On September 30, California Gov. Jerry Brown (D) addressed a slew of legislation inspired by the #MeToo movement. The legislation is expected to strengthen protections against workplace sexual harassment by restricting nondisclosure agreements, expanding available legal recourse, and increasing training requirements. Meanwhile, the Governor rejected legislative attempts to, among other things, prohibit mandatory arbitration agreements and extend the statute of limitations for claims brought under the California Fair Employment and Housing Act.

Sweeping changes to sexual harassment litigation

Senate Bill 1300, introduced by Sen. Hannah-Beth Jackson (D-Santa Barbara), includes a number of provisions that will change the way sexual harassment claims are litigated in California. The law takes effect on January 1.

Limiting releases of claims and non-disparagement agreements

SB 1300 makes it unlawful for an employer to require an employee to sign a release of a claim or right under the FEHA “in exchange for a raise or bonus, or as a condition of employment or continued employment.” Similarly, an employer cannot require an employee to sign a non-disparagement agreement or other document denying the employee the right to disclose information about unlawful acts in the workplace, including, but not limited to, sexual harassment.

Limiting employer’s right to fees and costs

SB 1300 provides that a prevailing defendant in a FEHA action will be entitled to recover attorneys’ fees and costs only if the court finds that the plaintiff’s action was “frivolous, unreasonable, or totally without foundation when brought or the plaintiff continued to litigate after it clearly became so.” Significantly, the provision applies notwithstanding Code of Civil Procedure section 998, which generally provides that if a plaintiff rejects a settlement offer and then fails to obtain a more favorable judgment at trial, the plaintiff is not entitled to post-offer fees and costs and must pay the post-offer fees and costs of the defendant. As a result, this new provision may change employers’ litigation and settlement strategies, given that recovering costs and fees will be more difficult.

Expanding liability for third parties

Existing law provides that an employer may be held responsible for sexual harassment committed by non-employees, such as customers, vendors, or other third parties, if the employer knew or should have known about the conduct and failed to take immediate and appropriate corrective action. SB 1300 expands such liability to all forms of unlawful harassment committed by non-employees, not just sexual harassment.

Legislative guidance

SB 1300 also contains extensive language regarding legislative intent on a number of issues involving the application of workplace harassment laws by the courts:

  1. “Tangible Productivity.” SB 1300 includes language adopting the standard set forth by Justice Ruth Bader Ginsburg in Harris v. Forklift Systems 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.”
  2. Single incident enough. The law states that “a single incident of harassing conduct is sufficient to create a triable issue regarding the existence of a hostile work environment.”
  3. “Stray remarks” doctrine rejected. The new law affirms that “a hostile work environment depends on 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 nondecisionmaker, may be relevant, circumstantial evidence of discrimination.”
  4. Same standard applies to all work environments. The new law provides that what constitutes sexual harassment should not vary by type of workplace or particular occupations that may have had greater frequency of sexually related commentary or conduct in the past.
  5. Summary judgment “rarely appropriate.” The law declares that harassment cases are “rarely appropriate for disposition on summary judgment.”

How the courts will respond to SB 1300’s unusual and unprecedented legislative intent language is unclear. Legislative findings and declarations are usually non-binding and of limited value. But it does demonstrate the Legislature’s understanding of key legal concepts and will certainly be used by plaintiffs’ attorneys, especially to defeat motions for summary judgment.

SB 1300 also prohibits employers from requiring employees to release FEHA claims in exchange for a raise or as a condition of employment.

“Bystander intervention” training

SB 1300 also introduces “bystander intervention training” – training to address the “bystander effect” during which individuals tend to remain silent and refrain from providing assistance to victims in their presence. Under the new legislation, employers may provide such training, including information and practical guidance to help bystanders recognize and act on problematic behavior. This provision, however, is merely permissive; employers are not required to provide such training.

