California law has for many years treated agreements that restrain one from engaging in a lawful profession, trade, or business as void and unenforceable, unless an exception applies. This applies to most non-compete and non-solicitation agreements with California employees.
Citing to California Supreme Court precedent that voided a post-employment non-compete and to state public policy favoring employee mobility, AB 1076 and SB 699, both effective January 1, 2024, prohibit employers from including, entering into, and attempting to enforce a noncompete clause in an employment contract, or otherwise requiring an employee to enter a noncompete agreement, absent an exception.
By February 14, 2024, employers are required by the new law to provide written notice to current California employees who signed an agreement with void noncompete provisions, and former California employees employed after January 1, 2022, who entered into such an agreement. The notice must be individualized and delivered to the last known address and email address of the employee or former employee.
Lastly, the new law creates a private right of action for current, former, and prospective employees to enforce the statute and, if successful in doing so, recover damages, fees and costs. Failure to provide the notice is actionable under California Business & Professions Code Section 17200, which provides remedies such as injunctions, restitution, and per-violation civil penalties.
Employers of California employees should immediately confer with their employment lawyers about how the new law impacts existing and future employee agreements with restrictive covenants such as non-competition and non-solicitation provisions and any notices required by February 14, 2024.
