Hiring employees can be challenging for many employers, especially those in California. In addition to the complexity associated with selecting the best talent, employers must also comply with federal and state laws.

This toolkit presents the business case for California employers to develop an understanding of the federal and state employment laws and introduces relevant equal employment opportunity laws. It also discusses issues that arise at these stages of the hiring process:

• Sourcing and recruiting.
• Candidate selection.
• Offer and post-offer transactions.

Business Case

Hiring in any state is a vital—and complex—process that bolsters an organization's success, productivity and bottom line, but finding, selecting and employing workers in California comes with a unique set of issues for employers.

To mitigate an organization's risk of potential discrimination claims and other violations during the hiring process, California employers must develop an understanding of a wide range of federal and state laws that protect applicants' rights. In addition, they should establish hiring policies and procedures addressing:

• Employment advertisements.
• Job descriptions.
• Application forms.
• Interviews.
• Background checks.
• Pre-employment testing.
• Employment offers.
• Employment contracts.
• Legal and regulatory issues.

Federal and California Equal Employment Opportunity Laws

Federal law prohibits the denial of employment opportunities based on certain personal attributes unrelated to one's ability to perform a job. Equal employment opportunity (EEO) laws apply both to hiring and to the terms and conditions of employment.

Federal law generally defines workers' rights in this area; however, states and some municipalities have EEO laws that may offer even greater protection. For example, the list of protected categories under California's Fair Employment and Housing Act (FEHA) is more inclusive than that under federal law. Employers should understand all the FEHA-protected categories to ensure appropriate, nondiscriminatory communications during the hiring process.

The FEHA prohibits hiring practices that discriminate against applicants on the basis of the following protected categories:

• Race or color.
• Ancestry or national origin (including language use restrictions).
• Religion or creed.
• Age (over 40).
• Mental or physical disabilities.
• Sex or gender (including pregnancy, childbirth, breastfeeding or related medical conditions).
• Sexual orientation.
• Gender identity or gender expression.
• Medical condition.
• Genetic information.
• Marital status.
• Military and veteran status.

The FEHA prohibits discrimination based on a perception that a person is a member of a protected class or is associated with a person who is, or is perceived to be, a member of a protected class. The law applies to all public employers, private employers with five or more employees, employment agencies and labor organizations.

See:

• Preventing Unlawful Workplace Discrimination in California
• Preventing Unlawful Workplace Retaliation in California
• Preventing Unlawful Workplace Harassment in California
• What is the California Fair Employment Housing Act (FEHA) and what does it cover?

Sourcing and Recruiting Candidates

Sourcing is identifying and soliciting individuals—either from within or outside an organization—to fill job vacancies or to staff for growth. Hiring new talent is essential for an organization to meet its goals and succeed in a rapidly changing marketplace. Most of the legal issues that arise in the recruitment process involve ensuring EEO and avoiding discrimination. These legal issues include the need to:

• Establish nondiscriminatory criteria for job descriptions.
• Implement nondiscriminatory strategies for attracting talent. 
• Ensure there is no disparate impact.

Employment advertisements

A well-written job posting is critical to finding the perfect candidate for an open position. Employers must ensure that advertisements do not contain discriminatory language and that they are not published only in venues that may indicate a preference or limitation based on any protected category. See Crafting the Perfect Job Ad and Learn How to Write Inclusive Job Postings.

Job descriptions

Well-crafted job descriptions help employers demonstrate compliance with nondiscrimination principles by focusing on appropriate, objective criteria to determine which applicants are best qualified for a specific position. In particular, employers should avoid job descriptions and recruitment criteria that require an educational level or physical ability that is not actually required to perform the job. Job descriptions are also beneficial in identifying the essential functions of a position, which can be an important tool in assessing the need for disability accommodations. Employers who use job descriptions in their hiring processes should be especially vigilant in updating them when the essential functions of a position are changed.

