Most California workers are aware that the state has long outlawed non-compete agreements, but the legislature has recently expanded the scope of this protection and has placed additional burdens on employers to inform current and former employees of the illegality of these provisions.
Non-compete agreement laws before the fall of 2023
Prior to the legislature’s actions in late 2023, California courts had consistently ruled that non-compete agreements were void unless the employee in question was covered by one or more of the exemptions in the statute.
Many employers failed to abide by the statutory prohibition on such terms, and many employees yielded to employer demands that they sign a non-compete clause before being hired or promoted or receiving a bonus.
On October 13, 2023, Gov. Gavin Newsome signed A.B. 1076, which made the judicial ban on non-compete agreements part of the state’s Business & Professions Code.
The extended reach of A.B. 1076
In addition to codifying the judicial ban on non-compete agreements, A.B. 1076 applied the ban to all non-compete agreements regardless of the state where the contract clause was originally signed.
One particular section of the bill may have more far-reaching consequences than the codification of the judge-made rule. This section requires all employers to inform all current and former employees of the invalidity of non-compete agreements unless the employee falls within one of the exempt categories of workers.
Such notices must be delivered to the employee no later than Feb. 14, 2024. The law as amended is complex, and it is advisable to take action after consulting an experienced employment attorney.