Valentine’s Day “Gift” For Employers With California Employees That Work Under Noncompete Agreements

Topics: New Laws & Legislation, Non-Compete and Trade Secrets

In September, California created a cause of action whereby employees may challenge non-compete agreements and win damages and attorney’s fees (see our prior post on “New Golden State Law to Create Gold Rush Litigation Testing Non-Compete Agreement.”) Last week, California law expressly codified Edwards v. Anderson, 44 Cal.4th 937 (2008) “to void the application of any noncompete agreement in an employment context, or any noncompete clause in an employment contract, no matter how narrowly tailored, that does not satisfy an exception in this chapter” through AB 1076, which was signed into law on October 13, 2023.  

While this modification does not appear to impact the application or interpretation of California law, it remains to be seen whether Courts will conclude that restrictions aimed at protecting trade secrets remain enforceable. See Edwards, n. 4.  

Of more immediate impact, the new law imposes the burden on employers that entered into noncompete agreements with employees after January 1, 2022 to give notice to employees that the noncompete is void. And, this must be accomplished by Valentine’s Day, February 14, 2024. 

While the statute does not define employees as California employees, as with many other California employment laws and regulations, there is no reason to believe that this requirement may be imposed on employers with employees outside of California. So, all employers who believe that they have noncompete or other restrictive covenants with California employees should promptly consult their favorite CDF attorney to create a strategy to attempt compliance with this new regulation.