For employees considering a move from cooler climates to warmer ones, California is likely becoming a top choice. As of September 1, 2023, Governor Newsom signed into law legislation that extends the state’s restrictions on non-compete agreements to those contracts drafted and signed outside of California. This new legislation will be effective from January 1, 2024.
Suitably denoted as SB 699, this law establishes that any contract which violates California law will be deemed unenforceable within the state, regardless of the location or timeline when the contract was signed. This development has noteworthy implications for both corporations and individual employees, particularly those who operate across state lines.
An in-depth legal analysis by Seyfarth Shaw LLP provides a comprehensive overview of the specifics in the new legislation and its potential effects not just on the corporate world, but also on employees contemplating career moves.
SF 699 requires corporations to reassess their approach when drafting non-compete agreements for employees who may end up working in California. Even if such agreements are signed out of state, their enforceability inside California becomes narrowly defined under the new legislation.
This acts as a reminder that companies and legal professionals must stay updated on the local laws in each of the states in which they operate. Managing legal risks in such a dynamic environment necessitates constant vigilance and ongoing scrutiny of inter-state legal trends.
This further emphasizes the increasingly important role of legal professionals in corporations, particularly those with presence in multiple states, to keep themselves abreast with not only the external regulatory landscape, but also their internal employee contracts and agreements.
The expansion of non-compete prohibitions across state lines, as illustrated by California’s new legislation, certainly signals a new chapter in employment law. Time will tell how this evolves and how corporations, legal practitioners, and employees adapt to this changing landscape.