Employee non-compete agreements have long been a subject of debate, balancing the interests of employers in protecting their trade secrets and businesses against the rights of employees to seek employment freely. In California, recent legislative changes have further restricted the enforceability of non-compete agreements. On the national front, a memorandum from the National Labor Relations Board (NLRB) Office of General Counsel marks significant shifts in the legal landscape surrounding non-competes.

Senate Bill 699: Impact on Out-of-State Employees

Senate Bill 699 invalidates any prohibited non-compete agreements, no matter where they were originally signed. This legislation carries particular weight when a California-based company seeks to employ an individual who signed a non-compete agreement in a different state.

An employer that enters into or tries to enforce a contract void under B&B 16600, et seq., commits a civil violation. An employee, former employee, or prospective employee may bring a private action for injunctive relief or the recovery of actual damages, or both. A prevailing employee, former employee, or prospective employee is entitled to recover reasonable attorney’s fees and costs. A defending employer is not entitled to attorneys’ fees even if the court concludes the contract is enforceable.

One of the key implications of SB 699 is its potential to fuel legal conflicts, often termed as a “race to the courthouse.” With California’s predisposition against non-compete agreements, employers seeking to enforce such agreements against employees working in the state may face legal challenges.

SB 699 grants prevailing employees the right to recover attorneys’ fees. This provision serves as a deterrent against employers trying to enforce void non-compete agreements, potentially offering a level of protection to employees against unfair enforcement.

Assembly Bill 1076: Voiding Non-Competes Outside Business & Professions Code Exceptions

Assembly Bill 1076 complements SB 699 by specifically outlining that non-compete agreements not falling within Business & Professions Code exceptions (e.g., related to the sale of a business) are void in California. Employers must notify employees who worked after January 1, 2022, about the invalidity of non-compete clauses present in their employment contracts.

This legislation reinforces the state’s stance against non-compete agreements that exceed the permissible boundaries outlined in the Business & Professions Code. Employers now have a statutory duty to inform affected employees about the unenforceability of such clauses, ensuring transparency and compliance with the law.

NLRB Office of General Counsel Memo GC 23-08: Protecting Employee Rights

The NLRB’s memorandum, GC 23-08, issued on May 30, 2023, draws attention to the intersection of non-compete agreements and employees’ rights under Section 7 of the National Labor Relations Act (NLRA).

Section 7 safeguards employees’ rights to engage in protected, concerted activities for mutual aid or protection. The memorandum highlights how non-compete provisions can chill employees’ exercise of Section 7 rights by restricting their ability to seek alternative employment opportunities.

The memo emphasizes that clauses in non-compete agreements that could be construed by employees as denying them access to other suitable job opportunities might run afoul of Section 7 protections. It signals a stance by the NLRB that restrictive non-compete agreements could impinge upon employees’ fundamental rights under federal labor law.


California’s evolving stance on non-compete agreements through Senate Bill 699, Assembly Bill 1076, combined with the NLRB’s GC Memo 23-08 reinforces efforts to protect employee mobility and rights. These legislative and regulatory changes reflect a continued effort to limit the scope and enforceability of non-compete agreements, promoting a fair and competitive employment landscape within the state. Employers and employees should remain informed about these changes to ensure compliance and a clear understanding of their rights and obligations regarding non-compete agreements in California and beyond.

Employers still have legal ways to protect their confidential information. Robert Nuddleman has decades of experience drafting enforceable agreements that protect legitimate business interests without violating the non-compete laws. Mr. Nuddleman also helps employees understand what they can and cannot do when they move places of employment. Contact the Nuddleman Law Firm before you make a potentially costly mistake regarding non-compete agreements.