California lawmakers passed two pieces of employment legislation into law in recent weeks, one of which received Gov. Gavin Newsom’s signature on Sept. 1 while the other awaits the governor’s approval over the coming weeks.
The first, Senate Bill No. 699, strengthens the state’s laws against noncompete agreements. It voids any contractual provisions in which a person is restrained from engaging in a lawful profession, trade or business of any kind, adding that such contracts are void “regardless of where and when the contract is signed.”
Per the law, this provision applies to anyone who seeks employment in California. Current or former employers violate the law when they attempt to enforce noncompetes involving such individuals, even if their current or previous employment was outside of California.
“The California courts have been clear that California’s public policy against restraint of trade law trumps other state laws when an employee seeks employment in California, even if the employee had signed the contractual restraint while living outside of California and working for a non-California employer,” state legislators wrote.
Newsom signed the bill into law Sept. 1 and it is effective Jan. 1, 2024. Employers that violate the law commit a civil violation for which affected employees may bring a private action for injunctive relief, the recovery of actual damages, or both.
Noncompetes are largely unenforceable in California outside of a few limited exceptions, but SB 699 “is significant for employers as it expands the ways in which employees can challenge noncompete agreements in the state,” attorneys at management-side firm Ogletree Deakins wrote in a Sept. 6 article. Further, the law’s inclusion of a private right of action “raises the risk of litigation that employers may face in this arena,” the attorneys said.
The law’s passage follows a contentious period for noncompetes at the national level, most notably with the Federal Trade Commission’s January proposal to effectively prohibit such agreements entirely. FTC’s proposed rule faces its own share of hurdles and may not come to pass without a lengthy legal battle, however.
Controversial anti-discrimination bill awaits governor’s signature
Days after advancing SB 699, California legislators signed off on Senate Bill No. 403. If signed into law, the bill would make California the first U.S. state to ban discrimination on the basis of caste, defined as “an individual’s perceived position in a system of social stratification on the basis of inherited status.”
Within the bill, caste is actually one of several characteristics included under a broader ban prohibiting discrimination on the basis of a person’s ancestry. Aside from caste, this category would include discrimination on the basis of a person’s lineal descent, heritage, parentage or any inherited social status.
SB 403 has drawn criticism from groups such as the Hindu American Foundation, a nonprofit advocacy organization. In an Aug. 28 post to X, formerly Twitter, the foundation called SB 403 a “divisive bill” that “implicitly singles out/targets South Asians,” and called for Newsom to veto the bill.
Per a Sept. 6 report by news outlet CalMatters, Newsom’s office said it will “evaluate the bill based on its merits.”