Roses are red,
Violets are blue,
You signed a noncompete,
That may not be true.
Last year, California lawmakers double-downed on the state’s hostility to noncompete agreements. One of the new provisions requires written notice to current and former employees that their noncompete is void – unless an exception applies – by Valentine’s Day (February 14, 2024).
Two New Bills Restricting Noncompetes in California
First, as covered in our Legislative Reference Guide, SB 699 extends the reach of the state’s ban on noncompetes to contracts signed out of state; creates a private right of action for employees whose agreements include restrictive covenants and provides for attorney fees for any current, former, or even prospective employee who successfully brings suit against an employer’s use of those restrictive covenants.
Second, AB 1076, codifies the 2008 Edward v. Arthur Andersen decision that invalidated all employment noncompetes, including narrowly tailored ones, unless they satisfy a statutory exception. In addition, impacting your Valentine’s Day plans, the legislation requires California employers to individually notify current and former employees employed since January 1, 2022 in writing by February 14, 2024 that their noncompete clauses are void. Individualized notice is required to the employee’s last known mailing and email addresses.
Love Letter Violations = More than Sour Grapes
Failure to send the required noncompete notices will be deemed an act of unfair competition under the statute, which may subject employers to civil penalties up to $2,500 per violation. Notice is not required for lawful noncompete agreements that satisfy one of California’s narrow exceptions.
To devise your compliance strategy with counsel, please contact your Baker McKenzie employment lawyer.
ps. we have an upcoming webinar discussing developments impacting noncompetes in the context of corporate deals.
Lawyers from our employment, antitrust and litigation practice groups will share advice from the trenches and what you need to know in 2024 about the current issues surrounding the enforceability of noncompete agreements.