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CA Amends Prohibition on No-Rehire Provisions in Settlements of Employment Disputes
Sep 12, 2020

CA Amends Prohibition on No-Rehire Provisions in Settlements of Employment Disputes

Topics: Employee Hiring, Discipline & Termination, Legal Information, New Laws & Legislation

On September 11, 2020, Governor Newsom signed AB 2143 into law.  This bill, which takes effect January 1, 2021, makes some modest changes to a law that was enacted last year to generally prohibit the use of no-rehire provisions in settlement agreements of employment-related disputes.  Last year’s law, which is codified as Code of Civil Procedure section 1002.5, states that an agreement to settle an employment dispute may not contain a provision prohibiting or restricting a settling party who is an aggrieved party (an employee who has filed a complaint against the employer in court, before an administrative agency, in arbitration, or internally with the employer) from obtaining future employment with an employer against who the aggrieved party has filed the claim, or with its affiliated entities.  The law provides an exception if the employer has made a good faith determination that the aggrieved party engaged in sexual harassment or sexual assault, in which case a no-rehire provision is permissible.  AB 2143 amends the statute to also allow an exception, permitting a no-rehire provision, if the aggrieved party has engaged in criminal conduct.  However, in order for the sexual harassment/sexual assault/criminal conduct exception to apply, the employer must have DOCUMENTED the good faith determination of sexual harassment/sexual assault/criminal conduct BEFORE the aggrieved party filed the claim against the employer.  AB 2143 also amends the statute to make clear that an employee must have filed his/her claim against the employer in good faith in order to be considered an “aggrieved party” who is entitled to the protections of the statute’s restriction against no-rehire provisions in a settlement agreement.

Employers are reminded to consider this law, as amended, in drafting settlement agreements in employment disputes.  Employers also should remember that nothing in the statute requires an employer to either retain or rehire an unfit employee (even if the reason for the unfitness has nothing to do with sexual harassment, sexual assault, or criminal conduct.)  It just limits employers’ ability to include a no-rehire provision in a settlement agreement of an employment dispute.

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For over 25 years, CDF has distinguished itself as one of the top employment, labor and immigration firms in California, representing employers in single-plaintiff and class action lawsuits and advising employers on related legal compliance and risk avoidance. We cover the state, with five locations from Sacramento to San Diego.

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About the Editor

Mark S. Spring is the Sacramento Office Managing Partner and Chair of CDF’s Traditional Labor Law Practice Group. He has been practicing labor and employment law in California for thirty years and was recently named “Sacramento Lawyer of the Year” in Employment Law-Management for 2021 by Best Lawyers®. Spring’s practice is focused on the representation of California employers in union-management relations and handling federal and state court litigation and administrative matters triggered by all types of employment-related disputes. He is also adept at providing creative and practical legal advice to help minimize the risks inherent in employing workers in California. Spring is licensed to practice in California as well as by the District Court of Hawaii, where he successfully tried a high profile same-sex sexual harassment case. Spring is also Chair of CDF’s Webinar Committee where he manages the firm’s monthly educational webinar series that the firm provides to clients and contacts.
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