In the ever-evolving landscape of employment regulations, both employers and employees must stay...
In the ever-evolving landscape of business contracts, staying updated on the latest legal changes is crucial. In 2024, the focus is on Noncompete Agreements and Contracts In Restraint of Trade, specifically Senate Bill 699 (SB 699) and Assembly Bill 1076 (AB 1076). Let's delve into these legislative updates and what they mean for employers and employees alike.
SB 699: Rethinking Voided Contracts
Existing regulations aim to preserve healthy competition and, therefore, invalidate contractual clauses that restrict an individual from pursuing a lawful profession, trade, or business. SB 699 brings a significant change to the table by rendering a voided contract unenforceable, regardless of where or when it was signed. Notably, this bill prohibits employers or former employers from attempting to enforce such voided contracts, even if the contract was signed and the employment was maintained outside of California.
Moreover, SB 699 sets a clear boundary by prohibiting employers from entering contracts with employees or potential employees that contain void provisions under the existing law. Noncompliance with this statute is considered a civil violation. What's more, it empowers employees, former employees, and prospective employees to take legal action for injunctive relief the recovery of actual damages, or both, should the need arise. Notably, prevailing individuals are entitled to recover reasonable attorney's fees and costs.
AB 1076: Reinforcing Noncompete Voidance
Existing law has long disallowed contractual clauses that inhibit individuals from pursuing lawful professions, trades, or businesses, except under certain circumstances. Case law, notably Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, has consistently interpreted this provision to nullify noncompete agreements within an employment context, regardless of their narrowness, unless specific exceptions apply.
AB 1076 solidifies this case law by broadly construing the statutory provision, ensuring that it applies to void any noncompete agreement within an employment context or any noncompete clause within an employment contract that fails to meet specified exceptions. Moreover, it extends these provisions to contracts where the restrained party is not a direct party to the contract.
Furthermore, AB 1076 outlaws the inclusion of noncompete clauses in employment contracts and the imposition of noncompete agreements that don't meet specified exceptions. Employers are now obligated to provide written notice to both current and former employees by February 14, 2024, explicitly stating the avoidance of the noncompete clause or agreement. Any violation of these new provisions is considered an act of unfair competition, subject to penalties under the Unfair Competition Law (UCL).
Conclusion: Adhering to the Changing Legal Landscape
As we step into 2024, it's crucial for businesses, both employers and employees, to stay informed about the evolving regulations surrounding Noncompete Agreements. SB 699 and AB 1076 bring substantial changes to how these contracts are handled, making it essential to navigate this legal landscape with care and compliance. Ensuring that your business practices align with these new laws is not just a legal obligation but a strategic move in today's competitive environment.
How do you feel about the new changes for 2024? Are you on board with them or still feel a bit doubtful? Contact a TPG Payroll & HR Specialist for any concerns or doubts we will happily answer all your questions! Call us at 909.466.7876 today!
Here are some more topics that could interest you on our blogs/resources webpage: Wage and Hour Changes in California and Enhancing Workplace Safety and Health Measures for the Upcoming Year.
