California’s regulators have made employment noncompetes (and knowing which employees are bound by them and how) a key compliance item.
Effective 1 January 2024, AB 1076 amends Section 16600 of the state’s Business and Professions Code 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.” In addition, the law requires employers to notify certain current and former California employees that any agreement containing a noncompete provision is void.

Last fall California doubled-down on the state’s hostility to noncompete agreements. Assembly Bill 1076 codified the landmark 2008 Edward v. Arthur Andersen decision that invalidated all employment noncompetes, including narrowly tailored ones, unless they satisfy a statutory exception. AB 1076 also added new Business & Professions Code §16600.1, requiring California employers to notify current (and certain former) employees that any noncompete agreement or clause to which they may be subject is void (unless it falls within one of the limited statutory exceptions).

The NYSE and Nasdaq have given listed companies more time to adopt their Clawback policy, with the new proposed effective date of their rules being 2 October 2023 with a requirement to adopt the policy by 1 December (subject to SEC approval).

On 26 October 2022, the SEC adopted final incentive compensation clawback rules requiring US-listed issuers to: (i) develop and implement a policy for the recovery of incentive-based compensation that is erroneously “received” by current and former executive officers during the three completed fiscal years immediately preceding the date that the issuer is required to prepare an accounting restatement, and (ii) file that policy as an annual report exhibit and satisfy related disclosure obligations in accordance with SEC rules.

On 25 August 2022, the Securities and Exchange Commission released a final rule in the form of new Item 402(v) of Regulation S-K that seeks to shine an ever-brighter spotlight on the link between executive pay and company performance at certain US public companies.

On 24 November 2020, the SEC proposed amendments to the Form S-8 registration statement relied on by Exchange Act1 reporting companies and the Rule 701 exemption from registration2 available to non-reporting companies for equity awards and other compensatory securities offered to employees, directors, consultants and advisors. The proposed changes are intended to modernize and simplify the securities offering requirements for such compensatory offerings, while maintaining investor protection.

In a companion release issued on the same date, the SEC issued proposed temporary rules that would expand the availability of Rule 701 and Form S-8 for securities offerings to so-called “gig” workers, in recognition of a changing modern workforce.

The SEC is seeking comments on both sets of proposed rules, on or before February 9, 2021.

In brief On September 24, 2020, the Franchise Tax Board of California (the FTB) released a proposed regulation — new section 17951-8 of Title 18 of the California Code of Regulations — which treats the compensation of a California nonresident, non-employee director of a corporation as California-source income subject to California personal income…

One of the most important issues that arises in any M&A transaction from a compensation perspective is the treatment of stock options, restricted stock, restricted stock units (RSUs) or other compensatory equity awards, whether vested or unvested, held by executives and other employees in the transaction. Below is a high-level…

Read publication Highlights Tom Asmar Joins Baker McKenzie We are excited to announce that Thomas (Tom) Asmar has joined our Compensation Group, based in our Palo Alto office. He joins the Firm from Skadden, Arps, Slate, Meagher & Flom LLP bringing nearly 20 years of experience advising companies and private…

The Coronavirus Aid, Relief, and Economic Security Act (the Act) was passed by the US House of Representatives by a voice vote today after being passed by the US Senate on Wednesday. The bill now heads to the White House, where President Trump is expected to sign it very soon.…