See:

• How to Develop a Job Description
• Sample Job Descriptions
• Why You Should Have Job Descriptions

Employment applications

Requiring a candidate to fill out an application form can help identify disqualifying characteristics, demonstrate compliance with EEO laws and preserve the at-will employment relationship. However, federal EEO and California FEHA laws preclude asking certain questions on employment applications. See Guidelines on Interview and Employment Application Questions.

As a general rule, state and federal EEO laws prohibit pre-employment inquiries that disproportionately screen out applicants based on protected status unless a bona fide occupational qualification (BFOQ) justifies the questions. Information obtained through pre-employment inquiries should be aimed solely at determining qualifications to perform essential job functions without regard to criteria based on irrelevant, nonjob-related factors. See Can an employer advertise or state a hiring preference for a specific protected class such as veterans?

Employers using electronic technologies to support their recruitment and hiring efforts must apply the same nondiscriminatory principles required for traditional hiring methods. Moreover, the California Online Privacy Protection Act (California OPPA) generally applies to websites that actively seek information from visitors, such as the data used to complete an online employment application. Although the California OPPA does not cover all employer websites, employers should seek guidance from legal counsel to determine if their procedures are in compliance. When the California OPPA applies, it requires that the website include a privacy policy that meets requirements to notify visitors how information may be stored, used and disclosed.

Fingerprints and photos

California Labor Code §1051 permits employers to maintain photos and fingerprints for their own use, but they may not provide them to third parties (including local police departments or other government agencies). That is, employers are prohibited from requiring applicants to furnish fingerprints or photographs as a condition of employment if an employer plans to provide the information to a third party and if the information could be used for an individual's detriment. If an employer requires photos or fingerprints, the items should be requested and obtained post-offer to better defend against potential claims that hiring decisions were based on impermissible factors (such as physical appearance).

Social media

California's Assembly Bill 1844 prohibits employers from requiring applicants to provide their e-mail or social media account usernames and passwords, with limited exceptions. The law also prohibits employers from retaliating against an applicant for refusing to comply with such a request or demand. 

Selection Process: Early Stages

In March 2022, U.S. job openings outnumbered unemployed workers by about 5.5 million. This talent shortage makes strategic sourcing and recruiting more imperative than ever. Practicing superior candidate management and offering excellent candidate care can help Employers select the right person and compete for talent. See Employers Are Responding to Job Candidates' Changing Expectations.

Interviewing

Employers should undertake the interview process with deliberation to select the best person for the job without asking questions about personal characteristics that are protected under federal and California EEO laws. Interviews should be structured to elicit only information concerning the candidate's qualifications and ability to perform the essential job functions. Asking questions that suggest a discriminatory motive or intent can expose employers to liability. For example, California employers may not ask (verbally or on an employment application) questions about the applicant's health or medical history. Also, they may not inquire whether the applicant has ever filed a workers' compensation claim.

See:

• Interviewing Candidates for Employment
• What questions are employers in California prohibited from asking applicants?

Salary history and pay disclosure

California Labor Code Section 432.3 prohibits employers from asking job applicants about their salary histories. Applicants may still, "voluntarily and without prompting," disclose their own salary history information to a prospective employer. The employer may consider or rely on that information in determining salary as long as prior salary is not the only factor justifying any disparity in compensation. See California's Salary History Ban: Answers to Frequently Asked Questions.

In addition, California employers must provide applicants with the pay scale for a position upon reasonable request. A reasonable request is defined as a request made after the applicant has completed the initial interview. See California Attempts to Clarify Salary History Ban and California Draft Bill Doubles Down on Pay Transparency.

Criminal records

California employers with five or more employees are prohibited from asking applicants about criminal history or including criminal-history questions on job applications, with very limited exceptions. Employers must generally wait until after an offer of employment has been made before making any inquiries into an individual's criminal background.

