Amended IN Assembly March 08, 2023 CALIFORNIA LEGISLATURE 20232024 REGULAR SESSION Assembly Bill No. 1076Introduced by Assembly Member Bauer-KahanFebruary 15, 2023 An act to amend Section 16600 of the Business and Professions Code, relating to business. LEGISLATIVE COUNSEL'S DIGESTAB 1076, as amended, Bauer-Kahan. Contracts in restraint of trade: noncompete agreements.Existing law voids contractual provisions by which a person is restrained from engaging in a lawful profession, trade, or business of any kind, except as otherwise provided. Existing case law, as established in the case of Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, interprets this provision to void noncompete agreements in an employment context and noncompete clauses within employment contracts, even if that agreement is narrowly tailored, unless an exception applies. Existing law, the Unfair Competition Law (UCL), makes various practices unlawful and makes a person who engages in unfair competition liable for a civil penalty, as specified. Existing law provides for enforcement of these provisions exclusively by the Attorney General or other specified local agency attorneys.This bill would codify existing case law by specifying that the statutory provision voiding noncompete contracts is to be broadly construed 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 specified exceptions. The bill would state that this provision is declaratory of existing law. The bill would also make it unlawful unlawful, and unfair competition pursuant to the UCL, to include a noncompete clause in an employment contract, or to require an employee to enter a noncompete agreement, that does not satisfy specified exceptions.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO Bill TextThe people of the State of California do enact as follows:SECTION 1. Section 16600 of the Business and Professions Code is amended to read:16600. (a) 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.(b) (1) This 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.(2) This subdivision does not constitute a change in, but is declaratory of, existing law.(c) It shall be 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. A violation of this subdivision is unfair competition within the meaning of Chapter 5 (commencing with Section 17200).
Amended IN Assembly March 08, 2023 CALIFORNIA LEGISLATURE 20232024 REGULAR SESSION Assembly Bill No. 1076Introduced by Assembly Member Bauer-KahanFebruary 15, 2023 An act to amend Section 16600 of the Business and Professions Code, relating to business. LEGISLATIVE COUNSEL'S DIGESTAB 1076, as amended, Bauer-Kahan. Contracts in restraint of trade: noncompete agreements.Existing law voids contractual provisions by which a person is restrained from engaging in a lawful profession, trade, or business of any kind, except as otherwise provided. Existing case law, as established in the case of Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, interprets this provision to void noncompete agreements in an employment context and noncompete clauses within employment contracts, even if that agreement is narrowly tailored, unless an exception applies. Existing law, the Unfair Competition Law (UCL), makes various practices unlawful and makes a person who engages in unfair competition liable for a civil penalty, as specified. Existing law provides for enforcement of these provisions exclusively by the Attorney General or other specified local agency attorneys.This bill would codify existing case law by specifying that the statutory provision voiding noncompete contracts is to be broadly construed 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 specified exceptions. The bill would state that this provision is declaratory of existing law. The bill would also make it unlawful unlawful, and unfair competition pursuant to the UCL, to include a noncompete clause in an employment contract, or to require an employee to enter a noncompete agreement, that does not satisfy specified exceptions.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO
Amended IN Assembly March 08, 2023
Amended IN Assembly March 08, 2023
CALIFORNIA LEGISLATURE 20232024 REGULAR SESSION
Assembly Bill
No. 1076
Introduced by Assembly Member Bauer-KahanFebruary 15, 2023
Introduced by Assembly Member Bauer-Kahan
February 15, 2023
An act to amend Section 16600 of the Business and Professions Code, relating to business.
LEGISLATIVE COUNSEL'S DIGEST
## LEGISLATIVE COUNSEL'S DIGEST
AB 1076, as amended, Bauer-Kahan. Contracts in restraint of trade: noncompete agreements.
Existing law voids contractual provisions by which a person is restrained from engaging in a lawful profession, trade, or business of any kind, except as otherwise provided. Existing case law, as established in the case of Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, interprets this provision to void noncompete agreements in an employment context and noncompete clauses within employment contracts, even if that agreement is narrowly tailored, unless an exception applies. Existing law, the Unfair Competition Law (UCL), makes various practices unlawful and makes a person who engages in unfair competition liable for a civil penalty, as specified. Existing law provides for enforcement of these provisions exclusively by the Attorney General or other specified local agency attorneys.This bill would codify existing case law by specifying that the statutory provision voiding noncompete contracts is to be broadly construed 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 specified exceptions. The bill would state that this provision is declaratory of existing law. The bill would also make it unlawful unlawful, and unfair competition pursuant to the UCL, to include a noncompete clause in an employment contract, or to require an employee to enter a noncompete agreement, that does not satisfy specified exceptions.
Existing law voids contractual provisions by which a person is restrained from engaging in a lawful profession, trade, or business of any kind, except as otherwise provided. Existing case law, as established in the case of Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, interprets this provision to void noncompete agreements in an employment context and noncompete clauses within employment contracts, even if that agreement is narrowly tailored, unless an exception applies. Existing law, the Unfair Competition Law (UCL), makes various practices unlawful and makes a person who engages in unfair competition liable for a civil penalty, as specified. Existing law provides for enforcement of these provisions exclusively by the Attorney General or other specified local agency attorneys.
This bill would codify existing case law by specifying that the statutory provision voiding noncompete contracts is to be broadly construed 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 specified exceptions. The bill would state that this provision is declaratory of existing law. The bill would also make it unlawful unlawful, and unfair competition pursuant to the UCL, to include a noncompete clause in an employment contract, or to require an employee to enter a noncompete agreement, that does not satisfy specified exceptions.
## Digest Key
## Bill Text
The people of the State of California do enact as follows:SECTION 1. Section 16600 of the Business and Professions Code is amended to read:16600. (a) 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.(b) (1) This 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.(2) This subdivision does not constitute a change in, but is declaratory of, existing law.(c) It shall be 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. A violation of this subdivision is unfair competition within the meaning of Chapter 5 (commencing with Section 17200).
The people of the State of California do enact as follows:
## The people of the State of California do enact as follows:
SECTION 1. Section 16600 of the Business and Professions Code is amended to read:16600. (a) 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.(b) (1) This 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.(2) This subdivision does not constitute a change in, but is declaratory of, existing law.(c) It shall be 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. A violation of this subdivision is unfair competition within the meaning of Chapter 5 (commencing with Section 17200).
SECTION 1. Section 16600 of the Business and Professions Code is amended to read:
### SECTION 1.
16600. (a) 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.(b) (1) This 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.(2) This subdivision does not constitute a change in, but is declaratory of, existing law.(c) It shall be 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. A violation of this subdivision is unfair competition within the meaning of Chapter 5 (commencing with Section 17200).
16600. (a) 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.(b) (1) This 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.(2) This subdivision does not constitute a change in, but is declaratory of, existing law.(c) It shall be 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. A violation of this subdivision is unfair competition within the meaning of Chapter 5 (commencing with Section 17200).
16600. (a) 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.(b) (1) This 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.(2) This subdivision does not constitute a change in, but is declaratory of, existing law.(c) It shall be 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. A violation of this subdivision is unfair competition within the meaning of Chapter 5 (commencing with Section 17200).
16600. (a) 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.
(b) (1) This 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.
(2) This subdivision does not constitute a change in, but is declaratory of, existing law.
(c) It shall be 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. A violation of this subdivision is unfair competition within the meaning of Chapter 5 (commencing with Section 17200).