On The Horizon: Notices Regarding Void Non-Compete Agreements Must Go Out By February 14th

Effective January 1, 2024, California made several adjustments to its non-competition laws to strengthen its general prohibition on such agreements.  Those adjustments included: making non-competition agreements unenforceable in California regardless of where they were signed, requiring notice to employees subject to non-competition agreements, and creating statutory penalties for any employer who attempts to enter into a non-competition agreement with an employee.  Top of mind for many employers is the required notice to employees, which must be sent by February 14, 2024.

Who Must Receive the Notice?

California’s updated laws now require that an individualized notice be sent to all current and former employees employed after January 1, 2022, who are subject to an non-competition agreement.  The notice must be sent by February 14, 2024, to the employee’s last known address and email address, notifying them that their non-competition agreement is void. 

This seemingly simple requirement, creates a lot of nuanced questions for employers when determining who should receive the required notice.  For instance, what about employees with out of state choice of law or venue in their agreements?  Do remote employees working in other states for a California employer need to receive the notice?  Do these requirements apply to employees who signed a non-solicitation provision?

What we know for certain is that an employee meeting the requirements below will have to receive the notice:

• They were employed after January 1, 2022;
• They are located in California; and
• They signed an employment agreement containing a non-compete provision, regardless of where the agreement was signed.

However, if you have questions regarding whether other employee may be subject to this requirement we suggest reaching out to your Stradling attorney for guidance.

What Must the Notice Contain?

The notice must be an individualized communication, meaning employers cannot send one form of communication to all affected employees.  Additionally, the notice should (1) identify the specific agreement at issue, (2) advise the employee regarding the changes in the law, (3) and notify the employee that the non-competition provision in their agreement is void and will not be enforced.

What Happens If I Don’t Send the Notice?

Failure to send the required notice constitutes a violation of California’s Unfair Competition laws.  Penalties can be up to $2,500 per violation, i.e. per employee with a void non-competition agreement.