Last year’s AB 749 (effective January 1, 2020) prohibited settlement agreements from containing a provision that restricts an employee from obtaining future employment with the employer (frequently referred to as a “no re-hire” clause) if that employee has filed a claim or civil action against the employer. However, AB 749 provided an exception to this restriction on no re-hire clauses in settlement agreements where the employer made a good faith determination that the aggrieved person engaged in sexual harassment or sexual assault.
AB 2143 makes several clarifying changes to this law as follows:
Expands the sexual harassment/sexual assault exception to also allow no re-hire clauses in situations where the employer determined the employee engaged in any criminal conduct.
Requires that the good faith determination of sexual harassment, sexual assault, or any criminal conduct be made and documented before the aggrieved person filed the claim or civil action against the employer, thus preventing employers from operating in bad faith from making an after-the-fact determination of such misconduct.
Finally, the law now also requires that the aggrieved person files their claim or complaint against the employer in good faith, thus, avoiding the potential for an employee filing an unfounded complaint just to invoke the protections of this law and avoid a no re-hire clause.
Although AB 2143 further clarifies the application of these exceptions to the prohibition on no-rehire clauses in employment settlement agreements, the burden is still on the employer to meet the qualifications and establishment of “good faith” determinations for the reasons noted above in order to use a no re-hire clause. Employers looking to invoke such an exception should therefore do so cautiously, and we recommend consulting legal counsel to assist in making such determinations.
(AB 2143 amends Section 1002.5 of the Code of Civil Procedure.)