California has long prohibited post-employment noncompetes, subject to certain narrow exceptions. Recently, it added some teeth to that prohibition in the form of a requirement for employers to notify California employees who are subject to unlawful noncompete clauses/agreements, by February 14, 2024, that those clauses/agreements are void. The notice requirement applies to current employees as well as former employees who were employed after January 1, 2022. The notice requirement does not apply to agreements/clauses that fall within an exception to the general prohibition on post-employment noncompetes. The notice is to be in the form of a written individualized communication to the employee or former employee, delivered to their last known physical and email address.
https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240AB1076
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1.
Section 16600 of the Business and Professions Code is amended to read:
16600.
(a) Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.
(b) (1) This section shall be read broadly, in accordance with Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, to void the application of any noncompete agreement in an employment context, or any noncompete clause in an employment contract, no matter how narrowly tailored, that does not satisfy an exception in this chapter.
(2) This subdivision does not constitute a change in, but is declaratory of, existing law.
(c) This section shall not be limited to contracts where the person being restrained from engaging in a lawful profession, trade, or business is a party to the contract.
SEC. 2.
Section 16600.1 is added to the Business and Professions Code, to read:
16600.1.
(a) It shall be unlawful to include a noncompete clause in an employment contract, or to require an employee to enter a noncompete agreement, that does not satisfy an exception in this chapter.
(b) (1) For current employees, and for former employees who were employed after January 1, 2022, whose contracts include a noncompete clause, or who were required to enter a noncompete agreement, that does not satisfy an exception to this chapter, the employer shall, by February 14, 2024, notify the employee that the noncompete clause or noncompete agreement is void.
(2) Notice made under this subdivision shall be in the form of a written individualized communication to the employee or former employee, and shall be delivered to the last known address and the email address of the employee or former employee.
(c) A violation of this section constitutes an act of unfair competition within the meaning of Chapter 5 (commencing with Section 17200).
