In addition to 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 employed after January 1, 2022) That applies to any unlawful non-competes are void. These notices need to be addressed specifically and individually to each employee, and are therefore likely to involve some investment in time and effort by employers to ensure compliance with the law.
In particular, references to “non-compete” in applicable law may be interpreted to include post-termination nonsolicitation 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 objectionable provisions that require employee notification.
Also, as a reminder, another new California law that took effect on January 1, 2024 increases the risks for employers using any type of restrictive covenant with respect to California employees (other than , including post-termination non-compete and non-solicitation, and extensive confidentiality agreements). Previous California law considered non-compliant restrictive covenants void. it is now illegal California requires employers to enter into void non-stipulation or non-compete provisions or attempt to enforce void restrictive covenants against employees.
Employers who use void restrictive covenants or attempt to enforce them will be subject to private lawsuits by employees or applicants, including injunctive relief, damages, and attorney fees, and possible class and private Attorney 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, check out our LawFlash on Senate Bill 699 and Assembly Bill 1076.