As most California employers know, non-compete provisions have been void in California under Section 16600 of the Business and Profession Code. This year, California has taken additional measures against non-competition provisions with the passage and signing of SB 699 and AB 1076. As of January 1, 2024, not only are non-competition provisions void, but it will be a civil violation for an employer to enter into, or otherwise enforce, such a provision regardless of if the employment occurs outside of California. As a result, employees will be permitted to bring private actions against violating employers for injunctive relief and damages, including attorney’s fees and costs.
Generally, California employers have been advised to modify their proprietary information and inventions agreements, confidentiality agreements, or other related agreements (a “PIIA”) for employees in California by removing any non-compete provisions. California courts have interpreted the non-compete prohibition to apply to non-solicitation clauses and employers have been recommended to remove these types of provisions as well. This advice remains unchanged by the new updates. However, California-based employers that have continued to implement, or enforce, non-competition and non-solicitation provisions for non-California employees should now cease such practice. As of January 1, 2024, the implementation or enforcement of a non-competition or non-solicitation provision outside of California will be an unlawful civil violation and may subject the employer to damages. As a result, California employers should update their PIIAs for employees in all states so that they will not be in violation of the updated requirements.
Additionally, California employers should be aware that the updated requirements apply retroactively. Not only will such employers be prohibited from enforcing pre-existing non-competition and non-solicitation provisions for employees outside of California, but to the extent that such an employer has entered into a such a provision with employees, the new law requires that such employer notify all current employees, and former employees who were employed after January 1, 2022, that such provision is void. This notice needs to be provided by February 14, 2024.
If you are a California employer and need to make these changes or provide the required notices, please contact your Kunzler, Bean & Adamson attorneys who can assist you in meeting these updated requirements.
Generally, California employers have been advised to modify their proprietary information and inventions agreements, confidentiality agreements, or other related agreements (a “PIIA”) for employees in California by removing any non-compete provisions. California courts have interpreted the non-compete prohibition to apply to non-solicitation clauses and employers have been recommended to remove these types of provisions as well. This advice remains unchanged by the new updates. However, California-based employers that have continued to implement, or enforce, non-competition and non-solicitation provisions for non-California employees should now cease such practice. As of January 1, 2024, the implementation or enforcement of a non-competition or non-solicitation provision outside of California will be an unlawful civil violation and may subject the employer to damages. As a result, California employers should update their PIIAs for employees in all states so that they will not be in violation of the updated requirements.
Additionally, California employers should be aware that the updated requirements apply retroactively. Not only will such employers be prohibited from enforcing pre-existing non-competition and non-solicitation provisions for employees outside of California, but to the extent that such an employer has entered into a such a provision with employees, the new law requires that such employer notify all current employees, and former employees who were employed after January 1, 2022, that such provision is void. This notice needs to be provided by February 14, 2024.
If you are a California employer and need to make these changes or provide the required notices, please contact your Kunzler, Bean & Adamson attorneys who can assist you in meeting these updated requirements.
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