There’s been a trend toward minimizing the use of non-compete clauses in employment agreements and making those that are necessary less broad and burdensome for employees and prospective employers. According to the Federal Trade Commission, about 20% of Americans are currently working under some type of non-compete agreement.
California law has been ahead of the curve on this. With a law signed by Gov. Gavin Newsom in September, California employees and businesses no longer need to worry about running afoul of a non-compete signed in another state that violates our state law.
The law amends the state’s Business and Professions Code language on non-compete agreements and provisions to include anyone who works in the state, even if they signed a non-compete in another state. Say that someone who works in a competitive industry like tech, biomedicine, pharma or entertainment, all of which are crucial to our state’s economy, signed a non-compete agreement with their employer in another state relocates to California and is seeking a job within their industry. If the non-compete agreement they signed includes language that’s illegal under California law, they’re not bound by it here.
How the new law helps California employers
Those who advocated for the law, which is effective at the beginning of next year, note that it will benefit California employers and the state as a whole. Since those who move to California no longer have to abide by the more stringent laws of many other states, they have more freedom to put their education, talent and experience to use here.
Unfortunately, you can’t count on all prospective employees to know about the new law. You certainly can’t count on employers in other states to know about it or accept it. There will be a period of adjustment. In the meantime, if you have questions or concerns, getting experienced legal guidance is always a good step.