Pre-employment testing

Pre-employment testing helps employers determine the applicant's suitability for a particular position. These tests might include drug and alcohol tests, skills tests, physical agility tests, honesty/integrity tests or personality tests. To avoid running afoul of EEO and FEHA laws, an employer must be able to show that the particular pre-employment test is valid (i.e., has a manifest relationship to the employment position). To demonstrate validity, an employer must 1) specify the trait or characteristic that the test is supposed to identify, 2) ensure that the trait is an important component of the job, and (3) ensure that the test actually predicts or correlates with that element. See What compliance issues are involved in creating a pre-employment test? and Validate Employment Tests to Avoid Lawsuits.

Pre-employment testing is a particularly delicate matter under state and federal nondiscrimination and privacy laws.

See:

• EEOC Employment Tests and Selection Procedures
• Screening and Evaluating Job Candidates
• Screening by Means of Pre-Employment Testing

Polygraph tests

California Labor Code §432.2 prohibits employers from demanding or requiring any employee or applicant to take a polygraph, lie detector, or similar test or examination as a condition of employment or continued employment. Employers may not use polygraph tests on a pre- or post-employment basis.

Drug tests

Employers are generally allowed to require applicants to take drug tests on a pre-employment basis if the employer has a lawful written policy and the employee consents. Pre-employment drug tests must be implemented and conducted fairly and consistently for all applicants for a position within a specific job class. Employers may not select and test only certain applicants for a position within the same job class. In addition, employers may not employ drug-testing procedures that are unnecessarily invasive or that violate employees' privacy rights under the California Constitution. Employers should consult with legal counsel before implementing any drug-testing program.

California has legalized medical and recreational use of marijuana; however, employers are able to continue to enforce their drug-free workplace policies. Proposition 64, also referred to as the Adult Use of Marijuana Act, does not affect the right of a California employer to prohibit marijuana use, nor does it require an employer to accommodate such use. The act expressly states that its intent is to "allow public and private employers to enact and enforce workplace policies pertaining to marijuana."¹ See Are employers in California legally allowed to test employees for drugs or alcohol?

Selection Process: Later Stages

Employers may use reference checks and background investigations to screen applicants in accordance with the California Investigative Consumer Reporting Agencies Act (ICRAA) and the Fair Credit Reporting Act (FCRA). The extent of the inquiry will depend on the nature of the business, the job and perceptions of risk. See Conducting Background Investigations and Reference Checks and Workplace Privacy Rights.

A reference check generally involves contacting applicants' former employers, supervisors, co-workers, educators and athletic coaches to verify previous employment and to obtain information about the individual's knowledge, skills, abilities (KSAs) and character.

A background investigation usually involves an investigation by a third party or by paying for access to a background-check database to determine whether an applicant may be unqualified for a position due to a record of criminal conviction, motor vehicle violations, poor credit history, or misrepresentation regarding education or work history.

Reference checks

Conducting thorough reference checks can identify potential problem employees. Employers should acquire as much information as possible about the applicant's previous job performance. However, there is a fine line between thoroughly reviewing an applicant's background and invading his or her privacy. Accordingly, California employers must take steps to minimize potential liability associated with seeking or providing references (i.e., claims of negligent hiring or retention).

Several common legal pitfalls are associated with reference checking practices in all states. Defamation occurs when an injury to the reputation or good name of another tends to bring that person into disrepute. For defamation to occur, a false or malicious statement must be made either orally (slander) or in writing (libel) to a third party, and it must damage the employee or his or her character or reputation.

Defamation claims arise most often from:

• Statements made as part of a request for a reference check.
• Disseminating information, including the reasons the employee was terminated or voluntarily resigned, to people do not need the information.

"Qualified privilege" is an exchange of information between employers (that have a common interest in hiring qualified applicants) regarding an applicant's previous work history during a reference check. This exchange is protected from defamation lawsuits if the statements are made in good faith to individuals with a legitimate need to know. The protection of qualified privilege exists only when the information is:

• Given in good faith.
• Authenticated.
• Limited to the inquiry.
• Given during the proper time and in the proper manner.
• Communicated to the proper parties.
• Strictly related to the job requirements.

