Clarifications on California No-Rehire Provisions

Beginning January 1, 2020, California amended their Code of Civil Procedure, which prohibits “no-rehire” provisions in settlement agreements with employees. This provision prevents or restricts the employee from obtaining future employment with that employer or any subsidiary of that employer after separating from the company. A new law, AB 2143, clarifies the no-rehire provision for California workers, which could have a substantial impact on your ability to work for certain companies after leaving their employ. To learn more, call or contact an experienced California employment law attorney in your area today.

When Does the No-Rehire Prohibition Apply?

California prohibits the use of no-rehire provisions in settlement agreements with employees leaving a company. However, an except applies if the employer made a determination in good faith that the former employee engaged in sexual harassment or sexual assault, in which case the employer is allowed to include a no-rehire provision within the separation agreement. The no-rehire prohibition applies to any severance agreement where the employee has filed a claim against the employer in court, before an administrative agency, an internal employer complaint process, or through some form of alternative dispute resolution. However, the no-rehire prohibition does not apply to standard severance agreements between employer and employee at a company.

AB 2143 Clarifications

The new California law clarifies the prohibition on no-rehire provisions and their exceptions. The first clarification is for the use of no-rehire provisions in cases of sexual harassment or sexual assault. In order to qualify for its use, an employer must have made and documented a good faith determination that this occurred before the aggrieved person files a claim that the former employee engaged in these behaviors.

Second, AB 2143 expands the acceptable exceptions on the prohibition of no-rehire provisions in severance agreements. In addition to their acceptable use in cases of sexual harassment or sexual assault, this provision is also allowed when the former employee is engaged in any criminal conduct. This could mean that a former employee could have a no-rehire provision in a severance agreement if a worker was arrested and charged for an offense that occurs outside of work and not related to their performance at the company.

The third and final clarification on the prohibition of no-rehire provisions in California severance agreements applies to the good faith standard of complaints. The new law specifies that the prohibition against a no-rehire provision does not apply when the former employee does not file a complaint against their employer in good faith. Bad faith complaints can result in the inclusion of a no-rehire provision in their severance agreement.

Call or Contact an Employment Law Attorney Now

Even with the new law providing guidance on the use or prohibition of no-rehire provisions, the concept is still very complicated. Do you have questions about whether an employer can institute a no-rehire provision in your severance agreement? If so, call the office or contact a knowledgeable California employment law attorney in your area today to learn more about your legal options.