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 5, 2023, the Federal Trade Commission (“FTC”) proposed an expansive new rule which would impose a near-complete ban on the use of noncompetes (the “Proposed Rule”) by employers.  The Proposed Rule is the culmination of the FTC’s recent efforts, following President Biden’s July 9, 2021 Executive Order on promoting competition in the economy