Negligent hiring or negligent retention can occur when an employer hires someone who the employer either knew or should have known, in the exercise of reasonable care, was dangerous, unfit or not qualified for the position. If an employer fails to make reasonable inquiry into an applicant's background and subsequently places a dangerous or unqualified individual in a position where he or she could harm co-workers or third parties, the employer could be held liable for the employee's acts. 

Negligent referral can occur when a current or former employer refuses to disclose, or selectively discloses, information about an applicant's employment during a reference check, in hopes of minimizing the chances of a defamation lawsuit for that employer. This situation forces prospective employers to make selection decisions based on incomplete or faulty information, which exposes these employers to negligent hiring and negligent retention claims. Failing to provide negative information in response to specific questions could substitute or transfer an employer's liability to the individual who gave the incomplete or inaccurate referral. The legal argument could be made that had the individual provided the negative information when asked, the other organization would not have negligently hired the applicant. See How can employers protect themselves from liability when giving references?

The following California statutes provide additional guidance on reference checking and declare legislative intent in this area:

• The Information Practices Act places specific requirements on state agencies in the collection, use, maintenance and dissemination of information relating to individuals.
• Section 1050 of the California Labor Code prohibits employers from disclosing misleading information that interferes with an individual's ability to obtain employment.

Consumer credit reports

In California, employers may obtain credit reports for only the following employee categories:

• Positions with the state Department of Justice.
• Managerial positions that qualify for the executive exemption under California wage and hour law.
• Sworn peace officers or other law enforcement personnel.
• Positions in which the information sought must be obtained or disclosed by law.
• Positions that involve regular access to all the following personal information of others: a) bank or credit card account information, b) Social Security numbers and c) dates of birth, other than the regular solicitation of credit card applications at a retail establishment.
• Positions requiring the employee to be a named signatory on the employer's bank or credit card or to be otherwise authorized to enter into financial contracts on behalf of the employer or to transfer money on behalf of the employer.
• Positions involving access to confidential or proprietary company information.
• Positions that involve regular access to $10,000 or more in cash.

Credit reports may also be obtained for financial institution employees in California. However, these businesses are not required to disclose the statutory support for obtaining a credit report, and use for any other positions is strictly prohibited. Additionally, before obtaining the report, employers are required to obtain an employee's consent and to give the employee or applicant a disclosure statement setting forth the specific basis permitting the employer to obtain a credit report. 

Background investigations

Employers must be sensitive to the sequence in which their organizations elicit various types of information during background investigations. A good practice is to begin the hiring process by seeking only the basic information needed to determine minimum qualifications. As the process moves forward, organizations may seek additional levels of information to the extent needed at each step to distinguish between competing candidates.

Employers that use an outside agency to perform a background check must be familiar with the requirements under the California ICRAA.

Under the ICRAA, an employer may not ask an outside agency to perform a background or credit check on an applicant or employee without receiving the applicant's consent, giving proper notice to the applicant and giving the applicant an opportunity to request a copy of the report. See What are the California rules regarding employer use of an outside agency to perform background checks, and how do they differ from federal law?

Employers that perform their own background investigations must comply with a different set of requirements under the ICRAA. A variety of privacy and individual employee rights under the ICRAA affect such investigations. These special rules apply when an employer obtains public record information regarding, for example, arrests, indictments, convictions, civil judicial actions, tax liens and outstanding judgments. See CA Civil Code §1786.53.

Employers obtaining public record information about an applicant or employee must provide a copy of the report, whether written or oral, to the applicant or employee within seven days of receiving the information, unless the applicant or employee expressly waives this right. A check box on an employment application or any other document is acceptable.

An employer that takes any adverse action based on the credit report must provide a copy of the report to the applicant or employee, even if he or she has already waived the right. This is sometimes called an adverse action notice.

For in-house investigations of a suspicion of employee misconduct or wrongdoing, the employer may withhold the information until completion of the investigation. Then the employer must provide the employee with a copy of the investigation information, regardless of whether the right was waived.

