Assembly Bill 749 is an unnecessary law that will only serve to incentivize more lawsuits between former employees and employers. Effective on January 1, 2020, AB 749 will prohibit an agreement to settle an employment dispute from containing a provision that prohibits a settling party from working for the employer against which he or she filed a claim, or any parent company, subsidiary, division, affiliate, or contractor of the employer. The law states that provisions in settlements signed after January 1, 2020 will be void as a matter of law and against public policy.
AB 749 seems harmless enough, except when you consider the realities of litigation. As anyone who has ever been involved in a lawsuit knows all too well, sometimes the truth of what happened can become distorted. Memories can differ or fade with the passing of time, stories change and, well, sometimes people lie. As a result, emotions often run high. In employment cases, settlements are often driven more by the desire to be free from the emotional turmoil of the dispute than by any shared recognition that money is owed. Given this dynamic, a clause in a settlement agreement separating the adversaries in terms of any future employment is not only desirable, it is essential.
With AB 749, the California Legislature has put an end to such clauses. In effect, this means that a former employee and employer could resolve a dispute, only to have the employee apply and be turned down for employment with the same employer, thereby prompting another lawsuit for retaliation. Of course, the bill allows that that an employer is not required to continue to employ or rehire a person if there is a legitimate nondiscriminatory or nonretaliatory reason for terminating or refusing to rehire the person. Good luck with that.
The bill does allow an employer and an employee to agree to end a current relationship. AB 749 also provides a narrow exception that permits the parties to agree to prohibit future employment with the employer if the employer has made a good faith determination that the person engaged in sexual harassment or sexual assault.
