How Does The Latest Crackdown On Noncompete Agreements Affect US Employers?

Noncompete agreements have come increasingly under attack at the federal and state level in 2023. In this alert, we review notable recent developments on the legality of continuing to use noncompete agreements in the employment context. Companies utilizing noncompete agreements in the US should confer with legal counsel to ensure that their practices remain in compliance with applicable law.

California

1. Senate Bill 699

In September 2023, California Gov. Gavin Newsom signed SB 699, which broadly expands the state's already existing strong public policy against noncompetes, reflected in Business and Professions Code Section 16600 (providing 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"). Limited exceptions under the code permit noncompete agreements in the context of the sale of a business, dissolution of a partnership, or dissolution of, or termination of an