Update Applicable to:

All employers operating in California and out-of-state employers who want to enforce an agreement against someone hired by a California employer.

What happened?

Governor Newsom Signed AB 1076 into Law on October 13, 2023, which now makes it unlawful for an Employer to Use Non-compete Agreements and Other Restrictive Covenants. This law will be effective on January 1, 2024.

What do employers need to do?

Employers should review the above law as well as the resources provided. In the process of reviewing any non-compete agreements or enforcing any existing contracts, employers should seek legal counsel from their trusted employment attorney to ensure compliance with the new law.

What are the details?

Following the ban established in Senate Bill 699, the new bill sign by Governor Newsom codifies existing case law in Edwards v. Arthur Andersen LLP (2008).

Now all non-competes and Other Restrictive Covenants are made unlawful and unenforceable unless they meet the criteria for them to become an exception. Additionally, employers must provide an individualized written notice to the current of former employee by February 14, 2024, who were employed after January 1, 2022, or who were required to enter a noncompete agreement that is not an exception under the law, and it must be made to the last known address and email address.

If in violation, employers will be subjected to California’s Unfair Competition Law, Business & Professions Code section 17200; New Business & Professions Code §16600.1.

“To void the application of any noncompete agreement in an employment context, or any noncompete clause in an employment contract, no matter how narrowly tailored, that does not satisfy an exception in this chapter” –  CDF Labor Law LLP.

For more information, please see the links below:

Law Firm Articles: Article 1, Article 2, Article 3, Article 4

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