California Gives Teeth to Ban on Noncompete Agreements

California law already says that noncompete agreements in an employment contract are void.  But some employers put noncompetes in their contracts anyway.  Employers know that a noncompete agreement might coax workers to stay in their jobs—even though it has no legal effect.  It’s a misleading and unfair way to do business.

SB 699, recently signed by Governor Newsom, addresses this problem.  It prohibits employers from putting a void noncompete agreement into a contract and from trying to enforce that contract.  A current, former, or prospective employee can sue the employer to stop them from including noncompetes in their contracts and to recover money damages.  The law protects employees who work in California, even if their employer is based somewhere else.  It also protects employees who work somewhere else if their employer is based in California.

For further information regarding this issue, contact your labor law counsel.