No More “No Rehire” Clauses in California Settlement Agreements

In most jurisdictions, it is standard practice to include a “no-rehire” clause when negotiating a settlement agreement in an employment dispute.  “No-rehire” clauses bar the departing employee from seeking future employment with the employer or one of the employer’s related entities.  If the former employee applies for a job with the employer or a related entity, the “no-rehire” clause allows the employer to reject the former employee’s application or require the former employee to withdraw the application for employment.  In some instances, if the former employee is hired inadvertently, the “no-rehire” clause provides the employer a legitimate nondiscriminatory basis to rescind the offer.  Although the use of “no-rehire” clauses is a common practice, California recently prohibited the practice and joined Vermont, which banned “no-rehire” provisions in 2018.

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