In September 2018, Governor Jerry Brown signed a series of bills aimed at drastically reshaping California’s approach to claims of discrimination and harassment amidst the “#MeToo” Movement. Among the legislation is Senate Bill 1300 which clarifies and expands employee rights under the California Fair Employment and Housing Act (“FEHA”). SB 1300, which was met with both opposition and support, became effective January 1, 2019. In addition to Senate Bill 1300, Gov. Brown also signed into law a series of bills on issues relating to workplace harassment, gender equality and human trafficking.
CALIFORNIA SENATE BILL 1300: HEIGHTENED EXPOSURE FOR EMPLOYERS
SB 1300 intends to close loopholes in the law that discourage or prevent victims from speaking out, and allow employers to avoid sexual harassment and discrimination laws and leave employees vulnerable to sexual harassment at work. In an attempt to aid these efforts, SB 1300 provides the following enhancements, further described below: 1) a new “single occurrence” standard for sexual harassment cases; 2) increases the challenges of recovering litigation costs for defendants; 3) potentially holds employers liable for third-party harassment; 4) prohibits release of both claims and non-disparagement agreements; and 5) provides for workplace accommodation and bystander training.
“SINGLE OCCURRENCE” STANDARD
One highly significant implication of SB 1300 is that it now makes a single instance of sexually harassing conduct a potentially triable sexual harassment claim by statute. Under FEHA, action was required to be so “severe or pervasive” so as to create a hostile work environment before it was actionable. However, the term “severe or pervasive” was subjective, leaving room for interpretation as to what conduct would be significantly severe or pervasive to support a claim under the existing law. For example, in Brooks v. City of San Mateo, 229 F.3d 917 (9th Cir. 2000), the Ninth Circuit Court of Appeals found that an employee touching another employee’s chest under her sweater was not significant enough to rise to the level of “severe or pervasive,” and, thus, granted the employer’s motion for summary judgment.
SB 1300 narrows the definition of “severe or pervasive” by clarifying that a single incident of harassing conduct is sufficient to create a triable issue, so long as the conduct limited the employee’s work performance or created a hostile work environment. The Legislation specifically rejects the court’s holding in Brooks and states that the case opinion shall not be used in determining what kind of conduct is sufficiently severe or pervasive to constitute a violation of the FEHA.
Of significance to litigation resulting from employment claims, SB 1300 affirms the court’s opinion in Nazir v. United Airlines, Inc. (2009) 178 Cal.App.4th 243. In Nazir, the Plaintiff filed a lawsuit against his former employer, United Airlines, and his former supervisor (“Defendants”). Defendants filed a motion for summary judgment/summary adjudication, seeking adjudication of 44 issues. The appellate court found that hostile work environment cases involve issues that are “not determinable on paper.” SB 1300’s reference to the finding in the Nazir case that employment issues are too complex for motions for summary judgment may be a threat to the validity of future motions for summary judgment in employment law cases which has been a common and successful defense tactic.
RECOVERY OF COSTS BY PREVAILING PARTY
SB 1300 authorizes the court, in its discretion, to award the prevailing party in a civil action reasonable attorney’s fees and costs, including expert witness fees. Under California Code of Civil Procedure Section 998, employers were once able to recover defense costs if a jury awarded plaintiff(s) with a smaller judgment than previously offered by a defendant in an attempt to reach settlement. The new law prohibits the court from awarding a prevailing defendant fees and costs unless the court finds that the employee’s action was frivolous, unreasonable, or groundless when brought, or that the plaintiff continued to litigate after it clearly became so during the litigation process.
EMPLOYER LIABILITY FOR THIRD-PARTY HARASSMENT
SB 1300 allows employers to be held liable for the acts of non-employees with respect to harassment of its employees, applicants, unpaid interns, volunteers, or persons providing services pursuant to a contract in the work place, if an the employer, its agents or supervisors, knew or should have known of the conduct and failed to take immediate and appropriate corrective action.
This explicit, statutory expansion of the law opens to the door to an influx of new employment lawsuits, as it severely broadens employer liability and holds them accountable for acts of non-employees.
