Exclusively Employment Law

New California Law: “No-Rehire” Provisions

by | Nov 11, 2019 | Settlement Agreements

When employers enter into settlement agreements with employees, they commonly include a “no-rehire” provision in the settlement agreement. Generally speaking, a no-rehire provision prohibits an employee from seeking or applying for re-employment with the employer after termination of the current employment relationship.

However, the California legislature recently passed a new law, AB 749, which greatly limits the permissibility of no-rehire provisions in California. With some limited exceptions, effective January 1, 2020, AB 749 prohibits employers from including a no-rehire provision in settlement agreements between employers and employees. Below are 5 things that you should know about the new law AB 749:

1. AB 749 applies only to settlement agreements between employers and “aggrieved persons.” “Aggrieved person” is defined as a person who filed a legal claim against his/her employer in court, before an administrative agency, in an alternative dispute resolution forum, or through the employer’s internal complaint process. This means that an employer can still include a no-rehire provision in a severance agreement as long as the employer is not offering the severance payment to settle a legal claim with an “aggrieved person.”

2. AB 749 does not prohibit an employer from terminating a current employment relationship with an “aggrieved person.”

3. AB 749 does not require an employer to continue to employ or rehire a person if there is a legitimate non-discriminatory or non-retaliatory reason for terminating the employment relationship or refusing to rehire the person. For instance, a legitimate non-discriminatory or non-retaliatory reason is that the person simply lacks the experience and qualifications for the job.

4. AB 749 permits “no rehire” provisions between an employer and an “aggrieved person” if the employer has made a good faith determination that the person engaged in sexual harassment or sexual assault. In other words, an employer is not required to rehire a person who the employer believes engaged in sexual harassment or sexual assault.

5. AB 749 applies not only to employers, but also to any parent company, subsidiary, division, affiliate, or contractor of the employer.

If you have questions about no-rehire provisions, call ((916) 612-0326) or email ([email protected]) Finley Employment Law today. We serve clients throughout California, including Sacramento, Roseville, Davis, Folsom, and Elk Grove.

The information in this blog post is for general informational and advertising purposes only and is not, nor is it intended to be, legal advice. Instead, you should speak with a California employment attorney for advice regarding your individual situation.