BILL ANALYSIS
AB 1531
Page 1
ASSEMBLY THIRD READING
AB 1531 (Portantino)
As Amended April 28, 2009
Majority vote
BUSINESS & PROFESSIONS 11-0APPROPRIATIONS 16-0
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|Ayes:|Hayashi, Emmerson, |Ayes:|De Leon, Nielsen, |
| |Conway, Eng, Hernandez, | |Ammiano, |
| |Nava, Niello, | |Charles Calderon, Davis, |
| |John A. Perez, Price, | |Duvall, Krekorian, Hall, |
| |Ruskin, Smyth | |Harkey, Miller, |
| | | |John A. Perez, Price, |
| | | |Skinner, Solorio, Audra |
| | | |Strickland, Torlakson |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Requires a state contract for services to include a
clause stating that the contractor is prohibited from imposing a
condition of employment that would prohibit or penalize an
employee subject to the contract or personal services contractor
from seeking or accepting employment with the state.
EXISTING LAW , under the State Contract Act, governs contracting
between state agencies and private contractors, and sets forth
requirements for the bidding, awarding, and overseeing of
contracts for projects, which it defines to include the
construction or other improvements to a state structure or
building, that will exceed a total specified cost threshold.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, this bill has 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 : According to the author's office, "The state has
entered into contracts to provide specific staff services, in
this case in response to a court order in our prison system, at
a cost of 90% higher than an equivalent state employee. The
contracted psychologist in this case wanted to become a state
employee and the contractor wanted several months of pay and
AB 1531
Page 2
tried to prohibit him from becoming a state employee. The state
could preclude such contractors from prohibiting such clauses in
employment contracts, particularly when the contracts are
prompted by court order at such an excessive cost to the state."
The California Legislature and state Supreme Court have
repeatedly stated that covenants not to compete are void and
unenforceable, subject to several exceptions. B&P 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 accepting
employment with competitors.
Analysis Prepared by : Sarah Huchel / B. & P. / (916) 319-3301
FN: 0000714