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New Law May Render Non-Compete Agreements in California Unlawful and Unenforceable

08 Nov


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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This communication is intended solely for the purpose of conveying information. The present post might incorporate hyperlinks directing readers to websites managed by third-party entities. The inclusion of any links within this communication is meant to serve as points of reference and could encompass opinion articles from various law firms, articles from HR associations, official websites, news releases, and documents of government agencies, and other relevant third-party sources. Vensure has no authority over these external websites and bears no responsibility for their content. Furthermore, Vensure does not endorse the materials present on these websites. The contents of this communication should not be interpreted as legal advice or as a legal standpoint concerning specific facts or scenarios. Nor should it be deemed an exhaustive compilation of facts potentially pertinent to federal, state, or local laws. It is strongly advised that employers solicit legal guidance from an employment attorney when undertaking actions in response to any legal updates provided. This is due to the possibility of future alterations occurring in federal, state, and local laws, regulations, as well as the directives and guidelines issued by governing agencies. These changes may transpire at any given time, potentially rendering certain portions of the content within this update void or inaccurate.

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