint of Trade) (statute)
• SB 351 (Stats. 2025, ch. 409), Health & Safety Code §§ 1190-1192 (session-law)
• AB 1697 (Stats. 2026, ch. 889), amending Bus. & Prof. Code § 16608 (session-law)

Questions to ask about your contract

• Is the radius measured from your practice site or from every location the employer owns?
• Does the restriction apply if the employer terminates you without cause?
• Is there a buyout, and how is the amount calculated?
• What does your state's law say about physician non-competes?