RELEASE OF CLAIMS AGREEMENTS AND NON-DISPARAGEMENT AGREEMENTS
A significant aspect of the new law is that SB 1300 prohibits employers from requiring employees to sign non-disparagement agreements and release of claims agreements as a condition of employment, continued employment, or for a raise or bonus. This provision will prevent employers from extorting employees into agreeing to waive any workplace harassment claims they might have. Any agreement made in violation of this section is unenforceable, even if it was signed before Governor Jerry Brown passed SB 1300. The impact of this provision of the bill on employers remains to be seen.
WORKPLACE ACCOMMODATION AND BYSTANDER TRAINING BY EMPLOYERS
SB 1300 reinforces that it is an unlawful employment practice for an employer to discriminate based on race, religion, national original, disability (physical or mental), marital status, sexual orientation, gender, or military or veteran status when considering someone for employment or training. An action is not considered discriminatory if the employee/prospective employee is unable to perform the essential employment duties even with reasonable accommodation or if the duties would endanger the employee/prospective employee’s health or safety, or the safety of others even with reasonable accommodation.
The bill provides that employers may provide bystander intervention training that includes guidance and information for employees to recognize potentially problematic behaviors and to take action, when appropriate. This may be accomplished through training and education, but it is not a requirement for employers to provide.
SIGNIFICANT OTHER EMPLOYMENT LAWS
Other new significant employment laws were recently enacted, imposing additional requirements for employers:
WORKPLACE TRAINING AND POSTING REQUIREMENTS
Senate Bill 1343 requires any employer who has 5 or more employees to provide at least 2 hours of sexual harassment training to all supervisory employees and at least 1 hour of sexual harassment training to all nonsupervisory employees by January 1, 2020 and once every 2 years thereafter. This requirement for employers with 5 or more employees also applies to seasonal and temporary employees.
The Department of Fair Employment and Housing (“Department”) will be required to provide 1-hour and 2-hour online training courses on the prevention of sexual harassment in the workplace on the department’s website. Employers will be able to use these training courses and will not need to provide or create their own.
SB 1343 also amends Government Codes 12950 and 12950.1, which require an employer with 50 or more employees to provide at least two hours of interactive training and education regarding sexual harassment to all supervisory employees in California within six months of their assumption of a supervisory role. These amendments now require employers to display the Department’s poster on discrimination in employment in a prominent and accessible location; display a poster developed by the Department regarding transgender rights; and provide to employees information regarding the illegality of sexual harassment, legal remedies, and directions on how to contact the Department. All employers are encouraged to educate themselves on these requirements and comply accordingly.
THE FUTURE OF CONFIDENTIALITY IN SETTLEMENT AGREEMENTS
Senate Bill 820 adds Section 1001 to the Code of Civil Procedure which will now void any provision in a settlement agreement that prevents the disclosure of factual information related to the action. This provision relates to any civil action or a complaint filed in an administrative action, in which a claimant has alleged sexual assault, sexual harassment, workplace harassment or discrimination based on sex, a failure to prevent an act of workplace harassment or discrimination based on sex, as well as an act of retaliation against a person for reporting harassment or discrimination based on sex by the owner of a housing accommodation. The section does not prohibit the enforcement of a provision in any agreement that precludes the disclosure of the amount paid in the settlement of a claim. Thus, while employees may now be forced to disclose the facts of a lawsuit or claim regarding any of the aforementioned, the privacy on settlement amounts may still be enforced.
HUMAN TRAFFICKING TRAINING REQUIREMENTS
On September 27, 2018, Governor Jerry Brown approved Senate Bill 970, which adds Section 12950.3 to the Government Code relating to employment. SB 970 amends the FEHA to require specified employers to provide at least 20 minutes of prescribed training and education regarding human trafficking to employees who are likely to interact or come into contact with victims of human trafficking. Specified employers are hotels and motels and employees are people who have duties including, but not limited to, interacting with the public in the reception area, housekeeping, customer service, or driving. This bill takes effect on January 1, 2020.
FUTURE IMPACT OF NEW LAWS:
The formal amendment of California law follows on the heels of the issuance of “Proposed Enforcement Guidance on Unlawful Harassment” by the Equal Employment Opportunity Commission based upon a study conducted by the EEOC’s Select Task Course on the Study of Harassment in the Workplace. The Proposed Guidance, when eventually issued in its final form, will supersede four (4) prior publications issued by the EEOC between 1990 and 1999.
