Noncompete agreements have come increasingly under attack at the federal and state level in 2023. In this alert, we review notable recent developments on the legality of continuing to use noncompete agreements in the employment context. Companies utilizing noncompete agreements in the US should confer with legal counsel to ensure that their practices remain in compliance with applicable law.
In September 2023, California Gov. Gavin Newsom signed SB 699, which broadly expands the state’s already existing strong public policy against noncompetes, reflected in Business and Professions Code Section 16600 (providing that “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void”). Limited exceptions under the code permit noncompete agreements in the context of the sale of a business, dissolution of a partnership, or dissolution of, or termination of an interest in, a limited liability company.
SB 699, which is effective January 1, 2024, adds Section 16600.5 to the code and clarifies that existing law prohibits noncompetition covenants regardless of where or when the agreement was signed, even if the covenant was signed outside of the state. An employer commits a civil violation for entering into or attempting to enforce a void noncompete. Former and prospective employees now also have a private cause of action against any employer, and in addition to injunctive relief...
A bitter legal battle at JPMorgan Chase has taken another dramatic turn after executive Lorna Hajdini filed a defamation lawsuit against former banker Chirayu Rana, accusing him of making up false...