California Non-Compete Agreements Void Under AB 1076 and SB 699: Employer Notice Required by February 14, 2024

What Changed

Two California laws effective January 1, 2024, dramatically strengthen the state's longstanding prohibition on non-compete agreements:

AB 1076 — Codification and Notice Requirement

Assembly Bill 1076 (AB 1076) codifies the California Supreme Court's ruling in Edwards v. Arthur Andersen LLP (2008), confirming that non-compete agreements in employment are void and unlawful regardless of how narrowly tailored they are. Critically, AB 1076 also imposes a notice requirement: employers must send individualized, written notice to current employees and former employees who were employed after January 1, 2022, informing them that any non-compete clause or agreement is void.

Deadline: Written notice must be delivered by February 14, 2024, to the employee's last known address and email address.

SB 699 — Expanded Enforceability Prohibition

Senate Bill 699 (SB 699) provides that any non-compete agreement void under California law is unenforceable regardless of where and when the contract was signed. This means out-of-state employers cannot enforce non-competes against California-based employees, even if the agreement was executed in another state under laws that permit such clauses.

SB 699 also makes it unlawful for an employer to enter into or attempt to enforce a non-compete agreement that is void under California law.

Who Is Affected

AB 1076 notice requirement: Any employer that has current California employees or former California employees (employed after January 1, 2022) who are or were subject to non-compete clauses or agreements.
SB 699: All employers with employees performing work in California, regardless of where the employer or the contract is based.

Where It Applies

California statewide. SB 699 extends the prohibition's reach to non-compete agreements signed in any jurisdiction if the employee works in California.

When It Takes Effect

January 1, 2024: Both AB 1076 and SB 699 take effect.
February 14, 2024: Deadline for employers to provide written notice to affected employees and former employees under AB 1076.

Why It Matters

Failure to comply with the notice requirement under AB 1076 is an act of unfair competition, which may subject employers to civil penalties of up to $2,500 per violation. SB 699 creates a private right of action for employees, meaning individuals can sue employers who attempt to enforce void non-compete agreements, seeking injunctive relief, damages, and attorney's fees.

These laws also send a clear signal to multi-state employers: if you have employees in California, your non-compete agreements are void as to those employees, period. The "we signed it in Texas" argument no longer has legs.

The Humareso Take

This is a landmark shift for multi-state employers who have historically relied on non-compete agreements as part of their talent strategy. If you have any California employees—or former employees from the past two years—who signed non-competes, the February 14 notice deadline is not optional. We've seen employers assume this doesn't apply to them because the agreement was signed in another state, but SB 699 closes that loophole entirely. Get the notices out now, and use this as an opportunity to audit all your restrictive covenant agreements nationwide.

Recommended Action Steps

Identify all current and former California employees (employed after January 1, 2022) who are or were subject to non-compete clauses or agreements.
Prepare and send individualized written notices to each affected employee by February 14, 2024, informing them that their non-compete clause or agreement is void under California law. Send to their last known mailing address and email address.
Review all employment agreements, offer letters, and separation agreements company-wide for non-compete provisions that may be unenforceable under California law.
Consult legal counsel regarding any non-compete agreements executed in other states that may apply to employees who work in or relocate to California.
Update your standard employment agreement templates to remove non-compete provisions for California-based positions.
Contact your Humareso representative for assistance identifying affected employees and preparing compliant notices.