Back in April of 2024, the Federal Trade Commission voted to adopt a ban on noncompete agreements, stating that such a ban was justified because noncompete agreements are an “unfair method of competition.” Texas filed suit in federal court challenging the ban, arguing that the FTC lacks authority to issue such a ban. The court agreed and in August of 2024 blocked enforcement of the ban nationwide. Since that time, on October of 2024, the FTC filed an appeal. Although an appeal is pending, employers can technically continue to enforce existing noncompete agreements against workers.
Read MoreCalifornia employers are tasked with new notice requirements! 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. The notice 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. This is a significant task and employers should plan their compliance ahead of time.
California’s new controversial law (SB 699) codified in California Business and Professions Code section 16600.5 now extends California’s restriction on non-compete agreements to even perfectly legal out-of-state non-compete agreements. California wants to attract the best workers in the nation and now will refuse to enforce ANY non-compete agreements at all - even those that other states recognize. Employers have no right to enforce non-compete agreements in California.
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