In 2023, the California legislature enacted a new law aimed at safeguarding employees from unenforceable non-compete agreements and fostering fair competition among employers. This legislation, codified under Section 16600.1 of the California Business & Professions Code, imposes obligations on employers regarding the use of non-compete clauses.
Under Section 16600.1, employers are mandated to provide written notice to both current employees and former employees who were employed after January 1, 2022, if their employment agreements contained a non compete clause or if they were subject to such a provision. This notice must be personalized for each employee and sent to their last known address and email address no later than February 14, 2024 – coincidentally, Valentine’s Day!
Failure to fulfill this notice requirement, where applicable, constitutes a violation of Section 16600.1 and will be considered an act of unfair competition. This may result in legal action, including claims for injunctive relief and restitution damages.
Section 16600.1 builds upon the passage of Senate Bill 699last year, which extended the ban on non compete agreements to cover all agreements, regardless of the jurisdiction in which they were executed or the location where the employee performed their duties. Notably, Senate Bill 699also established a private right of action for affected individuals.
California is renowned for its commitment to allowing employees the freedom to engage in competitive activities with former employers, subject to certain limitations. The enactment of these two laws further reinforces this policy. Given the dynamic legal landscape in California, it is imperative for companies to conduct a thorough review of their existing and historical agreements to ensure compliance with these and other relevant laws.
Please reach out to Ara Babaian at ara@encorelaw.com, or any other attorney at Encore Law to determine if you need to send a notice to your employees, along with a box of Valentine’s chocolates, by February 14, 2024.
It’s important to note that this communication serves as a summary of legal topics and should not be construed as tailored advice for individual legal concerns.
