CCP 1002.5: California’s No-Rehire Ban, Exceptions, and Scope

California Code of Civil Procedure section 1002.5 makes it illegal for an employer to put a no-rehire clause in an agreement that settles a workplace claim. If you filed a good-faith complaint against your employer and then reached a settlement, that agreement cannot bar you from working for the company again, or for its parent, subsidiaries, divisions, affiliates, or contractors. Any no-rehire provision entered into on or after January 1, 2020 is void as a matter of law.¹

What the Statute Prohibits

Before 2020, it was common for employers to condition settlement payments on a promise that the worker would never apply for a job with the company again. Section 1002.5 shuts that practice down. A settlement agreement resolving an employment dispute cannot include a provision preventing the aggrieved person from obtaining future employment with the settling employer.

The reach is deliberately wide. The prohibition covers not just the employer named in the claim, but also that employer’s parent company, subsidiaries, divisions, affiliates, and contractors.¹ In industries dominated by large corporate families with dozens of related entities, that breadth is what gives the statute teeth. A settling employer cannot use a single agreement to lock a worker out of an entire corporate group.

Who Is Protected

The law protects any “aggrieved person” — someone who, in good faith, has filed a claim against their employer. The filing can happen through any of four channels:

A lawsuit in state or federal court
A complaint with an administrative agency, such as the California Civil Rights Department
A claim in arbitration or mediation
An internal complaint filed through the employer’s own grievance or HR process

That last category matters. You do not need to have hired a lawyer or contacted a government agency. A formal internal HR complaint is enough to trigger the protection, so long as it was filed in good faith.¹ The good-faith requirement exists to prevent someone from filing a sham complaint solely to invoke the statute.

Three Exceptions Where a No-Rehire Restriction Is Still Allowed

Section 1002.5(b) sets out the situations where the ban does not apply.

Ending the Current Employment Relationship

Nothing in the statute forces an employer to keep the person on payroll. A settlement can include an agreement that the employee’s current job ends. The law distinguishes between closing out an existing role and shutting the door on future work.¹

A Pre-Claim, Documented Finding of Misconduct

An employer can include a no-rehire clause when it made and documented a good-faith determination that the employee engaged in sexual harassment, sexual assault, or any criminal conduct. The timing is strict. That determination must exist before the employee filed the claim. An employer cannot open an investigation after the fact, reach a negative conclusion, and use it to justify a no-rehire term.¹

Legitimate Non-Discriminatory, Non-Retaliatory Reasons

The statute does not require an employer to rehire someone when there is a legitimate, non-discriminatory, and non-retaliatory reason for the refusal.¹ Position eliminated, lack of qualifications for an open role, documented performance issues unconnected to the claim — any of those can support a decision not to bring the person back. The statute stops employers from using the settlement itself as a blacklisting tool. It does not guarantee a job.

Which Agreements the Law Covers

Section 1002.5 applies to any settlement agreement signed on or after January 1, 2020. The date of the agreement controls, not the date of the underlying conduct. If an incident occurred in 2017 but the parties signed the settlement in 2021, the no-rehire ban applies.

What Happens If a Settlement Contains a Banned No-Rehire Clause

A no-rehire provision that violates section 1002.5 is void as a matter of law and against public policy.¹ Void means the clause has no legal effect from the moment it was written. If an employer tried to invoke the clause to reject a later job application, a court would treat it as if it were never there.

The rest of the settlement generally survives. Payment terms, releases of liability, confidentiality provisions on other subjects, and everything else the parties agreed to remain enforceable. Only the offending clause is struck. California courts routinely handle illegal contract terms this way, removing the problem language rather than voiding the whole agreement.

Related California Restrictions People Sometimes Confuse With 1002.5

Two other California statutes come up in the same settlement conversations and are worth flagging so you don’t mistake one for another.

CCP section 1002 addresses secrecy about the underlying facts, not future employment. It restricts settlement provisions that would prevent disclosure of factual information in civil cases involving sexual assault, childhood sexual assault, sexual exploitation of a minor, and sexual assault against an elder or dependent adult, while still allowing confidentiality for medical information, personal identifying information, and details about the relationship between victim and defendant.²

Government Code section 12964.5 governs non-disparagement clauses in employment and separation agreements. If such an agreement contains a non-disparagement clause, it must include specific language stating that nothing in the agreement prevents the employee from discussing or disclosing information about unlawful workplace acts, such as harassment or discrimination. A non-disparagement clause missing that language is unenforceable.³

Each of those statutes handles a different piece of the settlement puzzle. Section 1002.5 is the one aimed squarely at future employment.

1
California Legislative Information. California Code of Civil Procedure Section 1002.5
2
California Legislative Information. California Code of Civil Procedure CCP 1002
3
California Civil Rights Department. Employment, Separation, and Settlement Agreements Limitations FAQ