California voided non-competes wherever they were signed

The record

Effective January 1, 2024, California enacted two companion statutes strengthening its existing ban on employee non-compete clauses. Senate Bill 699, signed September 1, 2023, added Section 16600.5 to the Business and Professions Code, providing that a void non-compete is unenforceable “regardless of where and when the contract was signed” and that an employer may not attempt to enforce, or enter into, such a contract even where the employment relationship was maintained entirely outside California. Assembly Bill 1076, signed October 13, 2023, added Section 16600.1, codifying the California Supreme Court's holding in Edwards v. Arthur Andersen LLP (2008) that the state's existing ban voids non-competes however narrowly they are drafted, and required employers to send current and former employees, employed after January 1, 2022, written individualized notice by February 14, 2024, stating that any covered non-compete clause or agreement is void.

What the documents establish

Both statutes go beyond declaring non-competes unenforceable in future California litigation. Section 16600.5 creates a private right of action for an employee, former employee, or prospective employee to sue for injunctive relief and actual damages, plus attorney's fees and costs for a prevailing plaintiff, and makes a violation a civil violation in its own right, independent of any attempt to enforce the clause in court. Section 16600.1 makes noncompliance with the notice requirement an act of unfair competition under California's Unfair Competition Law, which the statute's own text ties to the separate remedies that law provides. Neither statute purports to reach non-competes that fall within the Business and Professions Code's existing statutory exceptions, such as those tied to the sale of a business.

The operating read

Editorially, the extraterritorial language in SB 699 is the provision most likely to surprise an out-of-state employer: a non-compete signed by a worker who lived and worked outside California, for a company with no California non-compete policy, can still trigger California liability once that worker becomes California-based, because the statute conditions enforceability on the worker's status, not on where the contract was executed. This statute operates independently of the FTC's 2024 non-compete rule, which a federal court later set aside; California's ban rests entirely on its own Business and Professions Code and does not depend on the federal rule's validity.

What to check before you decide

Before relying on a non-compete against a worker with any California connection, or assessing exposure under one, check the following:

• Did the employer send the AB 1076 notice by February 14, 2024 to every current and former employee, employed after January 1, 2022, whose contract contains a non-qualifying non-compete clause?
• Does the worker's current or planned location include California, regardless of where the contract was signed or where the employer is based?
• Does the clause fall within one of the Business and Professions Code's existing statutory exceptions, such as the sale-of-business exception, that these 2024 amendments did not alter?

This describes the two statutes' own text; it is not an assessment of any specific employment contract.