The #MeToo Movement has inspired the California Legislature to enact a series of new laws to prevent and eliminate sexual misconduct in the workplace. These laws surely also will spur a host of new sexual harassment lawsuits against California employers, and make defense against them more difficult. These and other important new California laws are discussed in this Client Alert.

Sexual Harassment and Discrimination

A series of new laws adopts a comprehensive, multi-pronged approach to sexual harassment in the workplace by modifying the primary anti-discrimination statute in California: the Fair Employment and Housing Act (“FEHA”) and other statutes. These new laws change, clarify, or codify existing law in various areas, including: (i) the scope of sexual harassment laws, (ii) the standards for proving sexual harassment, (iii) confidentiality agreements and releases, (iv) testimony about sexual assault or harassment, (v) privileged communications about sexual harassment, (vi) sexual harassment training and education for employees, (vii) the standard for a prevailing defendant to be awarded attorney and expert witness fees in FEHA lawsuits, and (viii) diversity in corporate boardrooms.

Scope of Sexual Harassment Laws

California law, via section 51.9 of the California Civil Code, currently imposes liability for sexual harassment in “business, service or professional” relationships, and lists as examples of such relationships the relationship between a client and an accountant, and banker and financial planner. SB 224 adds client relationships with an investor, elected official, lobbyist, director, and producer to section 51.9. The list of professional relationships is not intended to be exclusive, but California legislators wanted to amend the statute to highlight some of the relationships that have proven to be more problematic in recent reports of sexual harassment.

In addition, a current requirement of prevailing on a claim for sexual harassment under section 51.9 is to show that “[t]here is a business, service, or professional relationship between the plaintiff and defendant.” SB 224 expands that requirement to include relationships where “the defendant holds himself or herself out as being able to help the plaintiff establish a business, service, or professional relationship with the defendant or a third party.” The new law also removes the requirement that in order to bring a cause of action under section 51.9, a plaintiff must prove that there is an inability by the plaintiff to easily terminate the relationship.

Proving Sexual Harassment

Colloquially, the term “harassment” is used to describe a wide range of unwelcome behavior, but, legally, “harassment” has a far narrower and more precise definition. Before SB 1300, California courts followed the federal standard that to be sexual harassment, the conduct must be “severe or pervasive.” With the new law, the Legislature has adopted the standard articulated by Justice Ruth Bader Ginsberg in her concurrence in Harris v. Forklift Systems, Inc., 510 U.S. 17 (1993). Justice Ginsberg would find sexual harassment to occur whenever “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.” Id. at 26. How this standard differs from the “severe or pervasive” standard remains to be seen.

SB 1300 also provides 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 legislation includes a statement by the Legislature that it rejects the holding in Brooks v. City of San Mateo, 229 F.3d 917 (9th Cir. 2000), in which the U.S. Court of Appeals for the Ninth Circuit held that a single incident of misconduct was insufficient to support a claim of sexual harassment. In Brooks, the aggressor approached a co-worker as she was taking a call, placed his hand on her stomach and commented on its softness and sexiness, positioned himself behind her chair and boxed her in, forced his hand underneath her sweater and bra and fondled her bare breast, and approached her a second time as if he would fondle her breasts again. The court held that although “unsavory” and “highly offensive,” the incident was insufficiently severe to constitute sexual harassment.

SB 1300 also provides 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 nondecisionmaker, may be relevant, circumstantial evidence of discrimination.” In that regard, the Legislature affirms the decision in Reid v. Google, Inc., 50 Cal. 4th 512 (2010), in its rejection of the “stray remarks doctrine.”

SB 1300 clarifies 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.” However, the new law also says, “[i]n determining whether or not a hostile environment existed, courts should consider the nature of the workplace when engaging in or witnessing prurient conduct and commentary is integral to the performance of the job duties.” Presumably, notwithstanding the first two sentences, the third sentence is intended to allow for “prurient conduct and commentary” to exist in some workplaces, such as a strip club or a pornographic publisher. But we will have to await a court’s construction of the text to be sure.

Finally, SB 1300 recites the Legislature’s judgment that “[h]arassment cases are rarely appropriate for disposition on summary judgment.”

