HIGHLIGHTS:

  • The California Legislature passed numerous labor and employment bills that become effective on Jan. 1, 2019
  • California's minimum wages and exempt salary thresholds increase on Jan. 1, 2019
  • These laws were among the last acts signed by Gov. Jerry Brown before he leaves office on Jan. 7, 2019

In 2018, California enacted numerous labor and employment laws. Unless otherwise noted, each of the laws listed below is effective on Jan. 1, 2019. These laws were among the last acts signed by Gov. Jerry Brown before he leaves office on Jan. 7, 2019. This alert highlights selected and significant new laws, as well as California's rising minimum wages and exempt salary thresholds:

  • California's Minimum Wages and Exempt Salary Thresholds Increase in 2019
  • SB 1300 – Significant New Protections and Prohibitions Under the California Fair Employment and Housing Act
  • SB 1343 – Harassment Prevention Training Requirements Extended to Smaller Employers and Nonsupervisory Employees
  • SB 820 – Settlement Agreements Cannot Prevent Disclosure of Factual Information Related to Sexual Harassment or Discrimination Claims
  • SB 224 – Sexual Harassment Claims Will Be Easier to Bring Under California Civil Code Section 51.9
  • AB 2770 – Expanding the Scope of "Privileged Communications" to Protect Employees Making Sexual Harassment Allegations and to Protect Former Employers When Communicating Credible Allegations
  • AB 3109 – Contracts and Settlement Agreements Cannot Waive a Party's Right to Testify in Certain Administrative, Legislative, or Judicial Proceedings
  • AB 2282 – Clarifications Regarding Employers' Use and Consideration of Salary History Information
  • SB 1252 – Employees Have a Right to Receive a Copy of Itemized Wage Statements, in Addition to Inspecting Itemized Wage Statements
  • AB 1976 – Expanded Lactation Accommodation Requirements
  • SB 826 – Certain Corporations' Board of Directors Must Include a Minimum Number of Female Directors by the Close of 2019 and 2021

California's Minimum Wages and Exempt Salary Thresholds Increase in 2019

SB 3, enacted in the 2015-2016 legislative session, sets forth a schedule for minimum wage increases through 2023.

Beginning Jan. 1, 2019, for employers with 26 employees or more, the minimum wage will increase from $11 per hour to $12 per hour, and the exempt annual salary threshold will increase from $45,760 to $49,920.

For employers with 25 employees or less, the minimum wage will increase from $10.50 per hour to $11 per hour, and the exempt annual salary threshold will increase from $43,680 to $45,760.

SB 1300 – Significant New Protections and Prohibitions under the California Fair Employment and Housing Act

SB 1300 makes several significant changes to the California Fair Employment and Housing Act (FEHA). These changes make it essential for employers to review their equal employment opportunity (EEO) policies and practices to ensure compliance and to mitigate risk.

  • SB 1300 marks a drastic change in the legal landscape in which FEHA harassment claims are litigated by making it easier to bring FEHA harassment claims and, at the same time, significantly more difficult to obtain summary judgment on such claims. Effective Jan. 1, 2019:
    • Harassment cases "are rarely appropriate for disposition on summary judgment."
    • 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. In SB 1300, the California legislature has rejected the higher "severe or pervasive" standard for unlawful harassment established by the U.S. Court of Appeals for the Ninth Circuit in its precedential decisions.
    • A plaintiff need not prove that his or her tangible productivity has declined as a result of the harassment. Rather, a plaintiff need only 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.
    • The existence of a hostile work environment depends upon the totality of the circumstances. Under this framework, a discriminatory remark, even if made outside of the context of an employment decision or uttered by a nondecision-maker, may be relevant circumstantial evidence of discrimination. The California Legislature expressly rejected the "stray remarks doctrine" under which a discriminatory remark outside of the context of an adverse employment decision did not create a triable issue of fact that could defeat summary judgment, reaffirming California Supreme Court precedent.
    • When conduct sufficiently offends, humiliates, distresses or intrudes upon its victim, so as to 1) disrupt the victim's emotional tranquility in the workplace, 2) affect the victim's ability to perform the job as usual, or 3) otherwise interfere with and undermine the victim's personal sense of well-being, that conduct deprives a victim of the statutory right to work in a discrimination-free workplace. Thus, such conduct rises to the level of harassment creating a hostile, offensive, oppressive or intimidating work environment.
  • Employers are prohibited from requiring an employee, as a condition of employment or continued employment, or in exchange for a raise of bonus, to:
    • sign a release of a claim or right under the FEHA. (In this context, "release of a claim or right" includes "requiring an individual to execute a statement that he or she does not possess any claim or injury against the employer or other covered entity, and includes the release of a right to file and pursue a civil action or complaint with, or otherwise notify, a state agency, other public prosecutor, law enforcement agency, or any court or other governmental entity.")
    • 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.

These prohibitions do not apply to a "negotiated" agreement to settle an underlying FEHA claim 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. "Negotiated" in this context means that "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."

