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On September 1, 2023, California Governor Gavin Newsom signed Senate Bill 699, which amends California Business & Professions Code Section 16600 to prohibit an employer from entering into or attempting to enforce a non-compete agreement regardless of whether the contract was signed outside of California.  The law goes into effect on January 1, 2024.

Previously, California law banned non-compete agreements, subject to limited exceptions.  Section 16600 of the California Business and Profession Code states that “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”  By adding Section 16600.5 to the Business & Professions Code, SB 699 expands the restrictions on non-compete agreements to contracts entered outside of California.

On January 14, 2021, the California Supreme Court decided, at the request of the Ninth Circuit, that its decision in Dynamex Operations West, Inc. v. Superior Court, 4 Cal.5th 903 (2018) applies retroactively. See our California Employment Law Update for more on this significant decision.

Applying the strict “ABC test” for determining whether…

On Thursday, September 12th, the California State Assembly passed Assembly Bill 5 (“AB 5”), the controversial new law that codifies the three-factor “ABC” test introduced by the California Supreme Court in its 2018 Dynamex decision. The passage of AB 5 marks a sea change in the way that companies doing business in California…

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In its 2018 decision in Dynamex Operations West v. Superior Court of Los Angeles County, the California Supreme Court upended decades of precedent by setting out a new, stringent, three-factor test to determine proper worker classification for purposes of California’s wage order rules. Then, this year, the Ninth Circuit first applied Dynamex retroactively and then wiped out that ruling and returned the question to the California Supreme Court. In the meantime, Assembly Bill No. 5, which seeks to codify the Dynamex test, is before the California Senate. In light of these developments, employers with workers in California are increasingly faced with conflicting information about the practical impact of Dynamex.

In this episode of The Proskauer Benefits Brief, Kate Napalkova and Pietro Deserio discuss Dynamex and its broader meaning for employers and other stakeholders in the compliance and transaction arenas.


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