In sum, SB 1300 will make defending against sexual harassment claims significantly more difficult.

Confidentiality Agreements and Releases

SB 820 (also referred to as the “Stand Together Against Non-Disclosure” (STAND) Act) restricts the use of so-called “secret settlements.” Specifically, it prohibits provisions within settlement agreements that prevent the disclosure of “factual information related” to a claim in a “filed” civil action or administrative complaint related to four types of claims: (1) a sexual assault that cannot be prosecuted as a felony sex offense; (2) sexual harassment in non-employment relationships; (3) workplace sex harassment or discrimination (as well as failing to prevent, or retaliating for reporting, such acts); and (4) sex harassment or discrimination (or retaliation for reporting such acts) by the owner of a housing accommodation. The Legislature went a step further by prohibiting courts from entering protective orders, even by stipulation of the parties, restricting the disclosure of such information. Any settlement agreement that prevents the disclosure of such “factual information” is “void as a matter of law and against public policy” under SB 820.

The Legislature provided a few narrow exceptions. The Legislature acknowledged the benefits of non-disclosure provisions in settlement agreements. On one hand, the victim may have a legitimate desire for privacy regarding the events that took place and desire unwanted attention, and on the other hand, defendants may be less likely to settle or will offer less money in such settlements. As a result, SB 820 allows a plaintiff bringing any of the above-described claims to request provisions in settlement agreements that shield their identity. In addition, the new law allows a provision in a settlement agreement that precludes the disclosure of the amount paid in settlement of any of the claims described above.

Confusingly, SB 1300 also regulates confidentiality agreements. SB 1300 prohibits an employer from requiring an employee to sign a confidentiality or non-disparagement agreement that purports to deny the employee the right to disclose information about unlawful acts in the workplace, including, but not limited to, sexual harassment. However, these prohibitions do not apply to a “negotiated settlement agreement to resolve an underlying claim under [FEHA] that has been filed by an employee in court, before an administrative agency, alternative dispute resolution forum, or through an employer’s internal complaint process.” The law defines “negotiated” to mean that “the agreement is voluntary, deliberate, and informed” and “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.”

How the respective confidentiality provisions of SB 820 and SB 1300 will be reconciled remains to be seen.

SB 1300 also bars a release of claims under FEHA in exchange for a raise or as a condition of employment.

Testifying About Sexual Assault or Harassment

Under AB 3109, any provision in a contract or settlement agreement is void and unenforceable if it purports to waive an individual’s right to testify in an administrative, legislative, or judicial proceeding concerning alleged criminal conduct or alleged sexual assault committed by someone else if the individual 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. However, a person who signed an agreement with a confidentiality clause would not be free to breach that confidentiality by voluntarily showing up and speaking at a public hearing; instead, the testimony must be in response to a court order, subpoena, or a written request.

Privileged Communications About Sexual Harassment

California Civil Code section 47 protects certain communications as privileged, making them immune from defamation lawsuits. Specifically, section 47(c) grants a conditional privilege against defamation to communications made without malice and on subjects of common interest. The statute often is invoked by employers to argue they are protected against defamation liability for making statements about an employee to other employees in the company.

AB 2770 codifies case law extending protections against defamation liability to sexual harassment allegations and investigations. The law arose from a concern that California’s defamation laws can deter victims, witnesses, and former employers from making complaints or communicating information about sexual harassers to others out of fear of being sued for defamation. This new law clarifies and makes explicit that the following three types of communications related to sexual harassment are privileged, and as a result, cannot form the basis for a defamation lawsuit if the communications are made without malice: (i) non-malicious complaints about sexual harassment communicated by an employee to an employer; (ii) non-malicious communications by the employer to “interested persons,” such as an investigatory body, regarding sexual harassment; and (iii) non-malicious communications, in response to an inquiry, in which a former employer tells a prospective employer that the former employer would not rehire the former employee based on the former employer’s determination that the employee engaged in sexual harassment.