  • The bill specifies that a court shall not award a defendant who prevails in a civil action fees and costs unless the court finds that the action was frivolous, unreasonable or groundless when brought, or that the plaintiff continued to litigate after it clearly became so.
  • The bill specifies that an employer can be held liable to employees, applicants, unpaid interns or volunteers, or persons providing services pursuant to a contract in the workplace for any type of harassment – not just sexual harassment – prohibited under the FEHA and committed by a nonemployee. For such liability to attach, the employer, its agents or its supervisors must know, or should have known, of the nonemployee's conduct and must fail to take immediate and appropriate corrective action.
  • The bill authorizes, but does not require, an employer to provide bystander intervention training "that includes information and practical guidance on how to enable bystanders to recognize potentially problematic behaviors and to motivate bystanders to take action when they observe problematic behaviors."

SB 1343 – Harassment Prevention Training Requirements Extended to Smaller Employers and Nonsupervisory Employees

The FEHA currently requires employers with 50 or more employees to provide sexual harassment prevention training to all supervisory employees within six months of their assumption of a supervisory position and once every two years.

SB 1343 extends training requirements to smaller employers and to nonsupervisory employees. More specifically, the bill requires that by Jan. 1, 2020, employers with five or more employees must provide at least two hours of sexual harassment prevention training to supervisory employees, and at least one hour of sexual harassment prevention training to nonsupervisory employees in California within six months of their assumption of a supervisory position.

Beginning Jan. 1, 2020, for seasonal and temporary employees or any employee hired to work for less than six months, employers must provide training within 30 calendar days after the hire date or within 100 hours worked, whichever is earlier.

The bill requires the Department of Fair Employment and Housing (DFEH) to make publicly available a one-hour online training course for nonsupervisory employees, and a two-hour online training course for supervisory employees. These training courses will comply with training requirements, but employers are still authorized to provide their own compliant training courses.

SB 820 – Settlement Agreements Cannot Prevent Disclosure of Factual Information Related to Sexual Harassment or Discrimination Claims

SB 820, which adds California Civil Code section 1001, applies to any settlement agreement entered into on or after Jan. 1, 2019. SB 829 renders as unenforceable any provision in any settlement agreement that prevents the disclosure of factual information related to claims filed in a civil action or administrative action regarding any of the following acts:

  1. Sexual assault not governed by California Civil Code section 1002(a) – California Civil Code section 1002(a) prohibits settlement agreement provisions that prevent disclosure of factual information related to certain felony sex offenses, childhood sexual abuse, sexual exploitation of a minor, conduct prohibited with respect to a minor, and sexual assault against an elder or dependent adult.
  2. Sexual harassment as defined by California Civil Code section 51.9 – California Civil Code section 51.9 was amended by SB 224, which is discussed below in the next section.
  3. Workplace harassment or discrimination based on sex, or the failure to prevent an act of workplace harassment or discrimination based on sex, or an act of retaliation against a person for reporting harassment or discrimination based on sex.
  4. Harassment or discrimination based on sex, or an act of retaliation against a person for reporting harassment based on sex, by the owner of a housing accommodation.

A court may consider the pleadings and other papers in the record, or any findings of the court in determining the factual foundation of the causes of action as specified.

For settlement agreements not involving a government agency or public official as a party, the agreement can include a provision which shields the identity of the claimant and all facts that could lead to the discovery of his or her identity, if requested by the claimant.

SB 820 does not prohibit provisions which protect against disclosure of the settlement sum paid under the agreement.

SB 224 – Sexual Harassment Claims Will Be Easier to Bring under California Civil Code section 51.9

Under current law, the elements for a sexual harassment claim under California Civil Code section 51.9 require, among other things, that there is "a business, service, or professional relationship between the plaintiff and defendant," and the statute sets forth a nonexhaustive list of such relationships. SB 224 adds the following relationships to that list: 1) elected official, 2) lobbyist and 3) director or producer.

Another element in the existing law is that there is an "inability by the plaintiff to easily terminate the relationship." SB 224 removes this element, thereby making it easier for a plaintiff to bring a claim under section 51.9.

SB 224 also makes it an unlawful practice for a person to deny or to aid, incite or conspire in the denial of rights created by section 51.9.

AB 2770 – Expanding the Scope of "Privileged Communications" to Protect Employees Making Sexual Harassment Allegations and to Protect Former Employers when Communicating Credible Allegations

One aim of AB 2770 is to help prevent future workplace sexual harassment by permitting former employers to communicate in a privileged way with an alleged harasser's new potential employer. A common practice when hiring new employees is conducting a reference check, where a prospective employer contacts an applicant's former employer. Under existing libel laws, the former employer is permitted to say whether or not it would rehire the applicant in response to a reference check. However, former employers were at risk for a libel or slander lawsuit if they informed a prospective employer that the applicant would not be rehired because of allegations of sexual harassment.

AB 2770's expansion of "privileged communications" now protects and permits the former employer to inform a prospective employer whether the decision not to rehire the applicant "is based on the employer's determination that the former employee engaged in sexual harassment." The former employer may communicate such in response to a reference check if it does so without malice. In theory, including such correspondence as "privileged communications" limits or eliminates a former employer's liability for slander or libel in connection with such statements.

