Valentine’s Day Deadline for California Employers

Many out-of-state employers are surprised to learn that California employers cannot prevent former employees from working for competitors. Non-compete agreements in California are generally not enforceable, as they are prohibited by California Business and Professions Code section 16600. Many other states will enforce such agreements if they are reasonable (based on length of time, geographic boundaries, etc.).

New California Laws for 2024

Now, a new California law for 2024, AB 1076, requires employers to notify certain current and former employees that they entered into a void non-compete agreement, by February 14, 2024. Specifically, employers must send a written, individualized communication to all current and former employees who were employed after January 1, 2022 and entered into a non-compete clause or agreement (not subject to an exception). The agreement must notify the employee the clause and/or agreement is void, and it must be sent to their last known address and email address. Violations constitute an act of unfair competition under the Business and Professions Code.

With less than two weeks away from the Valentine’s Day deadline, it is important that employers audit their agreements and contractual provisions now, and begin preparing the notices, if applicable.

Of note, another new law, SB 699, now allows current, former, and prospective employees to sue if they entered into a void non-compete agreement or the company attempted to enforce one. Previously, there were no monetary consequences for California employers who executed unenforceable non-competes. Rather, courts would just find them unenforceable if challenged. Now, employees can sue for monetary damages and their attorney’s fees. Furthermore, SB 699 provides that these protections apply regardless of where and when the contract was signed, including if the employment was maintained outside of California. This covers:

• California-based companies who enter into non-compete agreements with California employees or out-of-state employees
• Companies outside of California who enter into non-compete agreements with California employees

California employers may still enforce reasonable confidentiality, intellectual property assignment, and non-disclosure agreements.

So remember, by this Valentine’s Day, notify workers who entered into non-competes that they don’t have to “commit” to you—yes, pun intended.

What else makes California unique? Learn more on our What’s Different in California page for employers, and reach out to us for assistance at 800.399.5331.