California’s 2024 Noncompete Overhaul: SB 699 and AB 1076
Two 2023 bills, both operative January 1, 2024, rewrote Business and Professions Code section 16600, added a notice duty enforceable through the UCL, and gave employees, former employees and prospective employees a private right of action with mandatory fees.
California already voided most employee noncompetes. The 2024 package went further: it codified a broad reading of section 16600 “no matter how narrowly tailored,” declared that reading to be existing law rather than a change, reached agreements signed outside California, made merely entering into or attempting to enforce a void clause a civil violation, required employers to send individualized notices by February 14, 2024, and handed employees a private action with mandatory attorney’s fees.
Read the official text at California Legislative Information →
What it does
Section 16600 has voided contracts restraining a person from engaging in a lawful profession, trade or business since 1872, and Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937 rejected the “narrow restraint” gloss some federal courts had applied to it. The 2023 legislation did not change that baseline rule. What it changed was everything around the rule: how broadly it must be read, whether it reaches agreements made elsewhere, what an employer must affirmatively do about noncompetes already in its files, and who can sue.
Two separate bills are involved and they are frequently conflated. SB 699 added section 16600.5 — the extraterritorial reach, the civil violation, and the private right of action. AB 1076 amended section 16600 to add subdivisions (b) and (c) and added section 16600.1 — the notice requirement. Both took effect January 1, 2024. Getting the attribution right matters, because the two sections carry different remedies.
Key provisions
“Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”
The section “shall be read broadly, in accordance with Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, to void the application of any noncompete agreement in an employment context, or any noncompete clause in an employment contract, no matter how narrowly tailored, that does not satisfy an exception in this chapter.” Note the codification lives here, in section 16600 — not in section 16600.1, where it is often misplaced.
The subdivision “does not constitute a change in, but is declaratory of, existing law.” This is the retroactivity hook: on its own terms subdivision (b) states what the law always was, which bears directly on conduct predating January 1, 2024.
The section “shall not be limited to contracts where the person being restrained from engaging in a lawful profession, trade, or business is a party to the contract.” This reaches restraints imposed on a worker by agreements between other entities — no-poach and no-hire arrangements being the obvious case.
Subdivision (a) makes it “unlawful to include a noncompete clause in an employment contract, or to require an employee to enter a noncompete agreement, that does not satisfy an exception in this chapter.” Subdivision (b)(1) required employers, for current employees and for former employees “who were employed after January 1, 2022,” to notify the employee “by February 14, 2024” that the clause or agreement “is void.” Under (b)(2) the notice had to be “a written individualized communication” delivered “to the last known address and the email address” — both, not either. Under (c), a violation “constitutes an act of unfair competition within the meaning of Chapter 5 (commencing with Section 17200).”
(a) A contract void under the chapter “is unenforceable regardless of where and when the contract was signed.” (b) An employer “shall not attempt to enforce” such a contract “regardless of whether the contract was signed and the employment was maintained outside of California.” (c) An employer “shall not enter into a contract with an employee or prospective employee” containing a void provision. (d) Entering into or attempting to enforce such a contract “commits a civil violation.” (e)(1) “An employee, former employee, or prospective employee may bring a private action to enforce this chapter for injunctive relief or the recovery of actual damages, or both.” (e)(2) A prevailing employee, former employee or prospective employee “shall be entitled to recover reasonable attorney’s fees and costs.”
“This section shall be read broadly … to void the application of any noncompete agreement in an employment context, or any noncompete clause in an employment contract, no matter how narrowly tailored, that does not satisfy an exception in this chapter.”— Bus. & Prof. Code § 16600, subd. (b)(1)
How it applies
The remedy is the change. Before 2024, an employee facing a void noncompete was largely in a defensive posture — the clause was unenforceable, but there was no obvious affirmative claim. Section 16600.5, subdivision (e) reverses that. A prospective employee who never worked a day for the employer can sue; the relief includes injunctive relief or actual damages “or both”; and fees to a prevailing plaintiff are mandatory, not discretionary. That combination converts a defense into a viable affirmative case and changes the settlement calculus even where damages are modest.
Two distinct violations, two distinct hooks. Section 16600.5(d) makes entering into or attempting to enforce a void contract a civil violation, enforceable through the section 16600.5(e) private action. Section 16600.1(c) separately routes a notice failure into the UCL. They are not interchangeable, and a complaint should plead whichever the facts support rather than treating the package as one undifferentiated claim.
Out-of-state agreements. Section 16600.5(a) and (b) address the recurring scenario of a worker recruited into California under an agreement signed in, and governed by the law of, another state. The statute speaks in terms of unenforceability “regardless of where and when the contract was signed” and bars enforcement attempts even where the employment was maintained outside California. How far that reach extends against a sister-state judgment or a first-filed out-of-state action raises conflict-of-laws and full-faith-and-credit questions the text does not answer.
The notice deadline has passed — the exposure has not. February 14, 2024 is long gone. An employer that never sent the notice did not cure the problem by letting the date slip; section 16600.1(c) supplies a continuing UCL theory, and section 17200’s four-year limitations period is considerably longer than the deadline itself. Conversely, employers that did send notices created a dated, written admission that particular clauses are void — a useful document in later litigation.
Who is covered by the notice duty. Section 16600.1, subdivision (b)(1) is narrower than it first appears. It reached current employees and former employees “who were employed after January 1, 2022” — so a worker who left before that date was outside the notice obligation even if a void noncompete sat in the file. It is also keyed to employees; the statute’s notice provision does not by its terms extend to independent contractors, though section 16600 itself is not so limited and section 16600.5’s private action runs to “prospective” workers who were never employed at all.
Contracting itself is now actionable. Practitioners used to treat a void clause as inert until someone tried to enforce it. Section 16600.5, subdivision (c) forecloses that assumption: an employer “shall not enter into a contract with an employee or prospective employee that includes a provision that is void under this chapter,” and subdivision (d) makes doing so a civil violation independent of any enforcement attempt. The presence of the clause in a signed agreement is the violation. That matters for onboarding paperwork circulated to candidates who then decline the offer — the statute expressly contemplates a prospective employee as a plaintiff.
The exceptions still exist. Every operative provision is qualified by whether the restraint “satisfies an exception in this chapter.” The sale-of-business and partnership or LLC dissolution exceptions in sections 16601 through 16602.5 were not repealed, and the package does not disturb trade secret protection under the Uniform Trade Secrets Act. The 2024 amendments make the employment-context rule categorical; they do not abolish the statutory carve-outs.
Section 16600(b)(2)’s statement that subdivision (b) “does not constitute a change in, but is declaratory of, existing law” is the provision most likely to be litigated. Read one way it merely restates Edwards; read another it supports applying the broadened standard — and, by extension, the section 16600.5 remedies — to conduct and agreements predating January 1, 2024. The reach of section 16600.5 against out-of-state agreements and forum-selection or choice-of-law clauses is the second open front. Confirm the current state of the case law before relying on either point.
Related authorities
Practitioner summary, current as of July 2026 — not the statute itself. Statutes are amended; confirm the operative language at the official source before relying.