‘No-Rehire’ Clauses In Employee Settlements Now Illegal Under California Law

Governor Gavin Newsom signed Assembly Bill 749 earlier this week making it illegal to have no-hire clauses in settlement agreements with former employees.

Many employers currently settle claims and lawsuits from a former employee with a settlement that includes a no-rehire clause. These can include cases involving harassment, wrongful termination, and discrimination. This means that if the employee tried to apply for a job within the company or organization again, their application would not be considered, and if they are hired by chance, they can be automatically fired if found out.

The signing earlier this week eliminates having that clause, allowing former employees to be rehired without repercussions. However, the bill also makes it clear that they can be fired or not rehired if there is a legitimate reason or if it is found out that they were at fault.

AB 749 was authored by Assemblyman Mark Stone (D-Monterey). Assemblyman Stone has said that he has supported the bill because being fired for something such as discrimination, and not being allowed to be rehired, makes it hard for the victim to find another job in their career path. 

“The no re-hire clause punishes the victims of discrimination or sexual harassment from continuing employment while the offender remains in the job,” said Assemblyman Stone in a press release. “This clause is increasingly difficult when the employer is large, which significantly bars the victims ability to practice their profession. Eliminating this provision will have a meaningful impact for victims.” 

The bill had mixed support, as evidenced by the voting in the Assembly and the Senate that was split along party lines. Unions, workers rights groups, minority rights groups, and women rights groups applauded the signing.

“This was overdue,” said activist Connie Pena, in a California Globe interview. Pena had fallen victim to the clause five years ago when she wasn’t allowed to apply to her old job again after a sexual harassment lawsuit. “It wrecks your life and denies you the chance of everything returning to normal. The same job with the people who did this to me gone. That’s all I personally wanted, but it didn’t happen.”

“This allows it to happen for other people.”

There was also some opposition, most notably from some cities chambers of commerce and some business and manufacturing organizations.

“It still doesn’t do much in the end,” said Ed in a Globe interview, a business owner in Bakersfield who didn’t want his last name used. “We can still not hire people like that back and just say there were better candidates. It would be real hard to prove otherwise. All this does is make employers more cautious on who they hire next and more unwilling to hire that same person.”

AB 749 goes into effect January 1, 2020.