Flickr/Michael Dorausch

California businesses will now face penalties if they try to fine customers for negative comments.

California has a new law to protect residents' right to Yelp.

Known as the "Yelp Bill," Assembly Bill 2365 makes it illegal for businesses to prohibit or fine customers from writing negative online reviews.

Online reviews can make or break a business, and small businesses are especially vulnerable. Paranoia has driven some businesses around the country to sneak non-disparagement clauses into contracts to thwart bad reviews.

The new state law makes these kinds of provisions illegal, and businesses in violation of this law could face up to $10,000 in fines.

Yelp celebrated the passage of the law, calling it a victory for free speech.

"A five-star rating for a business who had used one of these clauses to simply scare all negative reviewers into removing their comments wouldn't really represent the experience a consumer could expect to have at that business in our opinion," Yelp's head of government affairs, Laurent Crenshaw, wrote in a blog post Wednesday.

California is the first state to pass legislation on the issue, but this is still a potential problem in other states.

The bill was inspired by a Utah couple whose credit score was damaged after they were fined $3,500 for unwittingly violating a retailer's "Terms of Sale" contract by posting a bad review, according to the bill's author, Assembly Speaker John Pérez.

Just last month, a New York hotel came under fire after newlyweds realized the hotel had sneaked into their contract a $500 fee for any negative reviews posted by their wedding party.

There have also been reported instances of medical and dental offices fining patients for bad reviews.

Rep. Eric Swalwell, D-Calif., plans to introduce similar legislation at the federal level in the near future.

This post originally appeared on National Journal, an Atlantic partner site.

MORE FROM NATIONAL JOURNAL:

Nancy Pelosi Backs Controversial Internet Powers to Save Net Neutrality

A President Who Ran Promising Peace Cautiously Declares War

What 'Big' Looks Like Across America

About the Author

Most Popular

  1. Design

    A History of the American Public Library

    A visual exploration of how a critical piece of social infrastructure came to be.

  2. Equity

    Berlin Builds an Arsenal of Ideas to Stage a Housing Revolution

    The proposals might seem radical—from banning huge corporate landlords to freezing rents for five years—but polls show the public is ready for something dramatic.

  3. Transportation

    You Can’t Design Bike-Friendly Cities Without Considering Race and Class

    Bike equity is a powerful tool for reducing inequality. Too often, cycling infrastructure is tailored only to wealthy white cyclists.

  4. Transportation

    With Trains Like Schwebebahn, No Wonder Germans Love Public Transit

    Infrastructure like this makes it clear why Germany continues to produce enthusiasm for public transit, generation after generation.

  5. A photo of a design maquette for the Obama Presidential Center planned for Jackson Park and designed by Tod Williams Billie Tsien Architects with Michael Van Valkenburgh Associates.
    Design

    Why the Case Against the Obama Presidential Center Is So Important

    A judge has ruled that a lawsuit brought by Chicago preservationists can proceed, dealing a blow to Barack Obama's plans to build his library in Jackson Park.