Effective January 1, 2024, AB 1076 amended California law to codify existing California case law holding most noncompete agreements void and making it unlawful to include a noncompete clause in an employment contract or to require an employee to enter a noncompete contract that does not satisfy specified exceptions. That new law, in and of itself, does not change the state of the law in California with regard to the enforceability of such contracts.
There is one provision of the law, however, that may mandate immediate action for any company that has had employees in California any time in the past two years. AB1076 requires employers to notify current and former employees who were employed after January 1, 2022 and whose contracts included an unlawful noncompete provision that the noncompete clause or agreement is void. Employers must give this notice by February 14, 2024, or face significant civil penalties payable to each employee who did not receive notice. Employers may face a civil penalty of up to $2,500 per violation.
The solution is a simple one, but it needs to happen now. Develop a simple notice to each employee who was subject to an offending contract in advance of the statutory deadline. Dykema is working with many clients to provide proper notice under AB1076. If you have any questions regarding AB 1076 contact the author of this alert or a member of Dykema’s Labor and Employment practice group for more information.