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What Californians should know about new changes to non-compete law

It’s not every day that legislation drafted with the help of a local professor is signed into law. However, last month, Gov. Gavin Newsom signed a bill into law that strengthens California’s already stringent law limiting the use of non-compete agreements by employers. 

A University of San Diego law professor and employment and labor policy expert who has long studied the harmful effects of non-compete agreements was instrumental in writing and advocating for that bill.

What does the law change?

The law, which adds language to the state’s Business and Professions Code, extends the strict limitations under California law regarding “non-competes” to all people working in California, regardless of what state they were in when they signed a non-compete. That means if they signed an agreement that would have been invalid in California, it’s considered invalid, even if it’s allowed in that state.

This can help people who move to California obtain a job in a competitive industry that they would be prohibited from taking in their previous home state or possibly other states. Even if they signed a non-compete with their employer in another state, they wouldn’t have to abide by it if it violates California law.

How the changes help employers and the broader California economy

This benefits California employers as well because it allows them to hire talented people with less concern about legal action by their former employer. To that end, the law strengthens the current protections for employees and employers in legal actions taken against them for violating the terms of a non-compete agreement. It also allows employees and even applicants as well as employers to take legal action against a party who tries to enforce a non-compete agreement that’s invalid in California and to “recover reasonable attorney’s fees and costs.” 

The professor notes that the new law, which takes effect at the beginning of next year, “provides an enforcement mechanism and strengthens California’s longstanding policy which has been an important contributor to the state’s prospering tech, entertainment, biomedicine, pharma, and other thriving industries.”

It can take some time for employers to get up-to-speed with changes in the law. Certainly, employers in other states may not be familiar with the change. If you believe you’re being held to a non-compete agreement that’s not valid, it’s wise to seek legal guidance to help protect your rights and your career.

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