Thompson Coburn’s Labor & Employment team recently hosted a webinar outlining the rapidly evolving legal landscape governing employment agreements in California. The session, led by partner Elissa Gysi and associate Marcus Nelson, unpacked why California has become one of the strictest jurisdictions in the nation regarding employee non-competes, non-solicitation clauses, stay‑or‑pay provisions, confidentiality limitations, and no‑rehire restrictions.
California’s aggressive statutory reforms mean that many “standard” employment‑agreement templates used by companies for years are now noncompliant or unenforceable. Elissa and Marcus emphasized that employers cannot rely on outdated forms or generative‑AI drafting tools without attorney review, noting that even small missteps can trigger statutory penalties, private rights of action, class‑action exposure, and attorney‑fee shifting.
The program walked attendees through the new statutes (including AB 1076, SB 699, and AB 692), the expansion of disclosure rights under the Stand Act and Silenced No More Act, and the NLRB’s Stericycle framework. The discussion highlighted where employers still retain viable tools, such as tailored trade‑secret and confidentiality agreements, and where formerly common provisions (from non-competes to non‑disparagement language to no‑rehire clauses) now pose major risks.
The presenters closed by urging employers to conduct a comprehensive audit of onboarding templates, offer letters, confidentiality agreements, compensation addenda, severance/separation agreements, and employee handbooks to ensure compliance.
Key Takeaways:
- California’s non-compete ban is now total, prohibiting both the inclusion and enforcement of non-competes and no‑hire provisions, with mandatory notice to affected employees.
- Non-solicitation clauses are increasingly treated as unlawful restraints, making narrowly tailored trade‑secret and confidentiality agreements the safer alternative.
- Beginning in 2026, AB 692 bars most stay‑or‑pay arrangements, allowing only tightly structured standalone exceptions such as certain tuition or bonus‑repayment agreements.
- Confidentiality, non-disparagement, and severance terms must preserve employees’ rights to disclose unlawful workplace conduct and include specific statutory notices and review time.
- Handbooks and workplace rules must be rewritten to meet the NLRB’s Stericycle standard, ensuring policies are narrowly tailored and do not chill protected employee activity.