Offer and Post-Offer Transactions

Practices such as extending job offers, requiring medical examinations and initiating employment contracts are components of any comprehensive hiring strategy. However, employers need to ensure that such practices do not violate federal or state laws or infringe on individual rights.

Employment offers

Written offers of employment document the terms and conditions of employment. An effective offer letter is important for not only what it says, but also for what it does not say. Offer letters should not contain promises of job security, length of employment or the promise not to terminate except for "good cause," unless the employer intends to honor its commitments and be vulnerable to litigation if the employee believes that the employer has broken its promises. See How to Create an Offer Letter Without Contractual Implications.

Recommended features of an offer letter include the following:

• The title of the position being offered.
• The amount and basis of compensation (salary, hourly, piece rate) and a reference to the organization's benefits plan.
• Whether the employment is full time or part time.
• The department in which the candidate will be employed and the name of the candidate's supervisor.
• Whether the employment is deemed exempt or nonexempt under the Fair Labor Standards Act and state law.
• That the employment is at will (unless the employer is offering employment for a specific length of time).
• That employment is subject to the candidate providing proof of eligibility for employment as required by applicable immigration laws.
• If applicable, that the offer is contingent on the employee passing a post-offer medical examination, drug test and/or criminal background check.

In addition to the above, California law prohibits employers, agents or officers from directly or indirectly influencing, persuading or engaging any person to move from one place to another in the state, from any place outside to any place within the state, or from any place within the state to any place outside for the purpose of employment, through or by means of knowingly false representations, whether spoken, written or advertised in printed form. This prohibition prevents employers from using misrepresentations to induce a person to leave employment. Employers that violate this prohibition may face criminal as well as civil liability. See California Labor Code §970-972 and California Employee Can Proceed with Claim of Falsely Represented Job Offer.

Criminal history

The California Fair Chance Act prohibits employers from:

• Including on a job application any questions about conviction history before a conditional job offer has been made.
• Asking about or considering an individual's criminal history before a conditional job offer has been made.
• Considering information about arrests not followed by conviction, participation in pretrial or posttrial diversion programs that have been completed and the underlying pending charges or conviction dismissed, sealed, or eradicated, or convictions that have been sealed, dismissed, expunged, or statutorily eradicated.

California employers may inquire about convictions (other than specified minor marijuana convictions) after an offer of employment has been extended. Because convictions, like arrests, may fall disproportionately among some racial and ethnic groups, the use of conviction information in employment decisions can lead to unintended discrimination under the FEHA and federal EEO laws, unless there is a nexus between the job and the conviction to justify the decision not to hire or to terminate an employee. Employers should not maintain a policy that results in an absolute or automatic bar to employment for applicants with a record of a criminal conviction.

When conducting a criminal history check post-offer, the law requires an individualized assessment about the conviction history. An employer can't rescind a job offer without considering the nature and gravity of the criminal history, the time that has passed since the conviction, and the nature of the job being sought. If an employer decides to take back a job offer based on a candidate's criminal history, the employer must do so in writing, provide a copy of any conviction history report they relied on, and give the individual at least five business days to respond. 

See:

New California Background Check Requirements Take Effect Oct. 1 (2023)

What are the California rules on asking job applicants or employees about arrests and convictions?

Employing Individuals with Criminal Records

Medical exams

Under both the Americans with Disabilities Act (ADA) and California's FEHA, medical examinations of applicants are allowed only after an employer makes a conditional job offer. Post-offer medical examinations are permissible only if all entering employees in similar positions are required to submit to such exams and the results are treated as confidential medical records and maintained on separate forms. In addition, pursuant to California's Government Code §12940, no post-offer, pre-employment inquiry is permitted unless it is directly related to and pertinent to the position being applied for or directly related to whether an individual would be a danger in the workplace.

Employers must not exclude individuals from a job because of a generalization about any disability. Each person must be judged solely on whether his or her particular medical history and condition prevent that person from performing the essential functions of the job, with or without a reasonable accommodation, safely and efficiently. Any medical standard or employment policy that automatically excludes entire groups of people (such as all people with high blood pressure, diabetes, AIDS or back problems) is usually unlawful. If an individual is rejected after a medical examination, investigators will scrutinize whether the rejection was based on the results of the medical examination. See  How to Manage Disability Accommodations in California.

