Noncompete And Nonsolicitation
NONCOMPETE AND NONSOLICITATION
TWO NEW CA LAWS IMMEDIATELY AFFECTING BUSINESS OWNERS IN 2024
Two new California laws directly affecting business owners went into effect on January 1, 2024. California has strengthened the prohibition against noncompete and nonsolicitation agreements, which also posse potential liability for employers who require their employees to sign noncompete agreements or attempt to enforce existing noncompete agreements against former employees.
Assembly Bill 1076 states that it is unlawful to include noncompete and nonsolicitation clauses in employment contracts, or to require an employee to enter into a noncompete agreement that does not satisfy an exception under California law.
Senate Bill 699 makes it a civil violation for employers to even attempt to enforce a void noncompete or Nonsolicitation provision regardless of where and when the contract was signed.
Although the new laws raise questions that the courts will likely be called upon to answer, a few things are relatively certain. Except for certain narrow statutory exceptions, employers cannot use noncompete agreements or similar restricted covenants to prevent former employees from competing against or soliciting the employer’s customers.
Except for certain narrow statutory exceptions, employers very likely cannot use noncompete agreements or similar restrictive covenants to prevent former employees from soliciting their current employees.
Entering into or even attempting to enforce a void noncompete or nonsolicitation provision in California may entitle affected employees to injunctive relief, actual damages, or both, and potentially attorneys’ fees and costs if the employee prevails.
By February 14, 2024, employers must notify current employees and former employees (employed after January 1, 2022), who the employer required to sign noncompete or nonsolicitation provisions that those provisions are void under California law. The notice must be sent to the last known address of the employee or former employee and to their email address. Failure to provide such notice constitutes an act of unfair competition and is subject to a penalty of $2,500 for each violation. If you have not yet notified the former employees, you must do so immediately before penalties are imposed.
Becoming a business owner, you control your own destiny, choose the people you work with, reap big rewards, challenge yourself, give back to the community, and you get to follow your passion. Knowing what you’re getting into is smart business because the responsibility of protecting your business falls on you.
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Disclaimer: This information is made available by Bagla Law Firm, APC for educational purposes only as well as to give you general information and a general understanding of the law, and not to provide specific legal advice. This information should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.
