Under a new law passed in October 2023, California employers must provide all current and certain former California employees with individualized written notices by February 14, 2024, advising them that any noncompete clauses or noncompete agreements with employers are void.
Articles Discussing Restrictive Covenants And Unfair Competition In California.
Many people are contemplating what to give their Valentine in a couple of weeks.
However, California employers that employed California persons under an agreement with a noncompete clause “no matter how narrowly tailored”, have until Valentines’ Day to comply with California’s new
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.
Employers with California-based employees should take immediate steps to comply with the February 14, 2024 deadline to provide written notice that the prohibited provisions are void. We note that Section 16600, and the written notice requirement, apply to most non-solicitation agreements, as well as non-compete agreements.
Employers with California employees
Beginning January 1, 2024, two new California statutes will impose additional limitations on restrictive covenants in employment agreements in the state.
In our previous post on October 23 2023, we discussed A.B. 1076, which makes important changes to California Business & Professions Code Section 16600. That section currently makes void, “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind,” subject to certain exceptions.
California law makes void any contract “by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind,” including non-compete agreements. (Business & Professions Code § 16600.) Non-compete agreements are enforceable in only three limited circumstances: the sale of a business, the dissolution of a partnership, or the dissolution or termination of interests in a limited liability company.
In September, California created a cause of action whereby employees may challenge non-compete agreements and win damages and attorney’s fees (see our prior post on “New Golden State Law to Create Gold Rush Litigation Testing Non-Compete Agreement.”)
On October 13, 2023, California Governor Gavin Newsom signed a bill into law that will reinforce the state’s ban on noncompete agreements in employment.
On September 1, 2023, Governor Newsom signed Senate Bill (SB) 699, which buttresses current state law that voids contracts that restrain an employee from engaging in a lawful profession, trade, or business of any kind.
California’s Business and Professions Code section 16600 states, “[E]very contract by which anyone is
A private class-action complaint claimed that the department store, Saks, and several luxury brands (including Louis Vuitton, Loro Piana, Prada, Brunello and Fendi) violated Federal Antitrust laws when they agreed that each of the luxury brand defendants would not hire or solicit to hire Saks’s employees within the six months after the employees left employment at Saks without written approval from Saks. Hayes v. Saks Incorporated, et al., USDC ED NY No. 1:20-cv-00833. The agreements were reached through negotiations between the department store and the luxury brands for the placement and sale of the luxury brands’ goods in Saks department stores.
The trial court granted defendants’ Motions to Dismiss and concluded that the complaint failed to allege an unreasonable restraint of trade and that any alleged restraint was ancillary to a legitimate collaborative business purpose.
The plaintiffs appealed the dismissal on several grounds. California and 20 other states filed an Amicus Curiae brief supporting plaintiffs’ appeal asserting that each state “has a keen interest in preventing such anticompetitive harms to labor markets and to workers….” Further, California and the other states asserted that the trial court’s refusal to recognize that the no-hire agreements were per se illegal which threatened each state’s ability to protect their own labor markets from unfair trade practices. California and its ally states asserted that the no-hire agreements constituted illegal anti-competitive no-poach agreements with the effect of depressing wages, benefit packages and limiting employee mobility. The Department of Justice, too, filed an Amicus Curiae brief supporting the workers.
While the legal issues on appeal remain under review, all employers should be aware that California, the Department of Justice and many other states continue to bring, monitor and police antitrust claims based on no-poach agreements and, typically side with employees making such claims. Before your company enters into an agreement with any other business restricting employees’ mobility of employment, consult with the author of this blog or your favorite CDF attorney to limit or eliminate potential antitrust exposure.
California law generally prohibits the enforcement of nonsolicitation agreements, but the law includes a narrow exception associated with the sale of a business. In Blue Mountain Enterprises, LLC v. Owen, a recent decision from the Court of Appeal of the State of California, First Appellate District, the appellate court upheld
On October 7, 2021, Governor Newsom enacted SB 331 to put up additional restrictions on employers offering severance agreements and settling claims alleging harassment, discrimination or retaliation based on purported violations of the Fair Employment and Housing Act. The new
On September 11, 2020, Governor Newsom signed Assembly Bill 2143 (“AB 2143”), which adds further nuances to last year’s AB 749 regarding no-rehire clauses in settlement agreements. AB 749 was part of the #MeToo inspired legislation, which prohibited no-rehire clauses in settlement agreements regarding employment disputes. Prior to AB 749,
On April 30, 2020, the Supreme Court of California issued its decision in Nationwide Biweekly Administration, Inc. v. Superior Court of Alameda County, a case that received a fair amount of attention in 2019 when it seemed possible the court might allow claims under California Business & Professions Code Sections