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Revamping the No-Rehire Clause

On September 11, 2020, Governor Newsom signed Assembly Bill 2143(“AB 2143”), which adds further nuances to last year’s AB 749 regarding no-rehire clauses in settlement agreements.  AB 749 was part of the #MeToo inspired legislation, which prohibited no-rehire clauses in settlement agreements regarding employment disputes.  Prior to AB 749, it was common for employers to include no-rehire provisions in a settlement agreement.  When drafting AB 749, Assemblyman Mark Stone, argued that the “no-rehire clause punished the victims of discrimination or sexual harassment from continuing employment while the offender remains in the job.”  From AB 749, Code of Civil Procedure section 1002.5 was created, which states:

An agreement to settle an employment dispute shall not contain a provision prohibiting, preventing, or otherwise restricting a settling party that is an aggrieved person from obtaining future employment with the employer against which the aggrieved person has filed a claim, or any parent company, subsidiary, division, affiliate, or contractor of the employer. A provision in an agreement entered into on or after January 1, 2020, that violates this section is void as a matter of law and against public policy.

Good Faith 

Now, AB 2143 adds a “good faith” component to the definition of “aggrieved person.” Before AB 2143, an “aggrieved person” was a person who “has filed a claim against the . . . employer in court, before an administrative agency, in an alternative dispute resolution forum, or through the employer’s internal complaint process.”  AB 2143 amends Code of Civil Procedure section 1002.5(c)(2) to require the claim to have been filed in “good faith.”  The section, however, does not further define what exactly entails a claim to have been made in “good faith.”

Documentation of Sexual Assault or Harassment

 Prior to AB 2143, a no-rehire provision could be included if the employer made a good faith determination that the “aggrieved person” engaged in sexual harassment or sexual assault.  AB 2143 revises Code of Civil Procedure section 1002.5 (b)(1)(B) to require the employer’s good faith determination to be “documented.”

Ramifications for Employers

The “good faith” inclusion in the definition of “aggrieved person” provides a little bit – but not much – of leeway to employers in incorporating no-rehire provisions.  If this came to litigation, the burden of proof would be on the Plaintiff (i.e. the employee) to show that their claim against the employer was made in good faith.  Nonetheless, this further stresses the importance of documentation and proper investigation of an employee’s complaints in order to determine whether an employee’s complaint is made in “good faith” or not.  Further, Code of Civil Procedure section 1002.5 (b)(1)(B) stresses the importance for employers to document, and investigate, incidents in the workplace – especially when they involve sexual harassment or assault.

Jackson Lewis P.C. © 2020National Law Review, Volume X, Number 258

TRENDING LEGAL ANALYSIS


About this Author

Principle

Frank C. Olah is a Principal in the Los Angeles, California, office of Jackson Lewis P.C. His practice focuses on representing employers in workplace law matters, including preventive advice and counseling.

Frank assists companies in addressing the challenges of employing workers in California. Frank’s experience includes the defense of single- and multi-plaintiff, representative and class action litigation pertaining to wrongful discharge, discrimination, sexual harassment, retaliation, FEHA, Title VII, ADA, ADEA, Section 1981, FMLA, FLSA, and PAGA claims...

213-689-0404
Associate

Osaama Saifi is an Associate in the Orange County, California, office of Jackson Lewis P.C.  His practice focuses on representing employers in wage and hour matters, as well as preventive advice and counseling.

Mr. Saifi is an experienced litigator who has tried multiple jury trials and defended employers and company executives in litigation related to meal periods, rest periods, overtime, and derivative wage and hour claims. Mr. Saifi’s practice is specifically focused on defending employers in wage and hour class actions and claims brought under California’s Private Attorneys General Act.  Mr. Saifi also defends employers from discrimination and harassment claims brought under California’s Fair Employment and Housing Act and Title VI under Federal law. 

He handles all client matters related to labor and employment law, including providing advice on personnel policies, employee handbooks, employee termination decisions, and wage and hour issues. Mr. Saifi has experience defending clients in claims brought by the EEOC, DFEH, OSHA, DLSE, and NLRB investigations, including onsite investigations and interview with employees.

Prior to joining Jackson Lewis, Mr. Saifi defended agricultural employers and grower and shipper industries in navigating complicated Wage Order 13 & 14 issues. Mr. Saifi also served as a Deputy District Attorney in Northern California, in which he prosecuted over 800 cases.

While in law school, Mr. Saifi worked as a Clinical Student at both the Loyola Immigrant Justice Clinic and the Loyola International Human Rights Clinic. He also served on Loyola Law School’s Scott Moot Court Honors Board as a National Team Oralist and was a finalist in the 2014 Scott Moot Court Competition.

Professional Associations and Activities

  • Ahmadiyya Muslim Lawyers Association USA, General Secretary 

Practices

  • Class Actions and Complex Litigation

949-885-1360