- October 11, 2023
On September 1, 2023, Senate Bill 699 was signed amending the California Business & Professions Code Section 16600. Under the California Business & Professions Code, noncompete agreements are generally unenforceable. Section 16600 says, “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void”. Under Senate Bill 699, any contract that is void under Section 16600 continues to be unenforceable, regardless of where the contract was signed or where the employee worked. This new amendment expands the restrictions on noncompete agreements and creates more opportunities for employees to challenge noncompete clauses. The goal behind this latest bill is to preserve California’s competitive business interests by “protecting the freedom of movement of persons whom California-based employers wish to employ to provide services in California, regardless of the person’s state of residence”.
This newly signed bill is set to go into effect beginning January 1, 2024. Employers who violate SB 699 may be liable for civil violations as the new bill authorizes both current and former employees to bring suit for injunctive relief and/or damages.
In addition to SB 699, Assembly Bill 1076 is under consideration which would reinforce the broad ban on restrictive contracts and require employers to notify current and former employees that any noncompete agreements they may have signed are void. These bills together expand California’s ban on noncompete agreements.