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News and Information

California - Settlement Agreements in Employment Disputes

On September 11, 2020, California Governor Gavin Newsom signed legislation (AB 2143) regulating settlement agreements in employment disputes involving an aggrieved person and their employer. The law bars agreement provisions restricting the settling aggrieved person from future employment with the settling employer or any parent company, subsidiary, division, affiliate, or contractor of the employer. Any agreement made in violation of this protection on or after January 1, 2020, is void. However, the law does not:

  • Preclude the employer and aggrieved person from making an agreement to:
    • End a current employment relationship; or
    • Prohibit or restrict the settling aggrieved person from future employment with the settling employer, if the employer made and documented a good faith determination, before the person filed their claim, that the person engaged in sexual harassment, sexual assault, or any criminal conduct.
  • Require an employer to continue to employ or rehire a person if there is a legitimate non-discriminatory or non-retaliatory reason for their termination or refusal to rehire.