Labor Employment Law Blog

In VL Systems, Inc. v. Unisen, Inc., a California Court of Appeal recently held that a broad "no-hire" provision in a consulting contract was unenforceable as an impermissible restraint on trade.  "No-hire" clauses are common in the consulting industry (and other similar industries such as the temporary services industry) in which the consulting companies provide specialized labor to their clients.  The reason for the "no-hire" provisions is that the consulting companies fear that the clients will hire their employees directly as employees and thereby eliminate the need for the consulting company.

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In September 2005, we reported on the California Court of Appeal's decision in Ross v. Ragingwire Telecommunications Inc., 132 Cal. App. 4th 590, finding that an employer may refuse to employ a person who is using marijuana in accordance with the Compassionate Use Act of 1996. (See, "Court Holds That A Company May Terminate A Medical Marijuana User," September 14, 2005.) However, on November 30, 2005, the California Supreme Court granted review of the case, rendering the prior decision invalid. As a result, employers are again left to question their rights and obligations under the State's disability accommodation laws versus the federal ban on marijuana use.

by Greg S. Labate

The purpose of this article is to show employers how to avoid liability when hiring, disciplining, and terminating employees.