Sexual Harassment Training

FEHA currently obligates employers with 50 or more employees to provide at least two hours of classroom or other effective interactive training and education regarding sexual harassment to all supervisory employees in California within six months of their assumption of a supervisory position and once every two years. The new laws make the following changes:

  • SB 1343 reduces the employment threshold for harassment training from 50 employees to five employees.
  • SB 1343 also expands the number of employees who are required to attend the training from supervisorial employees to all employees. Supervisors will continue to be required to be trained for two hours, while non-supervisorial employees will be required to be trained for one hour. In addition, temporary and seasonal employees employed for fewer than six months must be trained by the employer within 30 calendar days after the hire date or within 100 hours worked, whichever occurs first, but if the employees are provided through a third-party temporary services employer, the training must be provided by the temporary services employer rather than the client.
  • SB 1300 allows companies to incorporate “bystander intervention training” as part of the training. Bystander training teaches taking on personal responsibility and action to intervene when present at an event, party, or other setting that presents a problematic situation that may result in sexual harassment or assault, with the goal of preventing the situation from escalating.
  • SB 1343 requires that all employers provide the required sexual harassment training by January 1, 2020, although it does not need to be provided again if the sexual harassment training was provided to an employee after January 1, 2019. In general, subject to these deadlines, the training must be provided within six months of the employee being hired and once every two years.
  • SB 1343 requires the DFEH to develop (or obtain) two online training courses on the prevention of sexual harassment in the workplace. As an alternative to the DFEH online courses, employers can develop their own training module, so long as it has the required components. The mandated sexual harassment training may be provided in conjunction with other training provided to the employees, and further, may be completed by employees individually or as part of a group presentation, and may be completed in shorter segments, as long as the applicable hourly total requirement is met.
  • SB 1343 also requires that the sexual harassment information sheet developed by DFEH (or the employer on sexual harassment) includes a link to the online training course developed by DFEH and requires that the DFEH make the sexual harassment information sheet and online course available in multiple languages.
  • In an attempt to further “awareness of harmful work environments,” AB 2338 requires talent agencies to provide artists with sexual harassment prevention, retaliation, and reporting education. The timeline requires that the artist receive this education within the earlier of 90 days from the licensee’s representation agreement or 90 days from the licensee’s or the agency’s obtaining a professional engagement, meeting, or interview for the licensee. Minors between ages 14- to 17-years-old must additionally receive sexual harassment training before obtaining an entertainment work permit.
  • The In-Home Support Services (“IHSS”) program, which is administered at the state level by the Department of Social Services (“DSS”) and at the local level by counties, provides in-home services for low-income aged, blind, and disabled individuals who are unable to perform certain tasks themselves and who cannot safely remain in their homes unless these services are provided, such as personal care services like bathing and grooming. Concluding that home-care workers, such as IHSS providers, can be especially vulnerable to sexual harassment because they often work alone in clients’ homes, AB 3082 seeks to put protocols in place to address sexual harassment in this industry. Accordingly, under this new law, the DSS, in consultation with interested stakeholders, must develop or otherwise identify: (i) standard education material about sexual harassment and the prevention of such conduct to be made available to providers and recipients of IHSS; and (ii) a method for uniform data collection to identify the prevalence of sexual harassment in the IHSS program.
  • The third largest and second most profitable criminal activity in the world is human trafficking. Human-trafficking networks have increasingly focused their operations on hotel and motel establishments. SB 970 amends FEHA to require hotel and motel employers to provide at least 20 minutes of human trafficking awareness training to their employees who are “likely to interact or come into contact with” human trafficking victims. The law provides a timeline within which affected employers must comply and identifies certain mandated components of the training and education provided to employees. If an employer fails to comply with this new law, the Department of Fair Employment and Housing must issue an order requiring compliance.

