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ARTICLE · 19 OCTOBER 2023

California's Non-Compete Shakeup

Littler Mendelson
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California enacted two new bills expanding the scope and consequences of the state's policies against restrictive covenants. Governor Newsom signed Senate Bill 699 into law on September 1, 2023...

United StatesEmployment and HR
Walter C. Pfeffer
Walter C. Pfeffer
Joy C. Rosenquist
Joy C. Rosenquist
Bruce Sarchet
Bruce Sarchet
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California enacted two new bills expanding the scope and consequences of the state's policies against restrictive covenants. Governor Newsom signed Senate Bill 699 into law on September 1, 2023, and Assembly Bill 1076 into law on October 13, 3023. Both are designed to strengthen the protections in California Business and Professions Code Section 16600, which provides that "every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void." California courts have long interpreted Section 16600 to render noncompete clauses void, and many have recently begun interpreting the statute to negate employee nonsolicit agreements as well. These two new laws amend Section 16600, create two new statutes within the same chapter (Sections 16600.1 and 16600.5), and significantly increase the stakes for employers with restrictive covenants in their contracts.

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