Legal Question in Business Law in California

Yes, but what are they going to do if you tell them? Fire you. What are they going to do if you don't tell them and they find out? Fire you. You do the math. Unless it is part of a negotiated personal employment contract like many high level executives get, with appropriate protections for employer and employee if the employee is considering leaving, I'm not sure how realistic such a requirement is.

Legal to ask? Of course. Legal to refuse them? Of course. Legal for them to fire you if you say you are looking? Of course. Give them notice only after you have a new job, unless you are sure they won't immediately walk you off premise when you tell them.

Whenever anyone asks whether something is "legal" in a contract, my response tends to be "What do you mean by legal?" Lawyers tend to think of legal and illegal as terms defining what is permissible and what is punished, particularly in a criminal law context.

Here, the better question might be whether such a contract provision is enforcible, and what would enforcement amount to.

Suppose you signed the agreement, then went and applied for a position at another company without telling the employer, thus violating the term of the agreement. If they find out, what can they do? Fire you? Sure, but they can do that anyway; they don't need a contract provision. Sue you? I think the judge would die laughing. The company could win, but its damages would be nominal ($1). Or, it could lose on the ground that such a contract provision is void under Business and Professions Code 16600, which declares any employment contract term that limits anyone from engaging in any lawful business, trade or profession to be void; such ruling resting upon the obvious purpose of the clause to restrict employment mobility, contrary to B&P 16600.

I would not encourage you to engage in a heated negotiation over this term in your employment contract. Go ahead and sign it. Then, when you get itchy feet, either report the facts of your other job interviews to this employer or not. What's the worst thing that can happen?