Attorney and Expert Fees

FEHA provides for an award of attorneys’ fees to a prevailing plaintiff, but not to a defendant except under narrow circumstances, i.e., the defendant must show that the FEHA case was “frivolous, unreasonable, or totally without foundation.” Under California Code of Civil Procedure section 998, however, if, during civil litigation, a defendant makes a settlement offer to the plaintiff, the plaintiff rejects the offer, and the final verdict for the plaintiff is less than what the defendant’s settlement offer was, then employers often contended that the court may award all attorneys’ fees and costs that the defendant incurred from the time the settlement offer was rejected. Cal. Code. Civ. Proc. § 998. SB 1300 seeks to resolve the conflict where both FEHA’s fee-shifting rule and Code of Civil Procedure section 998’s fee-shifting rule apply by making clear that the post-offer, fee-shifting effects of section 998 do not automatically apply to cases brought to enforce rights under FEHA. Thus, under SB 1300, even when a defendant makes a section 998 offer and wins, or the plaintiff wins but does not beat the 998 offer, the court may award attorneys’ fees and costs to the defendant only if the lawsuit was, or became, frivolous, unreasonable, or totally without foundation.

Requiring Diversity in the Boardroom

Citing the shortage of publicly held corporations in California with female members on their boards of directors, and the benefits of having women serve on the boards, SB 826 takes proactive steps to improve and ensure female representation on the boards of public companies in California. It establishes two different schedules.

  • By December 31, 2019, each publicly held, domestic or foreign corporation with its principal executive offices in California must have at least one female director on its board.
  • By December 31, 2019, each publicly held, domestic or foreign corporation whose principal executive offices are located in California must have (i) at least three female directors if its number of directors is six or more, (ii) at least two female directors if its number of directors is five, and (iii) at least one female director if its number of directors is four or fewer.

The new law also mandates that by specified deadlines, the California Secretary of State publish a report on his or her website documenting the number of publicly held, domestic and foreign corporations whose principal executive offices are located in California that have complied with these two stages of requirements. SB 826 imposes steep penalties for non-compliance: the Secretary of State can impose a fine of $100,000 for a first violation, $300,000 for a second or subsequent violation, and $100,000 for failure to timely file board member information with the Secretary of State.

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In addition to these new laws on sexual harassment and related topics, the Legislature enacted a number of other laws of interest for California employers.

Compensation

Clarifying the Fair Pay Act

In 2015, California passed the Fair Pay Act, amending the state Equal Pay Act, which prohibits an employer from paying any of its employees at wage rates less than the rates paid to employees of the opposite sex or another race or ethnicity for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions except in limited circumstances. In each year since 2015, the Legislature has modified the Fair Pay Act to bolster its protections. In 2016, it passed legislation to prohibit employers from using prior salary, “by itself,” to justify a current disparity in compensation. In 2017, it further amended the Act to prohibit employers from relying on the salary history information of an applicant as a factor in determining whether to offer an applicant employment or what salary to offer, and also required an employer, upon reasonable request, to provide the pay scale for a position to an applicant for employment.

AB 2282 clarifies these prior modifications to the Fair Pay Act. First, it makes clear that prior salary cannot be used to justify a wage differential, whether used on its own or in combination with a lawful factor under the Fair Pay Act. Second, it provides a carve-out for using prior salary in a pay decision for current employees (e.g., awarding a bonus), so long as any wage differential from that decision is justified by one or more specified factors listed in the Fair Pay Act (e.g., merit system). Third, AB 2282 clarifies that the prohibition on asking about prior salary does not forbid an employer from asking the applicant about his or her “salary expectations” for the position for which he or she applied. Fourth, the new law clarifies the existing requirement to provide a “pay scale” by defining the terms “pay scale” (i.e., a salary or hourly wage range); “reasonable request” (i.e., request made after an applicant has completed an initial interview); and “applicant” (i.e., individual who is seeking employment with the employer and is not currently employed with that employer).

Disability and Leave

Accommodating Lactation

California employers are currently obligated to provide a reasonable amount of break time to accommodate an employee desiring to express breast milk for her infant and, further, to make reasonable efforts to provide the employee with the use of a room or other location, “other than a toilet stall,” in close proximity to her work area, for her to do so. AB 1976, with the goal of assisting employees to nurse in a cleaner and safer environment, modifies this current law to require that a lactation accommodation room must be a room other than a bathroom. There are two exceptions: (1) An employer can apply for an undue hardship exemption if that employer can show that accommodating an employee’s wish to express breast milk would constitute an undue hardship when considered in relation to the size, nature, or structure of the employer’s business, in which case the lactation accommodation space would be required instead to not be a bathroom stall; and (2) an agricultural employer can comply by providing an employee wishing to express breast milk with a “private, enclosed and shaded space.”

