California's Non-Compete Law Overhaul: A Comprehensive Guide
AB 1076 and SB 699 Reshape the Landscape
On October 13, 2023, California Governor signed Assembly Bill AB 1076 into law. This landmark legislation introduces significant amendments to the Business Professions Code, adding new Section 166001 and expanding the restrictions on non-compete agreements under Section 166005. These changes have profound implications for employers and employees alike.
Key Provisions of AB 1076
AB 1076 prohibits employers from entering into or enforcing non-compete agreements that are void under California law. This includes agreements that:
- Are unreasonably broad in scope or duration
- Impose undue hardship on employees
- Interfere with the employee's ability to earn a living
The law also provides for civil penalties against employers who violate these provisions.
Expansion of Restrictions under SB 699
In conjunction with AB 1076, Senate Bill SB 699 further expands the restrictions on non-compete agreements. SB 699 prohibits employers from entering into non-compete agreements with employees who:
- Earn less than $100,000 per year
- Are independent contractors
- Are hired on a temporary basis
SB 699 also applies to non-compete agreements that are entered into outside of California but are intended to be enforced within the state.
Implications for Employers and Employees
These new laws have significant implications for both employers and employees in California:
- Employers: Must review and revise their non-compete agreements to ensure compliance with the new law. Employers who violate these provisions may face penalties and legal challenges.
- Employees: Are now protected from unfair and unenforceable non-compete agreements. Employees who are subject to a non-compete agreement that violates the law may have legal recourse to challenge it.
Overall, these amendments represent a major shift in California's stance on non-compete agreements, providing greater protection for employees and limiting the ability of employers to restrict competition.
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