AB 2770 also includes under the aegis of "privileged communications" an employee's "complaint of sexual harassment . . . [made] without malice, to an employer based on credible evidence." This provision appears to operate as a method to protect accusers from libel or slander lawsuits brought as a method of "silencing" allegations.

AB 3109 – Contracts and Settlement Agreements Cannot Waive a Party's Right to Testify in Certain Administrative, Legislative, or Judicial Proceedings

AB 3109, which adds California Civil Code section 1670.11, applies to any contract or settlement agreement, entered into on or after Jan. 1, 2019. AB 3109 makes unenforceable any provision that waives a party's right to testify in an administrative, legislative, or judicial proceeding concerning alleged criminal conduct or alleged sexual harassment of the other party to the contract or settlement agreement, or on the part of the agents or employees of the other party, if the party has been required or requested to attend the proceeding per a court order, subpoena or written request from an administrative agency or the legislature.

AB 2282 – Clarifications Regarding Employers' Use and Consideration of Salary History Information

Under current law, an employer cannot rely on the salary history information of an applicant for employment as a factor in determining whether to offer the applicant employment or what salary to offer the applicant, with exceptions. Current law also generally forbids an employer from seeking salary history information from an applicant for employment. However, an employer may rely on salary history information as a factor in determining whether to offer employment or what salary to offer if the applicant voluntarily discloses their salary history information. Current law requires an employer, upon reasonable request, to provide the pay scale for a position to an applicant applying for employment.

AB 2282 clarifies the existing law and adds new provisions to the salary law. In terms of providing a pay scale to an applicant for a position, the bill defines "pay scale" as "a salary or hourly wage range." The bill defines "applicant" or "applicant for employment" as "an individual who is seeking employment with the employer and is not currently employed with that employer in any capacity or position." The bill defines "reasonable request" as "a request made after an applicant has completed an initial interview with the employer."

The bill also provides much needed clarification regarding what employers can and cannot do during the hiring process and in making compensation decisions. Under the revised law, employers are not prohibited from asking an applicant about his or her salary expectation for the position being applied for. However, employers must still be careful not to seek past salary history information.

The bill also clarifies that employers can make compensation decisions based on a current employee existing salary as long as any wage differential resulting from the compensation decision is justified by one or more specified factors, including a seniority system, a merit system, or education, training and experience.

SB 1252 – Employees Have a Right to Receive a Copy of Itemized Wage Statements, in addition to Inspecting Itemized Wage Statements

SB 1252 amends California Labor Code section 226 to specify that an employee not only has the right to "inspect" their itemized wage statements, but also to "receive" a copy of their itemized wage statements. The bill specifies that it is not a change in the law, but declaratory of existing law. This legislative statement may allow for retroactive application of the law to conduct occurring within the applicable statute of limitations period.

AB 1976 – Expanded Lactation Accommodation Requirements

Current law requires an employer to make reasonable efforts to provide an employee with use of a room or other location, other than a toilet stall, in close proximity to the employee's work area for the employee to express milk in private.

AB 1976 expands the lactation accommodation requirement. Employers must now make reasonable efforts to provide an employee with use of a room or other location, other than a bathroom.

The bill further provides that an employer who makes a temporary lactation location available to an employee will be in compliance if all of the following conditions are met:

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

If an employer demonstrates to the Department of Industrial Relations that the requirement to provide the use of a room or other location, other than a bathroom, would impose an undue hardship when considered in relation to the size, nature or structure of the employer's business, an employer must then make reasonable efforts to provide the use of a room or other location, other than a toilet stall, in close proximity to the employee's work area, for the employee to express milk in private.

SB 826 – Certain Corporations' Board of Directors Must Include a Minimum Number of Female Directors by the Close of 2019 and 2021

SB 826 adds California Corporations Code section 301.3. SB 826 requires a publicly held domestic or foreign corporation whose principal offices are located in California, per the corporation's U.S. Securities and Exchange Commission (SEC) Form 10-K, to have at least one female director on its board of directors by the close of the 2019 calendar year. A corporation may increase the number of directors on its board to comply.

By the close of the 2021 calendar year, such corporations must have:

  1. at least three female directors if the corporation has six or more directors
  2. at least two female directors if the corporation has five directors
  3. at least one female director if the corporation has four or fewer directors

California's Secretary of State will publish a report on its website, no later than July 1, 2019, which documents the number of domestic and foreign corporations whose principle executive offices, per the corporation's SEC Form 10-K, are located in California and who have at least one female director.

SB 826 authorizes the Secretary of State to adopt regulations to implement the new law and provides for significant fines for violations of those regulations. The bill makes clear that a female director having held a seat for at least a portion of the year is not a violation. The bill defines "female" as "an individual who self-identifies her gender as a woman, without regard to the individual's sex at birth," and defines "publicly held corporation" as "a corporation with outstanding shares listed on a major United States stock exchange."