California passed new laws reiterating its prohibition on employment-related non-competition obligations. Assembly Bill 1076, effective January 1, 2024, provides that it is unlawful to include noncompete clauses in employment contracts, or to require an employee to enter into a noncompete agreement, that does not satisfy an exception under California law—and notes that this “does not constitute a change in, but is declaratory of, existing law.” AB 1076 also states that this prohibition should be read broadly—and, in this regard, we note that California courts have generally applied California’s prohibition on non-competition obligations also to prohibit customer non-solicitation provisions, unless they are limited to prohibiting the use of confidential information or trade secrets for such solicitation.
