Attorney General Bonta Holds In-Home Care Company Liable for Unfairly Suppressing Worker Mobility

Comfort Keepers to pay $500,000 and to remove unlawful hiring restrictions from its client care agreements

OAKLAND - California Attorney General Rob Bonta today announced the filing of a stipulated judgment with CK Franchising, Inc. and SDX Home Care Operations, LLC (collectively, Comfort Keepers) resolving allegations that the companies engaged in unfair competition by using unlawful "no-hire" and non-solicitation provisions, as well as an onerous liquidated damages provision in their client care agreements. Headquartered in Irvine, California., Comfort Keepers is an international franchise offering non-medical in-home support, including meal preparation, companionship, and assistance with administrative needs, hygiene, and outdoor exercise. Of Comfort Keepers' 750 franchisees worldwide, 88 franchises are located in California. Today's stipulated judgment requires Comfort Keepers to pay $500,000 in civil penalties and imposes injunctive terms to protect workers, safeguard consumers, and preserve competition in the market.

"In-home care workers provide essential services to our most vulnerable populations, and like all California workers, they deserve to be treated fairly under the law. The California Department of Justice will hold accountable companies who gain an unfair advantage in the market by imposing unlawful constraints on worker mobility," said Attorney General Bonta. "The use of client contracts that include no-hire and non-solicitation provisions makes it difficult for workers to find future employment and results in the suppression of workers' wages. Today's agreement with Comfort Keepers is an important step towards correcting injustices, and we appreciate the steps that Comfort Keepers took to rectify these wrongs. My office will continue to stand up for in-home care workers across California and the nation."

Comfort Keepers required each client to execute a Client Care Agreement (Agreement) to receive services. The Attorney General concluded the Agreement violated California law by restraining worker mobility in violation of Business and Professions Code section 16600. The Agreement barred home care clients from using, hiring, or soliciting any current or former Comfort Keepers' caregiver up to one year after the termination of services. Caregivers could not be hired by any Comfort Keepers client, not just the client to whom they were assigned to provide services. Further impacting caregivers' employment opportunities, the prohibition was so broad that it created a risk a client would run afoul of the provision even if they contracted with another caregiving agency that assigned a former Comfort Keepers employee to provide services. Additionally, the Agreement's liquidated damages provision violated Civil Code section 1671 by automatically charging liquidated damages of $12,500 if a client used, hired, or solicited a current or former Comfort Keepers caregiver up to one year after the termination of services.

Contractual restrictions to prevent someone from engaging in a lawful profession have long been limited in California under Business and Professions Code section 16600. These restrictions come in different forms, such as no-compete agreements that bar an employee from working for a competitor, or "non-hire" or "no-poach" provisions that prevent competitors from hiring each other workers. These types of contracts suppress worker mobility, which is the ability of a worker to change jobs or take jobs in other businesses or industries, and depress wages and benefits because workers cannot leave their employment. In California, employers cannot impede worker mobility by requiring employees to execute non-compete agreements. Today's stipulated judgment prevents Comfort Keepers from using third-party client agreements containing "no-hire" provisions to suppress worker mobility as if the worker were under a non-compete agreement.

As part of the stipulated judgment, which is subject to court approval, Comfort Keepers will pay $500,000 in civil penalties and has agreed to injunctive terms that remove the unlawful no-hire, non-solicitation, and liquidated damages provisions. Additionally, Comfort Keepers will provide notice to its franchisees and current and former clients and caregivers of these changes.

Attorney General Bonta is committed to defending workers' rights, workplace safety, and California's fair and competitive labor market. Through the Civil Rights Enforcement Section, the Worker Rights and Fair Labor Section, and the Antitrust Law Section, Attorney General Bonta enforces California's laws to protect the welfare of California workers and legitimate businesses operating in California. In 2024, Attorney General Bonta took action by defending wages and overtime owed in the West Coast Drywall Lawsuit; he also secured a settlement with Amalfi Stone & Masonry Company, Inc., resolving allegations of unfair competition and payroll tax, and labor violations. In 2023, Attorney General Bonta took action to protect workers by launching a historic investigation into gender discrimination in the National Football League, joining 17 attorneys general in supporting the Federal Trade Commission's proposed rule limiting non-compete agreements, launching a legal fight for in-home-healthcare workers, and fighting for the rights of transportation workers and immigrant children. In November 2022, Attorney General Bonta joined 21 attorneys general in filing an amicus brief opposing McDonald's attempt to evade liability for past alleged efforts to stifle competition and undercut wages through the use of "no-poach" agreements. In October 2022, Attorney General Bonta filed an amicus brief in an effort to protect Californians from discrimination in the employment hiring process.

A copy of the complaint is available here. A copy of the stipulated judgment, which is subject to court approval, is available here.