As discussed here, California’s AB 1076 amended existing California law to codify its position on restrictive covenants (e.g., noncompete agreements/clauses). Sending a very clear message, AB 1076 provides 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.”

The statute also requires employers to send an individualized notification to all current and former employees – employed after January 1, 2022[i] – advising that any noncompete agreements (or restrictive clauses within any agreement) are now void.

The statute’s notification deadline is February 14, 2024. Employers may face civil penalties of up to $2,500 per violation[ii].

A few recommended next steps:

• If you have not already done so, immediately begin a retroactive review of all employment contracts (in state or out of state).
• Begin compiling contact information and drafting individualized notifications for those impacted.
• Create a notice that includes reference to the specific agreement at issue, including identifying the impacted provision(s), and clearly states 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.
• To ensure all impacted individuals receive the notice, send using a verifiable method such as FedEx, UPS or other such carrier. If sending by U.S. mail use a Return Receipt Request to confirm receipt.
• 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.

[ii] Payable to each individual who fails to receive notice.