Besides being Valentine’s Day, February 14, 2024 is an important day for employers with any California employees: It is the last day for employers to notify California employees (including former employees who were employed after January 1, 2022) that any unlawful noncompetes applicable to them are void. These notices need to be specific to each employee and individually addressed, and so will likely involve some investment in time and effort by employers to ensure compliance with the law.
Of particular note, the reference to “noncompete” in the applicable statute may be interpreted to include post-termination nonsolicit clauses. These types of restrictions may appear in agreements with employees that are not necessarily intuitive to employers, such as limited liability company operating agreements, equity grant agreements, and nondisclosure agreements. Employers should be careful to review all of their agreements to identify offending provisions that require employee notification.
Also, as a reminder, another new California law that went into effect January 1, 2024 materially increases risk to employers using any form of restrictive covenant in respect of California employees (including, among others, post-termination noncompetes and nonsolicits, and overbroad confidentiality agreements). Previous California law considered noncompliant restrictive covenants void. It is now unlawful for employers to require California employees to enter into void nonsolicit or noncompete provisions or to attempt to enforce void restrictive covenants against employees.
Employers who use or attempt to enforce void restrictive covenants will be subject to private lawsuits by employees or applicants, including injunctive relief, damages, and attorney fees, and potentially class and Private Attorneys General Act actions (which allow an aggrieved employee to seek civil penalties on behalf of the State of California and other employees for labor code violations).
For more information on the new laws, see our LawFlashes on Senate Bill 699 and Assembly Bill 1076.