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Top 9 Tasks to Comply with New Employment Laws in California

Labor & Employment Law Alert James Wu

In his final year in office, California Governor Jerry Brown signed into law many new labor and employment related requirements for California employers. Many of these new laws grew out of the #metoo and #timesup movements and are focused on workplace harassment and/or discrimination. Employers with California based employees must take steps now to comply with these new laws.

Here is a summary of the most significant new legislation for California employers in 2019, and some best practices for addressing them (all new laws effective as of January 1, 2019, unless otherwise noted):

Changing Landscape for Harassment Claims

Clearly, the Legislature and Governor focused upon national events in creating new law for California employers. Much of the new legislation is designed to accomplish the following goals:

  • Increase awareness and prevention of harassment and discrimination in the workplace
  • Discourage "hush agreements" that may stifle awareness and prevention
  • Make harassment claims more difficult for employers to defeat in the courtroom
  • Provide employers with some protection when providing an employment verification of an alleged harasser to a prospective employer - again, to encourage discussion and awareness of these topics

1. New Training Requirement: The most immediate and fundamental change in the law concerns sexual harassment prevention training. The two main changes in the law are

(1) non-supervisors must receive training, and

(2) the new law applies to any employer with five (5) or more employees (temporary and seasonal employees are counted in determining the 5 employee threshold).

Under prior law, only employers with 50 or more employees had to provide compliant training to supervisors.

Employers with at least 5 employees must now provide at least: (a) 1 hour of training for non-supervisors; and (b) 2 hours of training for supervisors. In addition, the prior requirements of topics included in the training, the interactivity of the training, and the use of certain qualified training presenters must also be met. All employees must attend compliant training within six months of job commencement, and supervisors must attend compliant training within six months of becoming a supervisor. Thereafter, these employees must attend compliant training once every two years. (For seasonal, temporary, or any employee who will be employed for less than six months, training must occur within 30 days or 100 hours, whichever comes first). These first training sessions must be provided before January 1, 2020.

As a result, employers should work on scheduling these training sessions now, and ensure that training by a compliant trainer is available. Furthermore, employers should develop systems to track when new employees and/or new supervisors start their roles and ensure that compliant training is provided to them within the specified guidelines. The law directs the California Department of Fair Employment and Housing (DFEH) to create online training modules, however it is unknown when those will be available. Furthermore, employers may wish to have more control over, and to customize, content for their employees (for example, by including excerpts from the employer's own Employee Handbook). For the new law, see Senate Bill 1343, which amended Government Code Section 12950 and 12950.1.

One final note on training: new Section 12950.2 to the Government Code adds that employers may provide "bystander intervention training…on how to enable bystanders to recognize potentially problematic behaviors and to motivate bystanders to take action when they observe problematic behaviors." This training is not yet mandatory, though employers should consider adding this bystander training, especially for supervisory employees.

2. Update Those Settlement Agreements - More Open Discussion of Harassment

To further increase awareness, assist meritorious claims, and thus to decrease harassing behavior, the Governor signed additional laws that made it more difficult for employers to restrict employees/former employees from discussing their allegations. Specifically, employers must edit/update any standard or template settlement agreements in order to comply with the following:

  • No "Hush Agreements": In the past year in several very public matters, the notion of "hush agreements" has seen the spotlight. For example, in the USA Gymnastics matters, several young gymnasts went public with their allegations, and as a result, were required to return the money they had received as part of private settlement agreements they had previously entered into. In response, California employers are now prohibited from requiring confidentiality or non-disclosure provisions in settlement agreements that prevent the disclosure of factual information involving the allegations of the sexual misconduct. (See Senate Bill 820 and new Code of Civil Procedure Section 1001). Note, however, that only if the claimant requests, a provision which "shields the identity of the claimant and all facts that could lead to the discovery of his or her identity, including pleadings filed in court, may be included within a settlement agreement." One perhaps unintended consequence of this new law is that employers may be less inclined to resolve/settle harassment cases if they are unable to enforce a confidentiality provision. Confidentiality has value to both the complainant and the employer, and if the confidentiality is not available, employers may choose not to resolve such cases until the complainant retains an attorney.
  • No "Hush Agreements" Part 2: Employers are also prohibited from requiring an employee to sign a release, or to sign a non-disparagement agreement, or "other document that purports to deny the employee the right to disclose information about unlawful acts in the workplace, including but not limited to sexual harassment," in exchange for a raise or bonus, or as a condition of employment or continued employment. (See Senate Bill 1300 which added Section 12964.5 to the Government Code). This Section does not apply to "a negotiated settlement" to resolve a claim filed by an employee in court, before an administrative agency, alternative dispute resolution forum, or through an employer's internal complaint process, so long as the agreement is "voluntary, deliberate, and informed, provides consideration of value to the employee, and that the employee is given notice and an opportunity to retain an attorney or is represented by an attorney."
  • Further, agreements must be updated so that any provision that "waives a party's right to testify in an administrative, legislative, or judicial proceeding" regarding alleged criminal conduct or alleged sexual harassment where the party has been "required or requested to attend the proceeding pursuant to a court order, subpoena, or written request from an administrative agency or the legislature," is deleted because it is void and unenforceable. (See Assembly Bill 3109, which added Section 1670.11 to the Civil Code).
  • Finally, and as always, employers should take care with what information they disclose to third parties about an employee. However, now employers will enjoy a limited "safe harbor" regarding the disclosure, without malice, of "whether or not the employer would rehire a current or former employee and whether the decision to not rehire is based upon the employer's determination that the former employee engaged in sexual harassment." Consequently, employers should consider whether they wish to test the limits of this new provision, and go beyond the typically recommended disclosure of only name, job title and dates of employment to include this "not eligible for rehire" information. Employers should create a standard internal approach to such inquiries. (See Assembly Bill 2770 which amended Civil Code Section 47).