In addition, it is unlawful for an employer or other covered entity to subject, directly or indirectly, any employee, applicant or other person to a test for the presence of a genetic characteristic.

Employment contracts

Legally binding contracts for employment may be created verbally or in writing. Organizations sometimes use written contracts to state the terms of their agreement with employees, especially high-level employees. In addition, employment contracts containing noncompete and confidentiality provisions are common with at-will employees.

Issues that employment contracts address include the following:

• Job duties and responsibilities.
• Compensation and benefits.
• Terms and conditions of employment.
• Confidentiality and nondisclosure requirements. 
• Resignation and termination procedures.
• Severance provisions. 

Effective January 1, 2017, California Labor Code §925 limits an employer's ability to require employees who are not represented by legal counsel to enter agreements that include out-of-state choice of law and/or forum selection clauses.

Noncompetition and related employment agreements

California is one of the toughest states in which to enforce a noncompetition or related agreement. The crucial general rule is that every contract in which anyone is restrained from engaging in a lawful profession, trade or business of any kind is to that extent void and/or unlawful. Not hiring an employee for refusal to sign an agreement that is void constitutes wrongful refusal to hire under California law. See Are noncompete or similar postemployment agreements enforceable in the state of California?

There is a critical difference between contract restrictions that apply during employment and contract restrictions that apply after employment ends. Section 16600 of the California Business Professions Code does not invalidate the numerous provisions of the California Labor Code that establish and reflect important duties that an employee owes during employment nor agreements that apply during employment that are consistent with those duties. But after employment ends, §16600 strongly favors the mobility of labor (i.e., the "right to earn a living").

• Disfavored agreements. Many kinds of agreements used by employers in other states to protect an organization's interests after an employee departs employment are clearly void and/or unlawful in California. Employers should understand the different legal status of each kind of agreement in California. 
• Agreement not to compete for a time or in a physical area. A noncompetition agreement is an agreement by one party not to compete with the business of another party (e.g., by opening or becoming employed by a competing business), typically limited to a specific time period after the employment ends or to a specific geographic area. Absent one of the few exceptions discussed below, noncompetition agreements are unlawful in California. Senate Bill 699 also prohibits enforcement of noncompete agreements entered into out of state by employees now working in California and allows employees or prospective employees to sue for damages, injunctive relief, and attorneys’ fees against employers attempting to use unlawful noncompete agreements.
• Agreement not to solicit an organization's customers. A nonsolicitation agreement is an agreement by one party not to solicit the business of specified customers of the other party, typically limited to a specific time period. Absent one of the few exceptions discussed below (e.g., some customer lists or information about customers can sometimes constitute protectable trade secrets), such nonsolicitation agreements are nearly always void and unenforceable in California. 
• Agreement not to recruit the organization's employees. An anti-piracy agreement (or anti-raiding agreement) is an agreement by one party not to recruit employees of the other party, typically limited to a specific time period. Anti-piracy agreements have been permitted in some circumstances by California courts. The viability of such provisions, however, has started to be questioned in light of recent California cases. As a result, employers should seek legal counsel.

Exceptions to noncompetition and related employment agreements

The general rule against noncompete agreements has three statutory exceptions and one common-law exception. Under these exceptions, broad restrictive covenants are permitted in four narrow situations:

• Sale of business goodwill exception. The seller of the goodwill of a business (the intangible portions of a business, such as its brand value and reputation that may have a value over and above that of its tangible assets) generally can agree not to compete with the business sold to a buyer within a specific area where the business has been carried on and for as long as the buyer continues to carry on like business in that area.
• Dissolution of partnership exception. Partners generally can agree that a partner who leaves the partnership (technically causing its dissolution) will not engage in a competitive business, typically for a specific time and within a specific area.
• Dissolution of limited liability company exception. Shareholders in a limited liability company (LLC) generally can agree that an exiting shareholder will not compete with the LLC's business, typically for a specific time and within a specific area.
• Common-law exception to protect trade secrets. Although not embodied in a statutory exception, numerous California cases have held post-employment restrictions enforceable to the extent necessary to protect an employer's trade secrets. See California Business and Professions Code 16600-16607.

