Just to drive home the point that California is serious when it says noncompete agreements are unenforceable, Governor Newsom has signed yet another bill on the subject.

As discussed here, on September 1, 2023 Governor Newsom signed into law SB 699, a statute firmly establishing the state’s position when it comes to prohibiting restrictive covenants. On October 13, 2023, the Governor signed AB 1076 further codifying the state’s position as it relates to noncompetes.

The new statute makes clear that, “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void” (Emphasis added). And should there be any doubt as to how the language of the statute should be construed, the statute itself mandates it “shall be read broadly…to void the application of any noncompete agreement in an employment context, or any noncompete clause in an employment contract, no matter how narrowly tailored, that does not satisfy an exception.”

By February 14, 2024, all California employers will be required to send an individualized notification to all current and former employees – employed after January 1, 2022[i] – who were required to enter into a noncompete agreement or whose contracts for employment included an unlawful noncompete provision, notifying them such agreements/provisions are void.

Notices must be sent to the individual’s last known physical and email addresses. Failure to comply will place an employer in violation of California’s Unfair Competition law and its penalty provisions.

A few recommended next steps for employers:

• Immediately begin a retroactive review of all employment contracts (in state or out of state).
• Once you have identified contracts impacted by AB 1076, begin compiling contact information and drafting individualized notifications.
• All notices should include reference to the specific agreement at issue, including identifying the impacted provision(s), and clearly state that due to the change in California law governing noncompete agreements/provisions, the company will no longer enforce or attempt to enforce such agreements/provisions.
• Seek counsel if you are unclear or unsure whether any of your company’s employment agreements entered into as of January 1, 2022 contain unenforceable noncompete language.

[i] Regardless of where they currently reside.