California's Senate Bill 699 (along with existing laws), bans (actually voids) agreements that purport to restrain an employee from competing with the employer: Existing law (Business & Profession Code 16600) states "Every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void." California courts previously confirmed these post-employment non-competition, non-solicitation of customers, and non-solicitation of employees agreements were against existing law (except for agreements that involved these restrictive covenants in the sale or dissolution of corporations, partnerships, and limited liability corporations).
SB 699 confirms existing law that voids these terms, confirming that these terms are void and unenforceable. This new law now prohibits an employer or former employer from attempting to enforce an agreement that restricts an employee's ability to engage in a lawful profession, trade, or business, even if the contract was signed outside of California, and the employment was maintained outside of California. So, yes, it applies to work-from-home employees, even those who work outside of California for the California employer.
It is even more risky now for employers to present these terms in the employee handbook and other agreements. SB 699 prohibits an employer from entering into a contract with an employee or prospective employee that includes noncompete clauses and other restrictive covenants that are void under § 16600. Employers may suffer lawsuits and damages for now doing so. Basically, it likely hands employees a potential class action lawsuit against the employer.
This Senate Bill 699 law will take effect on Jan. 1, 2024. Employers would be wise to update employee handbooks and agreements now.
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