On September 1, 2023, California Governor Gavin Newsom made a significant change to employment law in the state by signing SB 699 into law. This legislation amends the California Business & Professions Code Section 16600, thereby escalating the state’s prohibition against non-compete agreements. The new law prevents employers from entering into or attempting to enforce post-employment non-compete agreements and even applies to contracts signed outside of California.
The implications of this broadened prohibition have direct ramifications for companies and legal professionals alike. Special attention must be given to the drafting and execution of employment contracts moving forward. Employers should now consider revising existing contracts to ensure they comply with these new provisions.
It is fundamental to understand that this legislation will affect not only contracts signed within California but also agreements executed outside its borders. This compliance requirement presents a new challenge for multistate and multinational corporations that have to harmonize their contractual practices across various jurisdictions.
The codification of SB 699 as Section 16600.5 of the California Business and Professions Code will come into effect on January 1, 2024. This allows some lead time for corporations to adjust their practices. However, it is imperative for legal professionals to start understanding and preparing for the impacts of this modification now.
In the light of these new provisions, the need for expert counsel in labor and employment law is more crucial than ever. Legal teams should aim to become intimately acquainted with the details and potential ripple effects of the new law here.
The collaborative efforts of legal counsel and management will be crucial in addressing the challenges posed by these changes in the near future. As we adapt to this new legal landscape, it is foundational to consider the fair treatment of employees, the strategic goals of the business, and the ever-present requirement to operate within the law.