Senate Bill 699 and Assembly Bill 1076 were effective on January 1, 2024, expanding the prohibition on non-compete agreements in the employment context and requiring employers to notify employees and former employees that any non-compete agreements to which they previously agreed are now void. Employers must send these notices by February 14, 2024.
Who Must Send Notices?
All employers who entered into unlawful non-compete agreements with employees after January 1, 2022.
Who Receives Notices?
All current and former employees who were employed after January 1, 2022, and whose contracts included a non-compete clause, or who were required to enter a non-compete agreement.
The notice must notify the employee or former employee that the non-compete clause or agreement is void. The notice must be:
- In writing;
- Individualized to each employee or former employee; and
- Delivered to the last known address and email address of the employee or former employee.
What is a Non-Compete Agreement or Clause?
A non-compete agreement or clause is one “by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind,” subject to certain exceptions. Assembly Bill 1076 clarifies that the term is interpreted broadly “to void the application of any non-compete agreement in an employment context, or any non-compete clause in an employment contract, no matter how narrowly tailored.”
For reasons we discussed in more detail in our previous post on November 13, 2023, A.B. 1076 likely covers agreements and clauses restricting employees’ ability to solicit the employer’s clients or customers. Read more about A.B. 1076 and S.B. 699 in our October 23, 2023, post here.