3.  Examine Composition of Corporate Board of Directors

While not specifically related to sexual harassment, a new law has been implemented with the goal of increasing and promoting women to corporate boards and places of influence. As a result, employers who have their principal executive offices in California (according to the corporation's SEC 10-K form), should examine the composition of their Board of Directors. Specifically, such employers must comply with the following:

  • By the end of 2019: have at least one female director on the board. ("Female" is defined as an individual who self-identifies her gender as a woman, without regard to the individual's designated sex at birth).
  • If the board has at least 5 directors, then the corporation must have 2 female directors by the end of 2021.
  • If the board has 6 or more directors, then the corporation must have 3 or more female directors by the end of 2021.

(See Senate Bill 826). The new law also requires the Secretary of State to impose fines for noncompliance: $100,000 for the first violation, and $300,000 for each subsequent violation. The new law is likely to face some legal/constitutional challenges because it is essentially a "quota" system, and it singles out one category of individuals over others.

4. Focus on Preventing Claims Because Defending Them Has Become More Difficult

In 2019 more than ever before, employers should focus on preventing harassment claims. In addition to the above, the new California laws add that more types of defendants may be liable for harassment claims, including individuals who engage in retaliatory behavior against anyone who reported, opposed, or "testified or assisted in any proceeding relating to the harassment." (SB 1300).; And, non-employers may be held liable too: Under Civil Code Section 51.9, the alleged harasser can be liable if they hold themselves out as "being able to help the plaintiff establish a business, services, or professional relationship with the defendant or a third party." Importantly, as a direct link to current events, the statute also now includes as potential defendants the following: investors, elected officials, lobbyists, directors and producers.

Significantly, Senate Bill 1300 contains several noteworthy changes implemented to protect employees who bring harassment claims.  The Senate Bill added Section 12923 to the Government Code which now contains the following:

  • Adoption of "the standard set forth by Justice Ruth Bader Ginsberg in her concurrence in Harris v. Forklift Systems (1993) 510 U.S. 17 that in a workplace harassment suit 'the plaintiff need not prove that his or her tangible productivity has declined as a result of the harassment. It suffices to prove that a reasonable person subjected to the discriminatory conduct would find, as the plaintiff did, that the harassment so altered working conditions as to make it more difficult to do the job.'"
  • Adoption of the notion that "a single incident of harassing conduct is sufficient to create a triable issue regarding the existence of a hostile work environment if the harassing conduct has unreasonably interfered with the plaintiff's work performance or created an intimidating, hostile, or offensive working environment." The Legislature rejected the prior standard set forth in the United States Court of Appeals for the 9th Circuit's opinion in Brooks v. City of San Mateo (2000) 229 F.3d 917.
  • Rejection of the "stray remarks doctrine" by stating that the "existence of a hostile work environment depends upon the totality of the circumstances and a discriminatory remark, even if not made directly in the context of an employment decision or uttered by a non-decision maker, may be relevant, circumstantial evidence of discrimination. In that regard, the Legislature affirms the decision in Reid v. Google, Inc. (2010) 50 Cal.4th 512."
  • Declaring that "the legal standard for sexual harassment should not vary by type of workplace. It is irrelevant that a particular occupation may have been characterized by a greater frequency of sexually related commentary or conduct in the past. In determining whether or not a hostile environment existed, courts should only consider the nature of the workplace when engaging in or witnessing prurient conduct and commentary is integral to the performance of the job duties. The Legislature hereby declares its disapproval of any language, reasoning, or holding to the contrary in the decision Kelley v. Conco Companies (2011) 196 Cal.App.4th 191."
  • As if it was not clear enough with the above, the Legislature also declared that "[h]arassment cases are rarely appropriate for disposition on summary judgment. In that regard, the Legislature affirms the decision in Nazir v. United Airlines, Inc. (2009) 178 Cal.App.4th 243 and its observation that hostile working environment cases involve issues "not determinable on paper."

