Last year, California bolstered its already stringent laws prohibiting employment-related noncompetition agreements. While California’s pro-competition policy and its disfavor of employment-related noncompetition agreements are well-known, the state’s recent amendments to its Business and Professions Code strengthened those policies by declaring that noncompetition agreements are “unenforceable regardless of where and when a contract is signed” and prohibiting any “attempts to enforce” violative noncompetition agreements (Cal. Bus. & Prof. Code Section 16600.5(a)-(b)). The law also requires employers with applicable noncompetition agreements to provide written notice to employees informing them that their noncompetition agreements are “void” and the amendments provide a statutory cause of action for current and former employees to invalidate offending noncompetition agreements (and to seek costs and damages). (See Cal. Bus. & Prof. Code Section 16600.5.) When read in conjunction with Section 925 of California’s Labor Code, which prohibits the enforcement of most choice-of-law and forum selection provisions in employment agreements, California’s new laws provide staunch protection to California-based employees as well as challenges for out-of-state employers.
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