Settlements: No-rehire clauses may be illegal

When you settle an employment discrimination complaint or lawsuit, you likely include a “no-rehire” provision. Essentially, you trade some settlement dollars for the former employee’s promise not to apply for work at your company in the future. It’s a way to prevent future failure-to-hire lawsuits. Until now, everyone thought such common settlement provisions were legally valid and enforceable. But now a recent case has cast doubt on that premise by looking at California’s broad prohibitions on restrictive covenants in the Business and Professions Code Section 16600.