Expanding Paid Family Leave to Military Qualifying Exigency Leave

The federal Family and Medical Leave Act (“FMLA”) allows eligible employees to take specific kinds of military family leave, including “qualifying exigency leave,” which allows for up to twelve workweeks of job-protected but unpaid time off from work arising out of the fact that the spouse, son, daughter, or parent of the employee is on covered active duty or has been notified of an impending call or order to covered active duty in the Armed Forces. California’s Paid Family Leave (“PFL”) program provides up to six weeks of wage replacement benefits to workers who must take time off work to care for a seriously ill child, spouse, parent, grandparent, grandchild, sibling, or domestic partner, or to bond with a minor child within one year of the birth or placement of the child in connection with foster care or adoption.

SB 1123 seeks to provide PFL benefits to some of the more than 128,000 active duty service members and 56,000 reserve forces in California. To that end, this new law expands the PFL program to include time off to attend to a “qualifying exigency” related to the covered active duty status of the individual’s spouse, domestic partner, child, or parent in the armed forces of the United States deployed in a foreign country. SB 1123 articulates various circumstances that make one ineligible for the qualifying exigency benefits (e.g., another family member is able to perform the activity related to having a family member on active duty) and describes a certification process that the Employment Development Department may invoke to require an individual to provide documents and other information to substantiate the claim for PFL benefits. SB1123 will become effective January 1, 2021.

Wage-and-Hour

Clarifying Employee’s Right to Receive Copies of Wage Statements

Section 226 of the California Labor Code requires employers, semimonthly or at the time of payment of wages, to furnish an employee with an accurate, itemized, written statement containing specified information regarding gross and net wages earned and hours worked, among other things, subject to certain variations. It also grants current and former employees “the right to inspect or copy records” required by section 226 upon reasonable request to the employer and imposes a penalty of $750 for an employer’s failure to do so in a timely manner.

The Legislature passed SB 1252 as a “clarification” of the employer’s current obligation in light of reports of “some unscrupulous employers . . . telling workers that the ‘or copy’ language in the Labor Code means they must bring a copying device into the employers’ offices and make the copy themselves.” The amended version of section 226 will state that the employee’s right is to “inspect or receive a copy” of the required payroll records. The amendment adds that “[t]he amendment of Section 226 of the Labor Code . . . does not constitute a change in, but is declaratory of, existing law.”

Exemption for Task-Free Rest Periods for Safety-Sensitive Positions at Petroleum Facilities

In Augustus v. ABM Security Services, Inc., 2 Cal. 5th 257 (2016), the California Supreme Court ruled that “on-call” or “on-duty” rest periods do not satisfy an employer’s obligation to relieve employees of all work-related duties and employer control. In response to Augustus, AB 2605 provides a limited exemption from the requirement that rest periods are off-duty for certain safety-sensitive positions at petroleum facilities. Specifically, the new law provides that the requirement that employees be relieved of all duties during rest periods does not apply to an employee who meets the following criteria: (i) the employee holds a safety-sensitive position at petroleum facility, must respond to emergencies, and is required to carry and monitor a communication device, or is required to remain on the premises to monitor and respond to emergencies; (ii) the employee is subject to Industrial Welfare Commission Wage Order No. 1 (applicable to manufacturing industry); and (iii) the employee is covered by a valid collective bargaining agreement that expressly provides for, among other things, regular and overtime wages, rest periods, and a final and binding arbitration procedure for disputes concerning rest periods. AB 2605 includes a sunset provision of January 1, 2021.

Requiring Joint and Several Liability for Customers Who Contract with Port Drayage Motor Carriers

California has the two busiest ports in the United States: the Port of Los Angeles and the Port of Long Beach. In recent years, the state Division of Labor Standards Enforcement (“DLSE”) has received a large number of complaints from port drayage workers, especially related to claims that they are misclassified as independent contractors and not being paid at least the minimum wage and overtime. SB 1402 is an attempt to incentivize port drayage motor carriers to comply with the law and disincentives third parties from doing business with those motor carriers that decline to do so.

