The Valentine’s Day deadline to inform staff is fast approaching; employers must send individualized notice to all employees that their non-compete clause is void (unless it meets an exception). The requirement comes from Governor Gavin Newsom’s October 13, 2023, approval of Assembly Bill (AB) 1076, which took effect on January 1, 2024, and is codified in section 16600.1 of the California Business and Professions Code. It started as Senate Bill 699, states San Diego Biz Law, a state-wide employment law firm for both employers and employees.
No matter how narrowly drafted, unenforceability of noncompete agreements – or covenants not to compete - have been embodied in case law since the California Supreme Court’s 2008 decision in Edwards v. Arthur Andersen LLP. It does not change existing law voiding such agreements, but AB 1076 imposes the notice requirement toward current and former California employees with a non-compete agreement (or clause). The notice to these employees must: (i) state the agreement is void; (ii) be written; and (iii) sent to the last known address of each affected employee by February 14, 2024. The statute broadly applies to all employment-related agreements with noncompete provisions, including relocation agreements, confidentiality agreements, and partnership agreements. Employers must inform current and previous employees since January 1st of 2022.
Employers should also be aware that 16600.1 specifically provides that a violation of the new law constitutes a violation of California’s Unfair Competition Law, Business and Professions Code section 17200. A violation could also trigger a claim for violation of the California Private Attorneys General Act under California’s Labor Code as well as other penalties and attorneys’ fees.
San Diego Biz Law APC is a business law firm dedicated to representing businesses and individuals in complex business, employment, and other high-stakes matters. The lawyers of the Firm continuously monitor legal developments affecting California businesses and are available to discuss matters affecting California businesses, including guidance on compliance with new Business and Professions Code section 16600.1.
