As of September 1, 2023, California employers need to amend their procedures in regard to non-compete agreements for their employees. In an important development, Governor Gavin Newsom has enacted SB 699, a piece of legislation designed to strengthen the state’s approach to non-compete agreements and their enforcement.[1]
California has a history of being averse to non-compete agreements. Prior to the passing of SB 699, such agreements were not enforceable under California Business and Professions Code section 16600. Instead of preventing competition after employment termination, the state has traditionally encouraged mobility and freedom for its workers. This latest development amplifies that sentiment by making it clear that non-compete agreements have little place in California’s business landscape.
This turn of events may necessitate a shift in tactics for businesses based in California. Companies may wish to consult with their legal teams to explore alternate methods of protecting their interests. For example, enforceable protections may exist against trade secret theft or solicitation of customers.
The potential impact of SB 699 on corporate strategies and employment practices is significant. It provides an opportune moment for companies to revisit their current contracts with employees, and consider changes in alignment with the new state laws. In addition to protecting the freedom of California’s workforce, these actions will help ensure corporate compliance with evolving legal landscapes.
For legal practitioners and professionals working with California-based clients or with interests in the state, this is important news to keep in mind. As the SB 699 continues to drive change in employment law practice, it will notably reshape the local business environment and the way legal professionals approach negotiations and legal contracting for their clients.
To learn more about the latest updates of SB 699 and research further into the new state laws in California, you can find further information here.