California Employment Law Update

November 2018 California Employment Law Notes

We invite you to review our newly-posted November 2018 California Employment Law Notes, a comprehensive review of the latest and most significant developments in California employment law. The highlights include:

California Has a New Governor – Will it Make Much Difference for Employers?

After Jerry Brown’s second set of 8 years in office (1975-83 and 2011-19), employers now look to Governor-Elect Gavin Newsom for what’s in store for them in the Golden State.  (Although Jerry Brown wasn’t a particularly good friend of employers, he often was the only friend they had in Sacramento, vetoing some of the more radical anti-employer measures that the California legislature routinely passed and sent to him for signature.)   A former mayor of San Francisco and state lieutenant governor, Newsom is unlikely to change the course of California’s decidedly pro-employee, pro-union laws and regulations anytime soon.  That said, California employers should keep a watchful eye on the following moving targets: 

The #MeToo Movement and Arbitration

Newsom is an ardent supporter of the #MeToo movement and vows to “strengthen workplace protections such as creating hotlines for victims, transparent, independent, swift investigations, and real consequences for abusers and harassers.” Leading companies like Google, Microsoft, and Uber have recently decided to end mandatory arbitration of employee sexual harassment claims, leaving their employees free to sue them in state or federal court. One can wonder whether this is the sort of transparency that Newsom would embrace as part of his support of the #MeToo movement.

Gov. Brown repeatedly vetoed recently passed bills that prohibited mandatory arbitration in employment agreements on the perfectly reasonable ground that such legislation unquestionably conflicts with and is preempted by federal law. (Gov. Brown’s veto message.) However, it’s anyone’s guess whether Newsom will part ways with Brown and sign such legislation the next time the legislature passes it (i.e., presumably next term).

“The Future of Work”

Newsom dedicates a portion of his website statements about the economy to what he calls “the future of work.Although amorphous, many of his ideas on “the future of work” would significantly impact employers. For example, Newsom highlights wage insurance to those who lose their jobs to automation, portable benefits to transfer between jobs in the gig economy, and an expansion of the earned income tax credit as areas that need to be addressed.

Newsom, whose campaign for governor was largely funded by contributions from labor unions, has, not surprisingly, expressed his commitment to those same unions – especially in the wake of the Supreme Court’s recent opinion in Janus v. AFSCME, which eliminated mandatory union dues for government employees.  California already has taken numerous steps to limit the rights of government employees who decline to join or wish to leave a union.  Newsom presumably will be very receptive to even more union-friendly legislation in California.

With an expansive pro-employee, pro-union majority (which may in fact turn out to be a “supermajority) in both houses of the California legislature, Gov. Newsom is unlikely to provide much relief to employers (even if he wanted to) and in fact he may make things even more challenging once he starts signing legislation that Gov. Brown may have vetoed.

Court Provides Further Clarification of CA’s New Independent Contractor Test

On May 1, we reported about the Dynamex Operations W., Inc. v. Superior Court opinion in which the California Supreme Court adopted a new standard (the “ABC test”) for determining if a worker may properly be classified as an employee or independent contractor.  Last Monday, the California Court of Appeal clarified that the “ABC” test applies only to claims arising under the California wage orders and not to other issues such as determining employee status for purposes of workers’ compensation, wrongful termination, waiting time penalties, overtime, unfair competition and indemnity claims under the Labor Code.  Garcia v. Border Transportation Group.

The appellate court held that there was “no reason to apply the ABC test categorically to every working relationship” and that it was “logical” to apply it only to claims arising under the California wage orders. The panel explained that because the wage orders regulate basic working conditions, they warrant the broadest definition of employment to the widest group of workers.

Viacom Sues Netflix for Employee Poaching

Viacom, like Fox before, asserts the streamer is knowingly interfering with contracts.

Viacom, like Fox before, asserts the streamer is knowingly interfering with contracts.
Viacom has filed a lawsuit alleging that Netflix induced one of its employees to break contract to join the streaming giant. The case, lodged in Los Angeles Superior Court last week, continues to explode the issue of the legality of fixed-term employment contracts.Read more: 

“Bill Bites” – More New Labor and Employment Laws in California

In addition to the #MeToo inspired legislation, which we covered in a recent blog post, Governor Brown signed several other pieces of legislation amending existing laws and imposing new requirements regarding employment. Here are our “Bill Bites,” which provide a snapshot of the new laws

  • PAGA Does Not Apply to Construction Workers: Assembly Bill 1654 bars employees in the construction industry who are subject to a collective bargaining agreement with a grievance procedure from bringing claims under the Private Attorneys General Act until when the collective bargaining agreement expires or January 1, 2028, whichever is earlier.
  • Reasonable Efforts Required to Provide Location for Expressing Breast Milk Other Than in a Bathroom: Assembly Bill 1976 requires that employers make reasonable efforts to provide an employee with the use of a room or other location to express breast milk, other than in a bathroom. The previous law required reasonable efforts to provide a location other than in a toilet stall.
  • Employers Can Ask Applicants About Salary Expectations: Assembly Bill 2282 adds definitions to the law prohibiting an employer from relying on salary history in determining whether to hire an employee, and clarifies that an employer can ask an applicant regarding his/her expectations of salary for the position.
  • State’s Paid Family Leave Extended to Active Duty or Family Member’s Active Duty: Senate Bill 1123 expands the scope of the California’s family temporary disability insurance program to include time off to participate in a qualifying exigency related to covered active duty or a family member’s active duty.
  • Right to Inspect and Receive Wage Records: Senate Bill 1252 clarifies that Labor Code Section 226’s right to inspect wage records also means that the employee has a right to “receive” those records.

