California Non-Compete/Non-Solicitation Amendments:
Deadline to Notify California Employees of Void Agreements February 14, 2024

On January 1, 2024, amendments to Section 16600 of the California Business and Professions Code went into effect. This alert provides a brief overview and important information for employers with California-based employees subject to agreements that include restrictive covenant clauses, such as non-compete and non-solicit provisions. Employers are urged to review the information below and take steps to comply with the amendments. Please note that the changes to Section 16600 include a February 14, 2024 deadline for all businesses and organizations with employees working in California—regardless of where the business or organization is located—to provide written notice to certain California-based employees.

Changes to California’s Non-Compete Ban

With narrow exceptions, Section 16600 has long provided 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’s courts have interpreted this prohibition to apply to a variety of restrictive covenants, including non-compete and non-solicit provisions.

The changes to Section 16600 in effect as of January 1, 2024 include the following:

• • Employers are prohibited from attempting to enforce contracts that are void under Section 16600, “regardless of whether the contract was signed and the employment was made outside of California.”
  • Employers shall not attempt to enter a contract with an employee or prospective employee that is void under Section 16600.
  • The prohibitions under Section 16600 are not limited to agreements where the party being restrained are a party to the contract.
  • Employers who violate Section 16600 commit a civil violation, and current, former, or prospective employees can bring private rights of action in California seeking injunctive relief and/or damages.
  • Prevailing current, former, or prospective employees in an action brought under Section 16600 shall be entitled to recover reasonable attorney’s fees and costs, in addition to actual damages.

Obligation to Provide Notice by February 14, 2024

The amendments to Section 16600 also require that on or before February 14, 2024, employers must send a “written individualized communication” to (1) all current and former employees who were (a) employed after January 1, 2022, and (b) whose contracts include a prohibited provision, that (2) states that the applicable clause or agreement is void. The communication must be sent to the current or former employee’s last known address and email address. Failure to send the above notification is a violation of Section 16600 and, in addition to creating the risk of award of attorney’s fees and costs, constitutes unfair competition under California law.

Key Takeaways

Employers with California-based employees should take immediate steps to comply with the February 14, 2024 deadline to provide written notice that the prohibited provisions are void. We note that Section 16600, and the written notice requirement, apply to most non-solicitation agreements, as well as non-compete agreements.

Employers with California employees or who do business in California should therefore work with counsel to do the following:

• • Review employee agreements and policies on a case-by-case basis to determine if any agreements or policies are de facto  prohibited non-compete agreements under California law, including customer and employee non-solicits, and overly restrictive confidential information clauses;
  • Review their policies and procedures to protect trade secrets and confidential information; and
  • Assess or consider adopting policies regarding employee notice of residency changes or remote work to ensure employers have notice of any employee’s plans to relocate to California.

For Questions / Compliance Assistance

If you have any questions about the changes to Section 16600 of the California Business and Professions Code and its potential impact on your business, please contact:

• Samantha Halem (shalem@hrwlawyers.com / 781-235-4878);
• Tavish Brown (tbrown@hrwlawyers.com / 617-348-4366); or
• Any member of the HRW Team.

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