{"id":3818,"date":"2019-10-24T14:00:10","date_gmt":"2019-10-24T18:00:10","guid":{"rendered":"http:\/\/employerdefensereport.com\/?p=3818"},"modified":"2026-03-20T11:46:55","modified_gmt":"2026-03-20T15:46:55","slug":"california-employers-should-think-twice-before-inserting-no-rehire-language-in-settlement-agreements","status":"publish","type":"post","link":"https:\/\/www.connmaciel.com\/employer-defense-report\/california-employers-should-think-twice-before-inserting-no-rehire-language-in-settlement-agreements\/","title":{"rendered":"California Employers Should Think Twice Before Inserting No Rehire Language in Settlement Agreements"},"content":{"rendered":"

\"AB<\/a>California has just passed Assembly Bill (AB) 749<\/a>\u00a0resolving an ambiguity under current case law by generally prohibiting an employer from requiring, in settling an employment dispute, that a current or former employee agree not to obtain future employment with that employer.<\/p>\n

A similar issue arose last year in Golden v. Cal. Emergency Physicians Med. Grp.<\/a>, in which the Ninth Circuit Court of Appeals ruled that the no hire provision contained in a settlement agreement between a physician\u00a0and his former employer, a physician medical group,\u00a0constituted a \u201crestraint of a substantial character\u201d on the physician\u2019s medical practice and therefore violated California\u2019s non-compete law, Business and Professions Code section 16600.\u00a0 Specifically, the Ninth Circuit found that the agreement\u2019s preclusion of the physician from working at \u201cany facility owned or managed by\u201d the employer was lawful but that it violated Section 16600 to the extent that it permitted the employer to terminate the physician from employment with any medical facility where the employer contracts or may later contract for services.<\/p>\n

AB 749 expands on this Ninth Circuit ruling by barring any agreement to settle an employment dispute from containing a provision \u201cprohibiting, preventing or otherwise restricting\u201d the employee from obtaining employment with the employer or \u201cany parent company, subsidiary, division, affiliate or contractor of the employer.\u201d\u00a0 Significantly, the law only applies in circumstances where the current or former employee has filed a claim <\/u><\/em>against the employer in court, before an administrative agency, in an alternative dispute resolution forum, or through the employer\u2019s internal complaint process.<\/p>\n

Yet, AB 749 clarifies that the law does not preclude any agreement to end a current employment relationship, or prohibit or restrict the current or former employee from obtaining future employment where the employer has made a good faith determination that the individual engaged in sexual harassment or sexual assault.\u00a0 The law further clarifies that it does not require an employer to continue to employ or rehire a person if there is a \u201clegitimate, non-discriminatory or non-retaliatory reason\u201d for terminating the employment relationship or refusing to rehire the person.<\/p>\n

Bottom Line<\/strong><\/p>\n

AB 749 does not apply to separation agreements where the current or former employee has not <\/em>previously filed a claim against the employer, under any of the circumstances described above.\u00a0 However, where the employee has filed such a claim, the separation or settlement agreement must not contain any provision restricting the employee from obtaining future employment with the employer, or any of its business affiliates or contractors.<\/p>\n

While AB 749 generally bars no rehire clauses in settlement agreements, employers may, nonetheless, deem an individual ineligible for rehire.\u00a0 That determination should be based on documented poor performance or other legitimate reasons, and not the fact that the individual filed a claim against the employer or previously engaged in whistle blowing or other protected activity.\u00a0 Because AB 749 takes effect on January 1, 2020, it is advisable that employers now review their template separation and settlement agreements for compliance.<\/p>\n

Conn Maciel Carey LLP<\/p>\n

Attorney Advertising<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

California has just passed Assembly Bill (AB) 749\u00a0resolving an ambiguity under current case law by generally prohibiting an employer from requiring, in settling an employment dispute, that a current or former employee agree not to obtain future…<\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_price":"","_stock":"","_tribe_ticket_header":"","_tribe_default_ticket_provider":"","_tribe_ticket_capacity":"","_ticket_start_date":"","_ticket_end_date":"","_tribe_ticket_show_description":"","_tribe_ticket_show_not_going":false,"_tribe_ticket_use_global_stock":"","_tribe_ticket_global_stock_level":"","_global_stock_mode":"","_global_stock_cap":"","_tribe_rsvp_for_event":"","_tribe_ticket_going_count":"","_tribe_ticket_not_going_count":"","_tribe_tickets_list":"[]","_tribe_ticket_has_attendee_info_fields":false,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[11],"tags":[],"class_list":["post-3818","post","type-post","status-publish","format-standard","hentry","category-state-local-trends"],"acf":[],"yoast_head":"\nCalifornia Employers Should Think Twice Before Inserting No Rehire Language in Settlement Agreements - 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