The Proposed Guidance, in substance, is a comprehensive review of both statistical information and a summary of the application by the courts of the provisions of Title VII of the Civil Rights Act of 1964 in the aftermath of the United States Supreme Court’s ruling in Meritor Savings Bank v. Vinson in 1986, which found that workplace harassment can constitute an actionable form of discrimination under Title VII. The Proposed Guidance outlines a set of best practices for employers concerning harassment prevention in the workplace based upon five (5) core principles: committed and engaged leadership; consistent accountability; strong internal policies; the existence of effective complaint procedures; and regular training. The EEOC emphasizes that training should be provided to employees at all levels and at all locations of a given organization, provided in all languages commonly used by employees in the workplace of an employer, tailored to the specific workplaces and workforce of employment, and conducted by qualified, live and interactive trainers.
The passage of SB 1300 is likely to have a noticeable impact on claims and litigation against employers in California going forward. It will not only likely increase the number of employment lawsuits filed, but it will also increase the challenges associated with defending these lawsuits. The bill makes it easier for employees to file, litigate, and prevail in employment-related lawsuits arising out of claims including, but not limited to, harassment and discrimination. The new “single occurrence” standard, combined with the statutory weakening of summary judgment tactics, opens up employers to new challenges in defending employment lawsuits and educating employees on harassment in the workplace
SB 1300 seems likely to encourage an increase in employment lawsuits litigated through trial, while also creating a disincentive to employers defending such lawsuits who are also less likely to recover litigation costs even if they are successful in defending a case.
Given the clear and unequivocal message of SB 1300, 1343, and 970 all employers are strongly urged to become familiar with the details of the new laws and their requirements, provide training to educate and inform employees – including management – about potential workplace issues, re-assess and update internal policies and procedures. Moreover, pursuant to SB 820, employers must thoroughly review commonly used employee related forms and templates such as releases of claims and non-disparagement agreements to ensure they are in compliance with the laws now in effect.
SB 826 AND ITS IMPACT ON FEMALE EMPLOYEES AND CALIFORNIA COMPANIES
As of June 2017, among the 446 publicly traded companies included in the Russell 3000 index and headquartered in California, only 566 women held board of directors positions available, totaling 15.5%, while 3,089 men held board of director positions, totaling 84.5%. Further, only 12% of these companies had 3 or more female directors on their boards. Smaller companies were less likely to employ female directors.
Senate Bill 826 was passed and signed into law in an attempt to balance out gender equality. With its passing comes new protections and assurances for females. First, by no later than the close of the 2019 calendar year, there will be a requirement in place that a domestic general corporation or foreign corporation that is a publically held corporation whose principal executive offices, according to the corporation’s SEC 10-k form, are located in California to have a minimum of one female on its board of directors. Further, by no later than the close of the 2021 calendar year, the bill would increase that required minimum number to 2 female directors if the corporation has 5 directors or to 3 female directors if the corporation has 6 or more directors.
The enactment of SB 826 is only the beginning; how it is executed will be equally, if not more, important. The bill is intended to significantly increase gender diversity in businesses in California, something from which business may greatly benefit. However, many have opposed the bill on the ground that having the government mandate diversity takes away freedom from businesses and is counterproductive to how businesses should be run. Senator Hannah-Beth Jackson, who authored SB 1300 and co-authored SB 826, stated that merely encouraging businesses to aspire to gender equality in the workplace by voluntarily adding women to corporate boards has fallen on deaf ears.
Should publicly trade companies fail to abide by the regulations imposed by SB 826, the A first-time failure to timely file board member information with the Secretary of State will result in a fine of $100,000. A second or subsequent violation will amount to a fine of $300,000.
The new legislation, collectively, sends a clear message to California employers that there is a heightened standard for the supervision and management of the workplace. Moreover, publically traded California business will be monitored for gender equality within boards of directors. Employers are expected to strictly prohibit and actively prevent harassment and discrimination. While some of the new laws are clear-cut, such as those that simply require notice of new regulations and employee training, others threaten a host of expanded potential issues for employers. Employers are strongly advised to familiarize themselves with these new laws to ensure compliance. In addition, a comprehensive review of internal policies including existing internal training protocol for employees at all levels are mandated to comply with the legislation and avoid potential costly litigation.