Vermont Prohibits No Rehire Clauses For Discrimination Cases​

August 28, 2018
A state laws bans employers from including Not Eligible For Rehire statements into settlements and discrimination cases.
Backgrounds Online | August 28, 2018

A state law bans employers from including “not eligible for rehire” statements into settlements for discrimination cases.

About The Law

This is an amendment to existing anti-discrimination/harassment laws. It was inspired by the #MeToo movement and is the first of its kind. The updated law:
• Bans employers from including “No Rehire” clauses in discrimination settlement agreements.
• Prohibits nondisclosure agreements that say employees may not report instances of harassment.
• Establishes an easier method for employees to report sexual harassment to the Vermont Human Rights Commission or Attorney General's Office.

Why It Was Created

The law is intended to help victims of sexual harassment and discrimination. Currently, employees who report these crimes may be required to sign a settlement agreement that say the person may not work for the employer, its parent company or any affiliates.

Representative Sarah Copeland-Hanzas, primary author of the bill, felt this practice was unfair. She commented that the no rehire clauses can place a large burden on someone’s career and specified that if you are in “a specialty field in a small state; that might mean you can never work again."

Corporations typically own numerous brands. One prime example of this in Vermont is Unilever, which owns more than 400, including Ben & Jerry’s ice cream. If a Vermont employee signed a no rehire clause with a company like that, it could drastically limit their future employment options.


Not everyone agrees that this law should have been implemented. Those who oppose it say “separation agreements” are a common business practice. One reason for this is to help employers avoid the risk of lawsuits. If a person who was involved in a discrimination suit applies for a job with the same company but is unsuccessful, they may be able to file a case against the company and claim this was an act of retaliation if a no rehire clause is not in the settlement.

If, however, the former employee signed an agreement that includes a no rehire clause, then that risk is alleviated. This clause is used to stipulate that the person agrees they will no longer be employed and won’t attempt to seek another position within the company.

The Equal Employment Opportunity Commission (EEOC) chimed in on this topic. They suggested that the practice of asking people to sign no rehire clause could be construed as an act of retaliation against the person who filed a discrimination or harassment claim.

What VT Employers Should Know

Vermont employers should be aware of and compliant with this new law. Employees who settle discrimination or harassment claims cannot be forced to sign no rehire clauses.

Laws that cover what employers can and cannot do vary by state. It can be difficult to keep up with all the laws that affect your business. At Backgrounds Online, we are dedicated to providing educational resources to help our clients with their compliance efforts.

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