Under this new law, the DLSE must post on its website essential information for any port drayage motor carrier with any unsatisfied final court judgment, order, decision, or award finding that a port drayage motor carrier has engaged in illegal conduct, such as failure to pay wages and reimburse expenses and misclassification of employees as independent contractors. SB 1402 then provides, with certain exceptions, that a customer using a port drayage motor carrier that is on the list, shall be jointly and severally liable with the motor carrier for the full amount of unpaid wages, unreimbursed expenses, damages, and penalties, including applicable interest. Joint and several liability described does not apply to: (i) employees covered by a valid collective bargaining agreement, if the agreement expressly provides for wages, hours of work, working conditions, a process to resolve disputes concerning nonpayment of wages, expenses, damages, and penalties, including applicable interest, and a waiver of the joint and several liability; (ii) customers who terminate a port drayage contract after the contracted port drayage motor carrier is added to the list, within certain time limits; (iii) port drayage motor carriers not posted on the DLSE’s website; and (iv) port drayage motor carriers who have satisfied the conditions for removal prior to the time period for which the joint and several liability is alleged.

Clarifying Construction Direct Contractor Liability

Last year, the Legislature passed AB 1701, which made construction general contractors liable for their subcontractors’ employees’ unpaid wages if the subcontractor fails to pay wages due. AB 1565 is the follow-up legislation. It removes a provision in the original law that had created confusion about whether penalties and liquidated damages could be imposed whenever a general contractor becomes liable for wages or benefits owed to a subcontractor’s employees and allows a general contractor to withhold as “disputed” all sums owed to a subcontractor if the subcontractor fails to produce adequate information about payroll records and about the lower-tier subcontractors to whom the subcontractor has awarded work.

Criminal History

Restricting Consideration of Criminal History to “Particular Convictions”

Under the Labor Code, employers may not consider a job applicant’s expunged or judicially-sealed convictions until a conditional offer of employment has been extended. But there are exceptions to this prohibition for certain categories of sensitive jobs. Legislators had a concern that some employers were taking advantage of these exceptions, and given that background checks return information on all convictions on a person’s record, they were still denying employment based upon expunged convictions rather than considering crimes that would have a direct impact on their ability to do their job. SB 1412 attempts to address this by stipulating that an employer can only consider “particular convictions” when rejecting applicants. It defines “particular conviction” as “a conviction for specific criminal conduct or a category of criminal offenses prescribed by any federal law, federal regulation or state law that contains requirements, exclusions, or both, expressly based on that specific criminal conduct or category of criminal offenses.”

Alternative Dispute Resolution

Requiring Attorney Disclosures of Confidentiality Rules in Mediation

California has long had a policy to maintain confidentiality in mediation. But Legislators have become concerned that California’s strict mediation confidentiality statutes may inadvertently prevent certain clients from suing their lawyers for alleged malpractice in the course of mediation. Accordingly, SB 954 requires that attorneys provide their clients with information regarding the restrictions on mediation communications and documents.

First, except in the case of a class or representative action, SB 954 requires that, as soon as reasonably possible before the client agrees to participate in the mediation or mediation consultation, an attorney representing a client participating in a mediation or a mediation consultation must provide that client with a printed disclosure containing the confidentiality restrictions described in section 1119 (which must meet specific format requirements) and then obtain a printed acknowledgment signed by that client stating that the client has read and understands the confidentiality restrictions. Second, SB 954 provides that a communication, or writing made or prepared for the purpose of, or in the course of, or pursuant to, a mediation or a mediation consultation, is not made inadmissible, or protected from disclosure, if the communication, document, or writing is to be used in an attorney disciplinary proceeding to determine whether an attorney has complied with the requirements described in section 1129, and does not disclose anything said or done or any admission made in the course of the mediation.

Except as noted, these laws will come into effect next January 1. Before then, employers should familiarize themselves with these new laws to ensure that they are in compliance.