California’s Ban on Non-Compete Agreements

California has long been a state that champions employee mobility. Recently, lawmakers have taken steps to reinforce the state’s strict ban on non-compete agreements, making it one of the most protective states for workers in the U.S. These new rules have significant implications for both employees and employers, changing how businesses protect their interests and how workers can pursue new opportunities.

Glaser Labor Law will explain the key aspects of California’s strengthened non-compete ban, what it means for you, and what legal alternatives are available for employers.

What the Ban Means for California Employees

For employees in California, the recent laws solidify your right to work for whomever you choose, without restriction from a previous employer. Here’s what you need to know:

1. Non-Compete Clauses are Void

Under California law, nearly all non-compete agreements are considered void and unenforceable. This means if you signed a contract with a non-compete clause, it likely holds no legal weight in California.

2. Location and Timing Don’t Matter

The law is clear: it applies to California employees regardless of where the employment agreement was signed or where the work was performed. If you are a California employee, an out-of-state non-compete is generally unenforceable.

3. You Have the Right to Sue

If an employer tries to enforce a non-compete agreement against you, you have the right to take legal action. This can include suing for injunctive relief (to stop them from enforcing the clause), as well as recovering damages and attorneys’ fees.

4. Your Employer Must Notify You

Employers were required to notify any current or former employees hired after January 1, 2022, who had a non-compete clause that the agreement is void. This notice must have been sent in writing to the employee’s last known address and email.

What the Ban Means for California Employers

Employers in California must adjust their practices to comply with these strict regulations. Continuing to use or enforce non-compete agreements can lead to serious legal consequences.

1. Stop Using Non-Compete Agreements

It is now a civil violation for an employer to include a non-compete clause in an employment contract or to try and enforce one against a California employee. Continuing to do so can result in penalties.

2. Provide Mandatory Notice

If you haven’t already, you must send individualized written notifications to all current and former employees (employed after January 1, 2022) stating that their non-compete clauses are void. Failure to do so is a violation of the law.

3. Face Potential Penalties

Employers who attempt to enforce a void non-compete agreement can be held liable for the employee’s damages and attorney’s fees. This makes it a risky and costly endeavor.

4. Review and Update Your Agreements

It is crucial to conduct a thorough review of all employment contracts to ensure they are compliant with current California law. Remove any non-compete language and explore legal alternatives for protecting your business.

Legal Alternatives for Employers

While non-compete agreements are off the table, employers still have effective ways to protect their trade secrets and confidential information. These include:

• Non-Disclosure Agreements (NDAs): These agreements legally prevent employees from sharing confidential company information. They must be carefully drafted to be enforceable and should not be overly broad.
• Non-Solicitation Agreements: These can prevent a former employee from soliciting the company’s clients or employees for a reasonable period. However, like NDAs, their scope must be limited to be legally sound in California.

Focusing on these alternatives allows businesses to protect their legitimate interests without unlawfully restricting employee mobility.

Navigate Your Rights and Obligations

California’s strict ban on non-compete agreements marks a significant win for employee freedom, but it requires employers to be more strategic in protecting their businesses. Whether you are an employee wondering about your rights or an employer needing to update your contracts, understanding the law is essential.

The employment attorneys at Glaser Labor Law have extensive experience helping workers and business owners navigate California’s unique labor laws. If you have questions about a non-compete agreement or need assistance ensuring your business practices are compliant, contact us today for guidance.

Glaser Labor Law

With deep roots in Southern California, Glaser Labor Law combines a focus on workplace rights with proven success in broader legal matters. Joel Glaser and his team bring decades of litigation experience to ensure every client receives strong, results-driven representation.