Non-compete agreements are unenforceable in California unless given in connection with the sale of a business, sale of equity in a business or dissolution of a partnership or LLC. Effective January 1, 2024, Business and Professions Code 16600 has been amended (and section 16600.1 has been added) to make clear that these provisions are unenforceable and require businesses to notify current and former employees.
Business and Professions Code 16600 has been amended to make clear that it is impermissible to include non-compete provisions in any employment agreement or to attempt to enforce them. Business and Professions Code section 16600.1 has been added requiring an employer that has included these restrictions in employment agreements in the past to notify the employees or former employees in writing that these restrictive covenants will not be enforced. This is an affirmative obligation, and the notification must be individually addressed and sent by February 14, 2024.
Persons who need to be notified are current and former employees who have or had an agreement with the company that contained impermissible noncompete or nonsolicit restrictions, and who worked for the company for any period of time after January 1, 2022.
A failure to send the notice is declared in 16600.1 to be an act of unfair competition.
Please see the Duane Morris Client Alert for additional details.