California Legislature Strikes No Rehire Clauses In Settlement Agreements

Prior to 2020, an employee settling an employment claim with an ex-employer could be subject to a "no rehire clause." Such a clause could prohibit an employee from re-applying for a job from settling employer or any of the settling employer's "affiliates" or "partners." This language was determined to be too sweeping, potentially limiting an employee who settled a lawsuit with an ex-employer from obtaining a new job with many potential employers merely because of their relationship with the settling employer.

As of January 1, 2020, settlement agreement may no longer include "no rehire" provisions, opening the possibility of the aggrieved employee returning to work for the same employer or a company affiliated with the employer.