BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1531
                                                                  Page  1

          Date of Hearing:   May 13, 2009

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Kevin De Leon, Chair

                 AB 1531 (Portantino) - As Amended:  April 28, 2009 

          Policy Committee:                              Business and  
          Professions  Vote:                            11-0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:               

           SUMMARY  

          This bill requires a contract entered into between the state and  
          a person or entity for services, goods, or materials to include  
          a clause stating that a person or entity contracting with the  
          state is prohibited from imposing a condition of employment that  
          would prohibit or penalize an employee subject to the contract  
          or employed by the personal services contractor from seeking or  
          accepting employment with the state.

           FISCAL EFFECT  

          One-time minor costs (under $25,000) to the Department of  
          General Services to develop and implement the required statement  
          into the general terms and conditions for all state contracts.

           COMMENTS  

           1)Purpose  .  Business and Professions Code section 16600 states,  
            "Except as provided in this chapter, every contract by which  
            anyone is restrained from engaging in a lawful profession,  
            trade, or business of any kind is to that extent void."  Non  
            compete clauses may only be applied when an individual sells  
            the goodwill of a business, an owner sells all of his or her  
            ownership interest, or a partnership or limited liability  
            company dissolves, as specified.  Current case law also  
            prohibits employers from narrowly tailoring a non-compete  
            agreement that penalizes an employee for working for a  
            competitor.

            Nevertheless, companies frequently insert such clauses into  
            employment agreements to dissuade their employees from  








                                                                  AB 1531
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            accepting employment with competitors.

           2)In support  of this bill, AFSCME 2620 writes, "Today the  
            agencies with whom the state contracts include so-called  
            'non-compete' clauses in their own employment contracts which  
            preclude or significantly penalize any clinician who may  
            prefer going to work for the state directly.  

            "The state already faces a steep recruitment problem in terms  
            of hiring clinical staff directly due to the state's inability  
            as well as the competitive wages and benefits offered.  The  
            last thing the state should be doing is guaranteeing that  
            taxpayers will pay two or three times the amount necessary for  
            a particular worker, especially if that worker is willing to  
            work for the state directly."

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081