The deadline is nearing for employers with workers in California to send employees written communication stating that noncompete clauses and agreements are void under new laws.
Assembly Bill 1076, signed into law Oct. 13, 2023, requires companies to send notifications by Wednesday, Feb. 14, to current employees and former employees (employed after Jan. 1, 2022) in California who were subjected to noncompete clauses notifying them that the agreements are void, unless they fall under a statutory exception.
Under AB 1076, employees are required to be sent individualized notification of the changes to their last known address and email address. Violations of the bill are considered acts of unfair competition under the Unfair Competition Law and would be subject to a penalty of $2,500 per violation, according to law firm White and Case.
Senate Bill 699, signed into law Sept. 1, 2023, makes noncompetes void “regardless of where and when the contract is signed,” making the laws applicable to employers outside of the Golden State who employ workers in California.
“Together, AB 1076 and SB 699 underscore distrust of noncompete agreements in California,” attorneys at management-side firm Ogletree Deakins wrote in an Oct. 18, 2023, blog post.
To comply, the attorneys recommended employers: conduct audits of employment agreements with existing employees and former employees hired after Jan. 1, 2022, to see if any noncompete provisions are included; modify agreements with current workers that contain possibly void noncompete clauses; and send individualized, written notices to employees affected by the nearing deadline.
Both bills took effect Jan. 1, 2024.