California has enacted a number of significant laws that promise to change the landscape around issues of workplace harassment, discrimination, and inclusion. Among other things, these laws will affect how California employers deal with, defend against, and resolve allegations of workplace sexual harassment and assault, as well as expand the rights of complainants, extend the statute of limitations for certain claims, and mandate the inclusion of women on corporate boards.

Below are highlights of the new laws, which take effect on January 1, 2019, unless otherwise noted:

Limitations on Settlement Agreements (Senate Bill 820)

This law prohibits the inclusion of nondisclosure provisions in agreements, entered into on or after January 1, 2019 that stem from civil or administrative complaints of sexual assault sexual harassment, and/or workplace harassment or discrimination based on sex, and that purport to limit an employee’s right to publicly disclose factual information concerning the employee’s complaint. Employers may, however, still include nondisclosure provisions that preclude disclosure of the amount paid in settlement. And, unless the opposing party is a government agency or public official, claimants may still seek a nondisclosure provision that precludes disclosure of the claimant’s identity and any facts that could reveal his or her identity. Any settlement provision that violates the new law will be void and unenforceable.

To read about similar laws in other states, visit our advisories here (New York law) and here (Washington law).

Prohibition of Limitations on Employees’ Right to Testify (Assembly Bill 3109)

Any agreement entered into on or after January 1, 2019, that purports to waive a party’s right to testify in an administrative, legislative, or judicial proceeding regarding alleged criminal conduct or sexual harassment by the other party or the other party’s agent or employee, will be void and unenforceable.

Limitations on Releases and Non-Disparagement Agreements (Senate Bill 1300)

This new law prohibits employers from doing either of the following in exchange for a raise or bonus or as a condition of employment or continued employment: (i) requiring the execution of a release of a claim under the Fair Employment and Housing Act (FEHA), or (ii) requiring an employee to sign a non-disparagement agreement that seeks to deny the employee the right to disclose information about unlawful acts in the workplace. Any agreement that violates the statute will be void and unenforceable. Notably, these proscriptions do not apply to settlement agreements negotiated to resolve FEHA claims that have been filed by an employee in court, before an administrative agency or alternative dispute resolution forum, or through an employer’s internal complaint process.

Expansion of Existing Anti-Harassment Provisions in State Law (Senate Bill 1300, Senate Bill 224, Assembly Bill 1619, and Assembly Bill 3082)

The new laws significantly limit employer defenses and lower the claimant’s burden of proof. These changes may make it more difficult for employers to obtain summary judgment dismissals of sexual harassment claims under FEHA, which may increase the settlement “value” of those claims by. The changes include:

  • Narrowing the “severe or pervasive” legal standard for sexual harassment by declaring that even a single incident of harassing conduct could create a triable issue regarding the existence of a hostile environment (i.e., rejecting the “one free grope” concept established by a federal court);
  • Confirming that a single discriminatory comment, even if not made in the context of an employment decision and even if uttered by a non-decision-maker, could be relevant evidence of discrimination, depending on the totality of the circumstances;
  • Lowering the burden of proof for a plaintiff to establish harassment and declaring as a matter of legislative intent that harassment cases are rarely appropriate for resolution by summary judgment;
  • Rejecting the notion that different standards for sexual harassment should apply to different kinds of workplaces;
  • Extending FEHA protections to employees, applicants, unpaid interns, volunteers, and persons providing services pursuant to a contract from any type of harassment by nonemployees—not just sexual harassment as is the case under current law;
  • Denying prevailing defendants attorneys’ fees and costs awards unless the court finds that a plaintiff’s action was frivolous, unreasonable, or groundless
  • Enlarging the statute of limitations for sexual assault to ten years after an assault/attempted assault, or three years after the plaintiff discovered, or reasonably should have discovered, that his or her injuries resulted from an assault/attempted assault;
  • Authorizing (but not requiring) employers to provide bystander intervention training;
  • Expanding upon the types of professional relationships where liability for sexual harassment might arise (e.g., investors, elected officials, lobbyists, directors, and producers); and
  • Requiring the State Department of Social Services to develop or identify educational materials about sexual harassment to be made available to In-Home Supportive Services (IHSS) providers and recipients, as well as to propose a data collection method in order to understand the prevalence of sexual harassment in the IHSS program.

Expansion of Sexual Harassment Prevention Training Requirement (Senate Bill 1343 and Assembly Bill 2338)

Current law mandates that all employers with at least 50 employees provide two hours of harassment-prevention training to supervisors at prescribed intervals. Under the new law, any employer who employs five or more employees—including temporary and seasonal employees—must now provide at least two hours of harassment training to all supervisory employees, and at least one hour of harassment training to all nonsupervisory employees, by January 1, 2020, and once every two years thereafter.

Similarly, talent agencies, regardless of size, will now need to provide educational materials on sexual harassment prevention, retaliation, and reporting resources to adult artists, minors, and the parents and legal guardians of minors age 14 to 17. Talent agencies must also provide materials on nutrition and eating disorders to adult model employees.

Human Trafficking Awareness Training for Hotel and Motel Employees (Senate Bill 970)

Hotel and motel employers will have to provide at least 20 minutes of interactive human trafficking awareness training to employees who are likely to interact with human trafficking victims. Employers must provide this training by January 1, 2020, and once every two years thereafter. Bed and breakfast inns are expressly excluded from these requirements.

Minimum Quota for Females on Publicly-Held Corporate Boards (Senate Bill 826)

This new law requires publicly held corporations that have their principal executive offices in California to have at least one female director on their board of directors by the end of 2019. For purposes of this law, “female” means an individual who self-identifies as a woman, without regard to the designated sex at birth.

The threshold minimum will increase over time for companies with larger boards. Specifically, if a corporation has five directors, it must have at least two female directors by the end of 2021. If a corporation has six or more directors, it must have at least three female directors by the end of 2021.

Vetoed Legislation

There were some positive developments for California employers in Governor Brown’s veto of several hotly contested bills. One—Assembly Bill 3080—would have prevented employers from forcing employees to use private arbitration rather than the court system. Another—Assembly Bill 1870—would have extended the deadline for California employees to file discrimination complaints (including sexual harassment claims) with the state from one year to three years.

Practical Guidance Employers should modify settlement agreement and severance agreement templates to ensure that they do not run afoul of the new laws proscribing the inclusion of nondisclosure and non-disparagement provisions or an employee’s waiver of the right to testify in an administrative, legislative, or judicial proceeding. Employers should also review bonus documents and other incentive documents to ensure that they do not require the release of FEHA claims.

Dismissing or inexpensively settling harassment claims will likely be more difficult in the future. Employers—large and small—should consider ways to make the anti-harassment training they are required to provide meaningful and effective for all employees from the top down, and not simply an exercise in “check the box.” In addition, employers should review their internal complaint procedures to make sure there are multiple, well-publicized and readily accessible avenues for raising concerns, as well as protocols for the investigation of harassment and discrimination complaints that will ensure such investigations are thorough and fair. Doing so will help avoid litigation, improve employee relations, encourage the use of internal complaint resolution processes, and provide compelling evidence of employer good-faith commitment to prevent harassment.