With the new year, California employers face a changed legal landscape that impacts noncompete agreements with employees, with some new legal requirements having a short deadline for personalized communications to certain employees. These legislative changes, effectuated by the passage of SB 699 and AB 1076, reflect the state of California’s continuing opposition to noncompete agreements with employees.
While noncompete agreements for employees have generally been unenforceable in California for some time, as of January 1, 2024, SB 699 now makes it unlawful to require an employee to sign a post-employment noncompete agreement or to include a post-employment noncompete clause in any employment agreement (including severance agreements) in California with limited exceptions. Any attempt to enforce a noncompete agreement or provision, even if the contract was signed outside of California and the employment was maintained outside of California, will now be considered an unfair business practice.
The term “noncompete” includes any provision that restricts an employee’s ability to engage in a lawful profession, trade or business. It encompasses not only direct noncompete provisions but also provisions that prohibit solicitation of customers unless it is limited to proprietary or trade secret information and may include provisions which prohibit employees from soliciting other employees.
The limited exceptions when a noncompete agreement or...
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