As the deadline approaches, employers with staff in California must ensure they communicate clearly about the invalidation of noncompete clauses and agreements under new legislation.
Signed into law on Oct. 13, 2023, Assembly Bill 1076 mandates that companies must notify current and former employees (hired after Jan. 1, 2022) in California about the void status of noncompete clauses unless they meet specific statutory exceptions. The deadline for sending notifications is Wednesday, Feb. 14.
Under AB 1076, employers must send individualized notifications of these changes to the last known postal and email addresses of affected employees. Violations of the law constitute unfair competition and could incur a penalty of $2,500 per violation.
Additionally, Senate Bill 699, enacted on Sept. 1, 2023, invalidates noncompete agreements regardless of where or when they were signed, extending the law’s reach to employers beyond California who have staff in the state.
These legislative moves reflect a growing scepticism of noncompete agreements in California, according to insights shared by attorneys at Ogletree Deakins in an Oct. 18, 2023, blog post.
To comply with the new regulations, employers are advised to conduct audits of existing employment agreements with both current and former employees hired after Jan. 1, 2022, to identify any non-compete provisions. They should then amend agreements with current employees containing potentially void clauses and send personalized written notices to affected employees ahead of the deadline.
Both AB 1076 and SB 699 became effective on Jan. 1, 2024, marking a significant shift in how noncompete agreements are viewed and regulated in California.