Nondisclosure agreements

A nondisclosure agreement is a pact by one party not to use or disclose defined confidential information belonging to another party, sometimes limited to a specific time period. Nondisclosure agreements are often enforceable in California if they do not define the protected information too broadly (i.e., the scope of information protected should not significantly exceed protected trade secrets, as defined under the Uniform Trade Secrets Act). Nondisclosure agreements may prohibit disclosures of trade secrets as long as they remain trade secrets post-termination. Nondisclosure agreements restricting disclosure of confidential information that is not trade secrets after the end of the employment relationship should be limited to one year after employment ends. This is an area of dispute, and employers should consult with legal counsel. See Overly Broad Employee Confidentiality Provisions Violated California Law.

Unfair competition

Former employees (and the new employers that hire them) can become liable under California's Unfair Competition Law when the circumstances of the new hiring involve misappropriation of trade secrets or violation of enforceable post-employment restrictions, or when the conduct involves independent wrongful acts to the detriment of the former employer. Performing an intake assessment regarding any post-employment obligations an applicant may owe to a former employer is a necessary part of any hiring process involving employees hired from a competitor or in other circumstances in which liabilities could exist.

Uniform Trade Secrets Act

California is among the many states that have adopted the Uniform Trade Secrets Act (UTSA). UTSA protections apply to an organization's trade secrets regardless if there is also another nondisclosure, confidentiality or noncompetition agreement.

The UTSA protects only certain defined trade secrets, that is, information, including a formula, pattern, compilation, program, device, method, technique or process that meets the following criteria:

• Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use.
• Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

It is important to recognize that not all information an employer regards as confidential will constitute a protectable trade secret.

Invention assignment agreements

In an invention assignment agreement, an employee assigns to the organization any and all rights the employee may have to inventions and ideas generated through the employment with the organization. As long as these agreements meet certain requirements, they are permitted in California, including Labor Code §2870, et seq. 

An invention assignment agreement is void, unenforceable and against public policy if it purports to apply to an invention that the employee developed entirely on his or her own time without using the employer's equipment, supplies, facilities or trade secret information. Furthermore, the statute specifically prohibits an employer from requiring any employee to sign an unenforceable invention assignment agreement as a condition of employment.

The only exceptions are for those inventions that either:

• Relate at the time of conception or reduction to practice of the invention to the employer's business or to actual or demonstrably anticipated research or development of the employer.
• Result from any work performed by the employee for the employer.

Technology

Organizations use technology in all aspects of the hiring process from screening and engaging applicants to tracking EEO data. Career portals, talent networks, social sharing and recruitment marketing are all common technology tools. In addition, the use of "big data" allows employers to forecast talent acquisition metrics through predictive analysis giving them a recruiting advantage. However, employers are warned to be cognizant of potential adverse impact when using technology in recruiting.

See:

California Draft Regulations Would Curb Employer Use of Artificial Intelligence

Use of AI in the Workplace Raises Legal Concerns

Technology to Automate and Refine the Recruitment Process

Building a Recruitment Tech Stack That Works for You

Additional Resources

California Resources Page

SHRM California X Feed

SHRM Express Requests (California-Specific Topics)

California Legislative Information

California Agencies and Organizations

California SHRM Chapters

California Civil Rights Department

Equal Employment Opportunity Commission

California Department of Industrial Relations

Division of Labor Standards Enforcement

California Labor & Workforce Development Agency

California Employment Development Department

 

Endnotes

¹California Secretary of State. Text of proposed laws. Retrieved from http://vig.cdn.sos.ca.gov/2016/general/en/pdf/text-proposed-laws.pdf#prop64, p.180