CA Law Cracks Down On Employer Noncompete Agreements

Last year, California enacted two laws that severely restrict noncompete agreements in the state. First, Senate Bill 699, now codified as Section 16600.5 of the Business & Professions Code, extends the state's general ban on noncompete agreements to agreements signed out of state. It also creates a private right of action for employees whose agreements include restrictive covenants, including attorney's fees awards for successful lawsuits against employers. Second, Assembly Bill 1706, which amends Section 16600, codifies the 2008 California Supreme Court decision of Edwards v. Arthur Andersen LLP. As a result, all noncompete agreements are invalid, even if narrowly tailored, unless they meet specific statutory exceptions.