SB 1300: Recommendations for employers

The risks of litigation for employers will grow when SB 1300 takes effect on January 1, and employers should be ever more focused on reviewing and modifying policies, procedures, systems, and training so as to avoid issues and ensure legal compliance.

Ban on non-disclosure agreements

Effective January 1, Senate Bill 820 bans non-disclosure agreements in civil or administrative actions involving sexual assault, sexual harassment, and workplace harassment or discrimination based on sex. However, a claimant may request provisions to shield his or her identity, and employers may include a provision that precludes the disclosure of the amount paid, but not the underlying facts of the case. This legislation was inspired by reports that Hollywood producer Harvey Weinstein used such provisions to prohibit accusers from speaking publicly.

SB 820: Recommendations for employers

SB 820 applies to settlement agreements entered into on or after January 1. Employers in the final stages of settlement should carefully consider their approach before the deadline.

Beefed-up harassment training mandate

Currently, California requires employers with 50 or more employees to provide at least two hours of sexual harassment training to supervisory employees at least once every two years. With the signing of Senate Bill 1343, all employers with five or more employees, including temporary or seasonal employees, will be required to provide this training. Moreover, employers will now be required to provide at least one hour of sexual harassment training every two years to all non-supervisory employees. For new hires and newly promoted employees, the training must take place within six months of hire or promotion, and every two years thereafter. Significantly, SB 1343 does not impose any changes to the content requirements under existing law. The new requirement will take effect January 1, 2020.

To assist employers and the public, the Department of Fair Employment and Housing will make training courses, as well as posters and fact sheets, available on its website. Employers who provide training in compliance with SB 1343 after January 1, 2019, are not required to provide it again by the January 1, 2020, deadline.

SB 1343: Recommendations for employers

Employers may want to consider training employees in 2019 to satisfy SB 1343’s new requirements, and they should begin planning now for scheduling the sessions in a manner that best suits their business needs. The DFEH materials may be particularly helpful for small employers.

Gov. Brown vetoes ban on mandatory arbitration

Gov. Brown vetoed Assembly Bill 3080, introduced by State Assembly Member Lorena Gonzalez Fletcher (D-San Diego), and possibly the most controversial of the #MeToo measures. AB 3080 sought to prohibit mandatory arbitration agreements as a condition of employment for any claims covered by the FEHA (discrimination, retaliation, or harassment) or the Labor Code (wage and hour claims).

This measure stood in direct opposition to numerous landmark cases, including U.S. Supreme Court decisions, establishing that the Federal Arbitration Act preempts any state attacks on the enforceability of arbitration agreements. Most recently, in Epic Systems Corp. v. Lewis – a decision issued while AB 3080 was working its way through the California legislature – the Supreme Court upheld the enforceability of arbitration agreements containing class and collective action waivers of wage and hour disputes.

In a letter to the Legislature, Gov. Brown noted that he vetoed a similar bill in 2015 and since then, the U.S. Supreme Court has made clear that “states must follow the Federal Arbitration Act and the Supreme Court’s interpretation of the Act.” “Since this bill plainly violates federal law,” he wrote, “I cannot sign this measure.”

Recommendations for employers

With the veto of AB 3080, employers with California operations may continue to use mandatory arbitration agreements. However, employers should review and evaluate such agreements to ensure their compliance with California and federal law.

Gov. Brown vetoes longer statute of limitations on FEHA claims

Gov. Brown also vetoed Assembly Bill 1870, which would have extended the deadline to file an employment-related complaint with the DFEH from the current one year to three years. According to the Governor, the one-year deadline, which has been in place since 1963, encourages prompt resolution of claims while memories are fresh, and ensures that unwelcome behavior is promptly reported and halted.

Recommendations for employers

Retention of the one-year statute of limitations is good news for employers. However, employers should continue to monitor employee records and complaints to track potential liability.

California remains in the vanguard of employment law, now spurred by the #MeToo movement. Employers with operations in California should begin assessing how these new laws, particularly the expansion of harassment avoidance training, will be implemented in their workplaces.