New California Law Would End “No Rehiring” Clauses in Worker Discrimination Settlements

When a 34-year-old former California correctional officer secured a $1.7 million settlement from her former employer in her pregnancy discrimination lawsuit, she thought that might be the end of it. The agency was accused of failing to accommodate her pregnancy, ultimately resulting in her baby’s stillbirth. But she’s back in court facing them again, this time for a clause in the settlement that required her to resign – and barred her from ever working for the agency again. no rehire clauses

Although she does not want to return to that line of work, her concern is the impact this condition might have on her ability to collect disability retirement. A court hearing has been scheduled to address the issue, but this is something our Los Angeles employment attorneys have found affects many, many workers who have been discriminated and retaliated against.

It’s the driving force for a pending bill that would prohibit “no rehire” clauses like this in employment discrimination settlement agreements.

Case Law on No Rehire Clauses

The measure echos a previous ruling made by the U.S. Court of Appeals for the Ninth Circuit. The court in Golden v. California Emergency Physicians Medical Group was asked to address the state’s ban on employer non-compete agreements, through a case that dealt with a physician’s refusal to sign an employment lawsuit settlement agreement that contained a no-rehire clause.

The appellate court ruled that the clause had the effect of substantially restraining the doctor’s ability to continue his practice – which violated the California Business and Professional Codes Section 116600, which voids any contract that holds back anyone from engaging in lawful trade, business or professions.

Los Angeles employment attorneys know, however, that the impact of that ruling was somewhat limited because the clause in question would have prohibited the doctor from working not only for his previous employer, but any that might contract with the employer. It was this provision that led the court to determine the doctor was restrained from engaging in his lawful profession.

Now the pending bill, Assembly Bill 749, which would cover both private and public sector workers, would bar rehire clauses for their own sake. It’s awaiting the governor’s signature.

The Impact of No Rehire Clauses

Supporters insist that without this law, victimized workers are subject to worse treatment than those who do the harassing, discriminating and retaliating.

In recent testimony before a state Senate committee earlier this year, a former analyst with the California Highway Patrol alleges she’s been unable to secure another job in law enforcement after reaching a settlement with the state agency that contained a no rehire clause. She had pursued a sexual harassment lawsuit against the agency after she was subjected to repeated harassment and even assault by her immediate boss. She alleged supervisors did nothing to take action.

The lawsuit was resolved via settlement, one condition of which was that she resign (she didn’t want to) and another that she sign a no rehire clause, blocking her from working for any division or branch of the state highway patrol. In applications for other jobs, she is compelled to disclose that she’s signed an agreement not to seek/accept employment with a state agency. So despite more than a dozen years of experience, excellent reviews and a master’s degree relevant to the field, she’s yet to find another job in her field.

Now when she applies for other state law enforcement jobs, she has to disclose on the state application that she “agreed not to seek or accept subsequent employment with the state or any state agency.” Even though the clause doesn’t technically stop her from securing employment at other state agencies, those agencies are likely to reject applicants who check that box.

The impact of allowing no rehire clauses is workers who were victimized are punished further. AB 749 would remedy this.

Contact the employment attorneys at Nassiri Law Group, practicing in Orange County, Riverside and Los Angeles. Call 949.375.4734.