Seems like it is a Hadith saying that you should obey the law, unless obedience would betray a higher law. In this case, you should follow your contract unless it is voided by state law.

I'm actually not sure this applies here because California state law just says non-compete agreements are void, it doesn't say that you should compete. In other words, you could obey the not-legally-binding lesser law here (the contract) and you wouldn't be disobeying the higher law.

http://qaalarasulallah.com/hadithView.php?ID=2840

Sure. This is a "hadeeth". Muslims consider the Quran and Hadeeth (aka "Sunnah") as revelation from God. The hadeeth translation is here: https://sunnah.com/bukhari:2955

This means that if a ruler commands you to kill someone or drink alcohol, you should not obey. But otherwise, you must obey. This hadeeth is used frequently by governments (via clergy proxies) to (rightfully) inform the public it is a religious duty to obey. The intent of this obedience is to prevents disharmony/chaos.