Each of these provisions decreases the burden on complainants when pursuing claims for harassment, and increases the difficulty for employers to prevail in court when defending against these claims before trial. Thus, it is more critical than ever for employers to take steps now to avoid these claims in the first place.

The Legislature and Governor were also busy with non-harassment laws as well. Here are a few of the more significant new laws for California employers, unrelated to harassment.

5. Update/Verify Wage Rates: While not a surprise, employers must be sure to adjust to the new state minimum wage of $12.00 per hour for employers with 26 or more employees, and $11.00 per hour for employers with 25 or fewer employees. Employers with employees in multiple cities in California must also comply with any local ordinance that provides a hiring minimum wage different than the State.

Due to the state-wide increases, exempt employees must be paid at least $49,920 per year in order to meet the "Salary Basis Test" for exemption, or $45,760 per year for employers with 25 or less employees. Additionally, licensed physicians, surgeons and computer professionals have new adjusted salary thresholds as well.

6.  Determine What You Will Ask About Salaries: In 2018, a new law banning salary history inquires went into effect. This year, the law clarifies that employers may ask an applicant about salary expectations for the job position sought by the applicant. Thus, employers should determine ahead of time if they will ask applicants about their salary expectations. Consistency is the best practice: Ask all candidates for the same position, and do not just single out a few candidates to answer the question.

The new law also clarifies that external applicants are entitled to pay scale information upon request only after completing an initial interview. Prior law did not account for the employer's competitors, non-applicants, and even plaintiff's attorneys who took advantage of the ability to request pay scale information. Now, the law makes clear that an employer need only provide the requested information after the applicant completes an initial interview.

7.  Re-Evaluate If A Criminal History Check Is Needed: A new clarification limits the permissible inquiry only to situations where the employer is required by law to inquire into a "particular conviction" or where the employer is prohibited by law from hiring someone with a "particular conviction."; This law makes it even clearer that any criminal background check must be made for narrowly tailored situations where particular crimes are relevant to the position sought by the applicant. Thus, employers should re-evaluate criminal background check policies to ensure that such checks are made in appropriate situations only.

8. Provide Compliant Lactation Accommodations: Current laws provide for workplace lactation accommodations. Assembly Bill 1976 amends Section 1031 of the Labor Code so that employers may not designate a bathroom the location for the lactation break. Instead, the location must be a private location in close proximity to the employee's work area. The designated location may be a temporary one if all of the following conditions are met:

  • Employer is unable to provide a permanent lactation location because of operational, financial, or space limitations.
  • The temporary lactation location is private and free from intrusion while an employee expresses milk.
  • The temporary lactation location is used only for lactation purposes while an employee expresses milk.
  • The temporary lactation location otherwise meets the requirements of state law concerning lactation accommodation.

Agricultural employers can comply with the amended law by providing employees "with a private, enclosed, and shaded space, including but not limited to an air-conditioned cab of a truck or tractor."

9.  Make Copies of Payroll Records: California employees have a right to inspect or copy their own payroll records by making a request to their employers. SB 1252, which amends Labor Code Section 226, clarifies that the employer is required to make and provide copies of the employee's payroll records, instead of simply making the records available for the employees to copy themselves if they wish to retain a copy. The 21-day period to comply with these payroll records requests has not changed.

Conclusion

As a result of these new laws, and clarified laws, employers should engage in the following:

  1. Audit current Employee Handbook and/or policies and practices and take steps to comply with the above;
  2. Schedule harassment prevention training in 2019 with a compliant trainer and create processes to comply with mandatory training within 6 months of a new employee or new supervisor (short-term hires have a shorter window to receive training);
  3. Update any template Settlement Agreements regarding harassment claims, confidentiality and non-disclosure. And, determine with counsel what strategies the employer will use going forward regarding confidentiality and the lack of it;
  4. Appoint new Directors to the Board if necessary to comply with the new law regarding gender representation on an employer's Board;
  5. Determine what the company will say, if anything, when verifying employment to third parties regarding an alleged harasser;
  6. Audit pay scales to ensure minimum wages are being paid, and exempt employees are meeting or exceeding the salary basis test;
  7. Determine what, if anything, the company will ask job applicants about salary expectations, and the process for criminal history background checks;
  8. Locate a compliant lactation area for employees to express breast milk; and
  9. Make copies of payroll files upon appropriate employee request.

There are additional new laws for specific industries as well, including public sector employees, construction, contractors, hotel/motel employers and more.

For more information on compliance with any of the new California laws, please contact your Quarles & Brady attorney or James Wu, California Labor and Employment Chair, at [email protected] /  925.658.0300.