Bill Text

Bill Information

PDF |Add To My Favorites |Track Bill | print page

AB-3109 Contracts: waiver of right of petition or free speech.(2017-2018)

SHARE THIS:share this bill in Facebookshare this bill in Twitter
Date Published: 06/19/2018 09:00 PM
AB3109:v95#DOCUMENT

Amended  IN  Senate  June 19, 2018
Amended  IN  Senate  May 31, 2018
Amended  IN  Assembly  May 09, 2018
Amended  IN  Assembly  May 02, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 3109


Introduced by Assembly Member Mark Stone
(Principal coauthors: Assembly Members Friedman and Reyes)

February 16, 2018


An act to add Section 1670.11 to the Civil Code, relating to contracts.


LEGISLATIVE COUNSEL'S DIGEST


AB 3109, as amended, Mark Stone. Contracts: waiver of right of petition or free speech.
The California Constitution provides that the people have the right to petition government for redress of grievances and to assemble freely to consult for the common good. The California Constitution provides that every person may freely speak, write, and publish his or her sentiments on all subjects, being responsible for the abuse of this right. Existing law generally regulates formation and enforcement of contracts, including what constitutes an unlawful contract. Under existing law, a contract is unlawful if it is contrary to an express provision of law, contrary to the policy of express law, though not expressly prohibited, or otherwise contrary to good morals. A contract is also void to the extent that it restrains a person from engaging in a lawful profession, trade, or business of any kind.
This bill would make a provision in a contract or settlement agreement void and unenforceable if it waives a party’s right to testify in an administrative, legislative, or judicial proceeding concerning alleged criminal conduct or sexual harassment or if it constitutes a substantial restraint on a party’s right to seek employment or reemployment in any lawful occupation or profession. harassment.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NO   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

(a)The Legislature finds and declares as follows:

(1)The California Supreme Court, in finding a noncompetition agreement void and unenforceable, held that state law “evinces a settled legislative policy in favor of open competition and employee mobility” (Edwards v. Arthur Anderson LLP (2008) 44 Cal.4th 937, 946).

(2)Although the court held a noncompetition agreement void and unenforceable, the same principle should hold true for “no rehire” provisions in settlement agreements that impose substantial constraints on a person’s ability to engage in a lawful profession, trade, or business. This same principle is embodied in Section 16600 of the Business and Professions Code, which provides, subject to certain exceptions, that every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is, to that extent, void.

(b)The intent of the Legislature in enacting subdivision (b) of Section 1670.11 of the Civil Code is to follow the reasoning of the United States Court of Appeal for the Ninth Circuit in Golden v. California Emergency Physicians Medical Group (2015) 782 F.3d 1083, which held that Section 16600 of the Business and Professions Code applies to any contract that restrains a person from engaging in a lawful profession, trade, or business, and is therefore not restricted to noncompetition agreements. It is also the intent of the Legislature to follow the court’s reasoning that an agreement need not completely preclude a person from engaging in a lawful profession, trade, or business in order to be void and unenforceable, but that any agreement that imposes a restraint of a substantial character on a person’s ability to engage in a lawful profession, trade, or business is void and unenforceable.

SEC. 2.SECTION 1.

 Section 1670.11 is added to the Civil Code, to read:

1670.11.
 Notwithstanding any other law, a provision in a contract or settlement agreement entered into on or after January 1, 2019, that does either of the following is void and unenforceable:
(a)Waives waives a party’s right to testify in an administrative, legislative, or judicial proceeding concerning alleged criminal conduct or alleged sexual harassment on the part of the other party to the contract or settlement agreement, or on the part of the agents or employees of the other party, when the party has been required or requested to attend the proceeding pursuant to a court order, subpoena, or written request from an administrative agency or the legislature. legislature, is void and unenforceable.

(b)Constitutes a substantial restraint on a party’s right to seek employment or reemployment in any lawful occupation or profession. This paragraph does not preclude a provision in a contract or settlement agreement that restricts a party’s right to seek employment or reemployment with the party’s existing or prior employer who is a party to the contract unless the employer is a public employer, as defined in Section 7522.04 of the Government Code, or a private employer that so dominates the labor market that such a restriction would impose a substantial restraint on the party’s right to seek employment or reemployment in any lawful occupation or profession.