Employment

On the heels of approving SB 699, which heightened the protections and reach of California’s prohibition of employee non-competes under California Bus. & Prof. Code Section 16600 (“Section 16600”) (see our blog post here), Governor Gavin Newsom has now signed AB 1076. AB 1076 further increases the litigation risk for employers that use employee non-competes and, most notably, requires employers to provide notice of any non-competes to current and former employees by early next year. Together, these two new laws, which take effect on January 1, 2024, reinforce California’s strong public policy against employee non-competes and specify new consequences for employers who seek to enforce or enter into such agreements.

As a reminder, SB 699 adds new Bus. & Prof. Code Section 16600.5 to: (1) prohibit an employer or former employer from attempting to enforce a contract (e.g., a non-compete) that is void under Section 16600; (2) grant current, former, and even prospective employees a private right of action for damages and injunctive relief, and to recover attorney’s fees and costs; and (3) expand the territorial reach of California’s prohibition of employee non-competes to apply “regardless of where and when the contract was signed.”Continue Reading California Doubles Down with Yet Another Law on Employee Non-Competes

California non-compete law has just been shaken-up—and the ripples are likely to travel across the country. For decades and save for narrow exceptions, California Business and Professions Code § 16600 has made post-employment non-competes unenforceable due to their potential to unduly restrain an individual’s business or profession. Effective January 1, 2024, however, Senate Bill 699 (“SB 699”) drastically expands both the protections and the reach of California’s prohibition on employee non-competes.

Specifically, SB 699:

  • prohibits an employer or former employer from even attempting to enforce a contract that is void under Section 16600;
  • grants current, former, and even prospective employees a private right of action for damages and injunctive relief—and to recover attorney’s fees and costs; and
  • applies to all non-competes “regardless of where and when the contract was signed.”

Continue Reading Will California’s SB 699 Shake Up Non-Compete Law Everywhere?

Introduction

On 10 May, the Department for Business and Trade (the “DBT”) released the regulatory reform update “Smarter Regulation to Grow the Economy” – the first in a series of updates on how the government intends to reform regulations to support economic growth.  This first package…

Continue Reading UK Employment Law: Government plans to cut Red Tape for UK Businesses

2023 will likely see employment lawyers and HR professionals (in the UK and further afield) grappling with a number of key employment-related legal and policy developments. In this alert we highlight some of the most important ones.

  1. Brexit: The Employment Law Fallout

When the UK left the European Union on…

Continue Reading UK Employment: Top Five Hot Topics in 2023

As we discussed in a previous post, effective January 1, 2023, California employers must include pay scales in job postings, and a similar bill in New York was awaiting signature by Governor Kathy Hochul. The California Labor Commissioner has now issued guidance to assist employers in complying with the new law, and the New York State bill was signed into law on December 21, 2022 and is set to take effect on September 17, 2023.Continue Reading Update on California and New York Pay Transparency Laws

On January 5, 2023, the Federal Trade Commission (“FTC”) issued a groundbreaking proposed rule that would, if finalized:

  • prohibit most employers from entering into non-compete clauses with workers, including employees and individual independent contractors;
  • prohibit such employers from maintaining non-compete clauses with workers or representing to a worker that the worker is subject to a non-compete clause; and
  • require employers to rescind any existing non-compete clause with workers by the compliance date of the rule and notify the affected workers that their non-compete clause is no longer in effect.

The FTC’s notice of proposed rulemaking explains that the FTC considered possible limitations on the rule—such as excluding senior executives or highly paid employees from the ban—but it ultimately proposed a categorical ban on post-termination non-competes.  The only exception is for non-competes related to the sale of a business.  However, even this exception is unusually narrow: it would only apply to selling business owners who own at least 25% percent of the business being sold.  (The proposal also would not apply to most non-profits, certain financial institutions, common carriers, and others who are also outside the scope of FTC regulation.)Continue Reading FTC Proposes Rule to Ban Most Non-Competes

On October 1, 2022, the District of Columbia’s new ban on non-compete agreements (the Ban on Non-Compete Agreements Amendment Act of 2020, as amended by the Non-Compete Clarification Amendment Act of 2022 (the “Act”)) went into effect. The final version of the Act is far less restrictive than originally anticipated and permits non-competes with highly compensated employees, non-competes paired with long-term incentives, and certain anti-moonlighting policies.

Key Takeaways

  • As of October 1, 2022, non-competes are prohibited in the District with limited exceptions.
  • Generally, employers can still enter into the following types of non-competes with District employees:
    • Non-competes with highly compensated employees that do not exceed one year; provided 14 days’ advance notice is given to the employee. 
    • Non-competes paired with a long-term incentive.
    • Non-competes entered into in connection with the sale of a business.
  • The Act permits specified workplace policies like confidentiality or non-disclosure policies, anti-moonlighting policies/outside employment restrictions, and conflict of interest policies. However, the employer must provide the policies to employees before October 31, 2022, within 30 days after acceptance of employment, and any time such policy changes.
  • Violations of the Act carry both administrative penalties and civil liability.
  • Prohibited non-compete agreements in effect before October 1, 2022, are not subject to the Act and remain in effect. However, employers should consult with legal counsel before amending these agreements.
  • Non-solicitations of customers and employees are not explicitly considered non-competes under the Act.
  • The Act does not apply to the terms of a valid collective bargaining agreement.

Continue Reading D.C.’s Scaled-Back Non-Compete Ban Is In Effect

As interest rates rise and the threat of a recession looms, many employers are beginning to struggle with balancing the cost of maintaining their workforce with an expected decrease in profits. The frequent result of such a balancing act is a mass layoff. While a reduction in workforce may be inevitable, below are options that employers can consider to try to avoid that outcome. For all of these alternatives, employers should apply any changes consistently across the workforce to avoid claims of inequity or discrimination.Continue Reading Avoiding Layoffs In an Uncertain Economy