Ban on Noncompete Agreements – What It Means To You

Noncompete clauses and agreements have existed for nearly 600 years. So why are they now about to be eradicated? And what does it mean for businesses?

At first, noncompete agreements protected employers from former employees taking their skills and knowledge learned from the employer to compete against them. What began as a “shield” to employers, non-compete agreements have recently become more of a “sword” to sanction employers. This evolution will likely continue.

President Biden has signed over 70 Executive Orders affecting various industries such as Banking and Finance, Technology, Labor Markets, Healthcare, Agriculture, Internet Service, and Transportation. These Executive Orders do not apply to pre-existing non-compete clauses and agreements. But, these orders favoring employees serve as a benchmark and direction for the Biden administration; and one to keep an eye on for businesses. 

While the new Executive Orders limit non-compete agreements on a broader scale, California law operates under its own set of regulations. California Business and Professions Code § 16601 provides “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.” Put simply, non-compete agreements are unenforceable under California law, subject to a few notable exceptions.

Employers must stay abreast of these laws affecting their businesses. Our business lawyers have the skills and experience to guide companies to navigate these ever-evolving regulations.

Consult with Our California Business Litigation Lawyers

Our world-class lawyers at Gordinier Kang & Kim LLP help clients in minimizing exposure to potential catastrophe. With any concern about noncompete clauses or general business matters, call Gordinier Kang & Kim LLP at (942) 501-4872.