New California law bans ‘no-rehire’ clauses after worker lawsuits

California workers who sue their employer and then settle their case no longer may be barred from future work with the employer as part of the settlement, according to a new law signed by Gov. Gavin Newsom.

“No rehire” clauses have become common in settlement agreements in both the public and private sectors, including to resolve cases of harassment and discrimination, said supporters of the new law. The ban on them goes into effect in January.

Supporters said the new law would help protect victims of discrimination, harassment and retaliation from being treated worse than the people who harass, discriminate and retaliate, who sometimes continue their careers without repercussions.

Carmyn Fields, a former California Highway Patrol analyst, told a state Senate committee in June that she has been unable to find employment with another law enforcement agency since she reached a settlement agreement with CHP.

Fields sued the department after supervisors failed to take action when she reported her boss had repeatedly sexually harassed her. Her settlement agreement included a “no rehire” clause.

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.

Opponents to the proposal, including the California Chamber of Commerce, argued that the law could make it difficult for an employer to prevent the re-hire of an employee fired for a valid reason, or for a fired employee to claim retaliation if they are not rehired.

The Chamber also raised concerns that the law would undermine the certainty of closure that comes with settlement agreements containing no-rehire clauses.

With Newsom’s signature of Assembly Bill 749, California becomes at least the third state to ban the clauses, following Vermont and Oregon.

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Wes Venteicher anchors The Bee’s popular State Worker coverage in the newspaper’s Capitol Bureau. He covers taxes, pensions, unions, state spending and California government. A Montana native, he reported on health care and politics in Chicago and Pittsburgh before joining The Bee in 2018.