Governor Brown Signs Slew Of #MeToo-Inspired Laws

This weekend Governor Brown signed many laws that were authored and gained traction in response to the #MeToo movement:

New Restrictions On Confidentiality Of Sexual Harassment/Discrimination Settlements

Senate Bill 820 prohibits confidentiality or non-disclosure provisions in settlement agreements that prevent the disclosure of factual information involving allegations of sexual misconduct – unless the party alleging the harm desires confidentiality language to protect his or her identity. The bill, which adds Section 1001 to the California Code of Civil Procedure, renders void as against public policy any provision in a settlement agreement that prevents the disclosure of factual information regarding sexual assault, sexual harassment (as defined in Section 51.9 of the Civil Code), workplace harassment or discrimination based on sex (as described in Section 12940 of the Government Code), along with failure to prevent, or retaliation for reporting, harassment or discrimination based on sex.

The law does not void confidentiality provisions that prevent disclosure of the amount paid in settlement of a claim. Importantly, the new law also contemplates a cause of action for civil damages for failing to comply with the new requirements.

New Restrictions Regarding Preventing Future Testimony

Assembly Bill 3109, which adds Section 1670.11 to the Civil Code, voids provisions in settlements that would prevent someone from testifying about alleged criminal conduct or alleged sexual harassment in an administrative, legislative, or judicial proceeding where the individual is requested to attend the proceeding pursuant to a court order, subpoena or written request from an administrative agency or the legislature.

New Requirements For Sexual Harassment Workplace Training

Senate Bill 1343 radically changes the requirements for workplace sexual harassment prevention training in the #MeToo era. The bill amends California Government Code Section 12950.1 and changes several workplace training requirements, including the following:

  • Training required by small businesses: Employers with at least 5 employees are now required to provide training to their employees (the bar was lowered significantly from the previous 50-employee threshold);
  • Training is no longer limited to supervisory employees: Employers are now required to provide sexual harassment prevention training to all employees, including non-supervisory employees. Specifically, one hour of classroom or other effective interactive training and education regarding sexual harassment must be provided to all non-supervisory employees, and two hours of the same to supervisory employees.
  • Training required within six months of job commencement: Employees are currently required to undergo training within six months of starting their jobs. Seasonal or temporary employees (or any employees that will be employed less than six months) need to undergo training within 30 days or 100 hours, whichever comes first.

The new bill will force many employers to overhaul their current training protocols in light of the new requirements. The bill also directs the DFEH to create online training modules that employees could take to fulfill the new requirements. However, if employers simply require employees to “comply” with the new law by clicking through government-supplied online training, that may not deliver the right message regarding the employer’s commitment to prevent and remedy workplace harassment. Employers should consider carefully how and what training to provide to all of their employees in order to ensure that the training is perceived by employees to be genuine. As the EEOC noted in its report on sexual harassment published in 2016, an “organization’s commitment to a harassment-free workplace must not be based on a compliance mindset, and instead must be part of an overall diversity and inclusion strategy.”

“Hostile Work Environment” Is Redefined; Release/Non Disparagement Agreements as a Condition of Employment or Promotion Are Banned

Senate Bill 1300 decrees that a single incident of harassing conduct is sufficient to create a triable issue of hostile work environment if the conduct interfered with a plaintiff’s work performance or otherwise created an intimidating, hostile, or offensive work environment. The law also explicitly rejects the prior standard for hostile work environment set by the 9th Circuit in Brooks v. City of San Mateo, 229 F.3d 917 (9th Cir. 2000), an opinion written by former Judge Alex Kozinski who retired from the court in 2017 amidst allegations of improper sexual conduct while on the bench.

The law also makes it unlawful for an employer to require an individual to sign a release or non-disparagement agreement that purports to deny the employee the right to disclose information about unlawful acts in the workplace in exchange for a raise, bonus, or continued employment. The prohibition does not apply to a release or non-disparagement provision in a settlement that is negotiated with respect to alleged claims wherein the employee is represented by counsel.

Corporate Boards Are Required To Include Women

Senate Bill 826 requires that, by the end of 2019, all California publicly held companies have a minimum of one female on their board of directors; and by the end of 2021 a minimum of 2 female directors if 5 total directors, or 3 female directors if 6 or more total directors. Failure to comply will result in fines ($100,000 for the first violation and $300,000 for subsequent violations).

Sexual Harassment Claims Permitted Against a Defendant Who Holds Himself/Herself Out As Being Able to Help Plaintiff

Aimed at preventing directors and producers from taking advantage of young talent looking for a break, Senate Bill 224 creates a cause of action for sexual harassment where

  • Plaintiff proves there is a business, service, or professional relationship between plaintiff and defendant, or defendant holds himself or herself out as being able to help plaintiff establish a business, service, or professional relationship with the defendant or a third party;
  • Defendant has made sexual advances, solicitations, sexual requests, demands for sexual compliance, or other verbal, visual, or physical conduct of a sexual or hostile nature based on gender that were unwelcome and pervasive or severe; and
  • Plaintiff suffered or will suffer economic loss or personal injury.

Talent Agencies Required to Provide Talent with Educational Materials on Sexual Harassment

Assembly Bill 2338 requires that a talent agency, as a condition of the requirement that it be licensed with the Labor Commissioner, provide educational materials on sex harassment prevention, retaliation, and reporting resources to its talent (the artists). Failure to comply will result in $100 fines for each violation.

Human Trafficking Awareness Training Required of Certain Employees

Senate Bill 970 requires that employees who are likely to interact or come into contact with victims of human trafficking (e.g., those who have recurring interactions with the public such as receptionists, housekeepers, and drivers) go through 20 minutes of classroom or other interactive training regarding human trafficking awareness.