Labor & Employment

Existing law declares every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind to be void, except as expressly provided. Existing law provides for a system of labor standards enforcement administered by the Labor Commissioner. This bill would, for contracts entered into on or after January 1, 2026, make it unlawful to include in any employment contract, or to require a worker to execute as a condition of employment or a work relationship a contract that includes, specified contract terms, including a term that requires the worker to pay an employer, training provider, or debt collector for a debt if the worker's employment or work relationship with a specific employer terminates. The bill would declare these contracts as contracts that restrain a person from engaging in a lawful profession, trade, or business, and as void and contrary to public policy, except as provided. This bill would authorize a worker who has been subjected to the above-described prohibited conduct regarding a contract or its terms or a work representative to bring an action on behalf of that worker, other persons similarly situated, or both, in any court of competent jurisdiction. The bill would make a person who violates these provisions liable for specified civil penalties and relief.

Existing law, until December 31, 2025, requires an employer, as defined, to offer its laid-off employees specified information about job positions that become available for which the laid-off employees are qualified, and to offer positions to those laid-off employees based on a preference system, in accordance with specified timelines and procedures. Existing law, until December 31, 2025, also prohibits an employer from refusing to employ, terminating, reducing compensation, or taking other adverse action against a laid-off employee for seeking to enforce their rights under these provisions. These provisions are enforced by the Division of Labor Standards Enforcement, as prescribed. Existing law defines "laid-off employee" for these purposes to mean an employee who was employed by the employer for 6 months or more and whose most recent separation from active employment by the employer occurred on or after March 4, 2020, and was due to a reason related to the COVID-19 pandemic, including a public health directive or reduction in force, among other reasons. Existing law also creates a presumption that a separation due to a lack of business, reduction in force, or other economic, nondisciplinary reason is due to a reason related to the COVID-19 pandemic, unless the employer establishes otherwise by a preponderance of the evidence. This bill would extend operation of these provisions until January 1, 2027, except as specified.