California’s Governor Newsom recently signed into law Assembly Bill 1076 which took effect on January 1, 2024 and makes it unlawful for employers to include noncompete clauses in agreements – even narrowly tailored clauses- unless the clause falls within one of the very limited statutory exceptions under California Business and Professions Code section 16600. This new law is codified in section 16600.1.

Under the new law, employers who try to impose an unlawful non-compete clause or agreement are engaging in unfair competition. In addition, the new law increases the liability for employers because it gives the employees a private right of action against employers who do try to impose an unlawful non-compete clause or agreement. In this private right of action, employees have the power to sue employers for significant damages, injunction, and attorneys fees.

Employers need to be aware that they have obligations under the new law. Specifically, employers are tasked with new notice requirements, and the employers’ failure to comply may have serious consequences.

In particular, employers must give notice to all current and former employees employed after January 1, 2022 whose contracts included a noncompete clause (or who were required to enter a noncompete agreement) that such clauses or agreements are void. This notice must be given to the employees by February 14, 2024- only four months after the law was enacted! Employers may be surprised to find out that the notice also has to be individualized for each employee, in writing, and shall be delivered to the employee’s or former employee’s last known address and email address.

Clearly, the employer’s notice obligations are a significant task, especially for employers who do not have dedicated human resource departments. Employers should take action now to plan their compliance with the notice requirements and speak with one of our knowledgeable employment law attorneys to ensure that they will not be subject to any future liability.