In recent legal developments, California Assembly Bill 1076 has emerged as a significant piece of legislation, inspiring substantial changes in regard to the enforceability of non-competition agreements.
Many people in the business community know that non-compete agreements are largely unenforceable in the Golden State except for unique and narrow exceptions. The California Business and Professional Code prohibits any employment contract restricting employees, through a non-compete provision, from engaging in lawful business, trade or profession. California Governor Gavin Newsom signed Bill 1076 into law on October 13, 2023, to reinforce the state’s ban on non-compete agreements in employment.
How does this legislation play out in employment?
According to Assembly Bill 1076 and Senate Bill 699, not only are non-compete agreements void under the state’s law, but employers who attempt to enforce them commit a civil violation. If this civil violation occurs, a former, prospective or current employee is entitled to seek actual damages, injunctive relief or both. Prevailing employees may also recover reasonable attorneys’ costs.
Moving forward, it’s unlawful for employers in the Golden State to include post-employment non-compete clauses in employment contracts or require their employees to sign post-employment non-compete agreements. Therefore, employed professionals can notify their current and former employers that any previously entered post-employment non-compete agreements are now void.
Moreover, employers have until February 14, 2024, to provide certain former and current employees with individualized written notices. The notices should state that any post-employment non-compete clause in employment or post-employment agreement with the employer is void.
California Assembly Bill 1076 marks a pivotal turning point in the state’s employment laws, significantly impacting the use and enforceability of non-competition agreements. Employers and employees alike must familiarize themselves with the intricacies of AB 1076 to help ensure compliance and navigate the evolving landscape of California employment practices and so that, broadly, they can better understand their rights and obligations under the law.