Exclusively Employment Law

No Re-Hire Provisions: Golden v. CEP

by | Aug 22, 2021 | Non-Competes, Severance Agreements

If you and your former employer enter into a severance agreement, the severance agreement might contain a provision called a “no rehire” provision. A “no rehire” provision essentially states that if you apply for re-employment with your former employer, your former employer is not required to rehire you.

Such a provision is lawful and fairly typical. But let’s say your former employer — an accounting services company — provides accounting services to hundreds of companies throughout California. And not only that, but your former employer is planning to expand so that it eventually provides accounting services to hundreds of more companies in the years to come.

Can your former employer make you sign a “no rehire” provision that prohibits you from working at any of the companies at which your former employer (a) currently provides accounting services; and (b) may in the future provide accounting services?

In a recent decision, Golden v. California Emergency Physicians, D.C. No. 4:10-cv-00437-JSW (9th Circuit, July 24, 2018), the U.S. Court of Appeals for the Ninth Circuit answered no. (The Ninth Circuit has appellate jurisdiction over the federal district courts in California.) The Ninth Circuit found that such a “no rehire” provision violates California’s non-compete law (California Business and Professions Code Section 16600) because such a provision substantially interferes with an individual’s future employment prospects in his/her chosen profession. The Ninth Circuit accordingly found the entire settlement agreement void and unenforceable. Read the full Ninth Circuit opinion here.

So if you are in the midst of negotiating a settlement agreement or severance agreement with your former employer, take a close look at the “no rehire” provision.

If you have questions about “no rehire” provisions, call 916-612-0326 or email ([email protected]) Finley Employment Law today. Finley Employment Law serves 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.