New Restrictions on Non-Compete Agreements – And Burdens on Employers – in California
Highlights
New California laws further restrict non-compete agreements
Employers can face civil penalties for attempting to enforce a non-compete agreement
Employers must provide written notice to any employee who has entered into an otherwise illegal non-compete agreement since Jan. 1, 2022, informing the employee that the non-compete agreement is void
It is well-known in the business community that non-compete agreements are largely unenforceable in California unless specific, narrowly tailored exceptions apply. Section 16600 of the California Business and Professions Code broadly prohibits “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind.” In short, if a contract or agreement seeks to restrain, through a non-compete provision, a former employee from engaging in a lawful profession, that provision will be void under California law.
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