California Law Bans ‘No Rehire’ Clauses

Flag of California (Wikimedia Commons).

California Governor Gavin Newsom signed into law AB-749 prohibiting “no rehire” clauses in employment dispute-related settlements effective January 1, 2020, joining Vermont and Oregon as the third state to do so on October 12.

      During an employment dispute, “no rehire” clauses bar departing employees from seeking future employment with the employer or related entities. Such clauses allow employers to reject former employees’ applications or requires the employee to withdraw his or her application. In some instances, if the employee is hired, employers can utilize the “no rehire” clause as a legitimate, nondiscriminatory basis to rescind offers of employment. The rule excludes employees who have been sexually abusive and still allows latitude for employers to fire employees with good cause but prohibits lifetime bans against workers who allege mistreatment on the job by filing a lawsuit or internal complaint.

      Assemblyman Mark Stone, author of the bill, said in a press release that the ‘no rehire’ clause “punishes the victims of discrimination or sexual harassment from continuing employment while the offender remains in the job,” and claimed that “eliminating this provision will have a meaningful impact for victims.” While unions, women’s rights, workers’ rights, and minority rights groups heavily praised the rule, the bill barely scraped past by a one-vote majority in the California Assembly and State Senate over fierce lobbying by business groups. 

More than a dozen Californian business and trade groups, including the state Chamber of Commerce, wrote in a statement that AB-749 would “preclude an employer from prohibiting an employee that has engaged in unlawful or egregious conduct, from seeking future employment with the same employer.” In an interview with the California Globe, Connie Pena, an activist and victim of workplace sexual harassment barred from applying to her old job, said the bill was “overdue,” asserting that the “no rehire” clauses wrecked her life and denied her “the chance of everything returning to normal.”

      An article by the San Francisco Chronicle revealed that “no rehire” clauses disproportionately affected victims of harassment in the workplace, citing the story of Danielle Hartley, an employee who worked for a former staff member of Presidential Candidate Kamala Harris. Hartley faced regular workplace sexual harassment at the hands of her employer, Larry Wallace. Although Hartley received $400,000 from a harassment and retaliation settlement, a no-rehire agreement in 2017 allowed the abuser to continue his work unbothered as Hartley was forced to seek employment. Only when reporters began to inquire about the specifics of the case in December 2018 did Wallace resign from his position.

Although AB-749 represents a sweeping change to how California businesses should finalize settlement and severance agreements, the legislation aims to even the playing field for victims of workplace harassment and sexual abuse.