Starting January 1st 2024, non-compete agreements and contract provisions can’t be enforced against California employees or by California companies.
California’s legislature enacted AB 1076. The law codifies the California Supreme Court's decision in Edwards v. Arthur Andersen LLP, which stated that non-compete clauses in employment contracts are void.
The law also requires employers to notify each active or former employee hired after January 1st 2022 in writing, in clear language, if their agreement includes terms that are void under the law.
California also passed SB 699, which enables employees to bring legal action against employers who fail to notify affected employees or who try to enforce a non-compete clause or agreement. Employers are potentially liable for civil penalties.
Non-compete agreements and contract provisions aim to prevent employees from working for competing businesses after leaving their current employer. By restricting non-compete agreements, the state seeks to give employees more freedom to explore new opportunities.
Employers must now review and adjust their contracts to comply with these changes. These developments will likely reshape California's employment landscape, fostering a more open and competitive job market. As these laws take effect in January 2024, both employers and employees should understand their implications to ensure a smooth transition and promote equitable employment practices. Clear communication between businesses and their employees about contract changes is crucial.
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