On September 30, 2018, Governor Jerry Brown signed into law a slate of legislation borne out of the #MeToo movement. These new laws take effect January 1, 2019, and pose significant new challenges for employers.
Senate Bill 820
On September 30, 2018, Governor Brown signed SB 820, which adds Section 1001 to the California Code of Civil Procedure. The new statute prohibits the inclusion of certain provisions of confidential settlements and nondisclosure agreements in the settlement of sexual harassment cases. Specifically, sexual harassment settlement agreements cannot include provisions that prohibit the disclosure of the underlying factual information that relates to claims of sexual assault, sexual harassment, sex discrimination or retaliation. It does allow the parties to include language in settlement agreements that would shield the identity of the victim as well as other facts from which the victim’s identity could be determined or discovered. The bill does not prohibit inclusion of provisions that keep the amount of the settlement confidential. Employers must also remember the federal tax bill passed in late 2017, which prohibited sexual harassment settlements from being tax-deductible by the employer if they are confidential.
Senate Bill 826
Governor Brown also signed SB 826 on September 30, 2018. This bill adds Section 301.3 to the California Corporations Code and requires boards of directors of public companies whose principal executive offices are in California to have at least one woman on the board of directors by the end of 2019; at least two women by the end of 2021 if the board has five directors or fewer; or at least three women by the end of 2021 if the board has six directors or more. Companies will face fines of $100,000 for a first violation and $300,000 for subsequent violations. If a woman occupies a board of director seat for at least a portion of the year in question, there will be no violation for that seat. A corporation that is required to have two female board members will need to show that a woman occupied each mandated female board position for at least a portion of the year. For purposes of this bill, “female” is an individual who self-identifies as a woman, regardless of the gender assigned at birth.
Senate Bill 1300
Also signed on September 30, 2018, SB 1300 adds Section 12923 to the Government Code and amends Section 12940 of the same code (California’s Fair Employment and Housing Act). Section 12923 makes several policy declarations that will make it more difficult—and perhaps impossible—for employers to obtain summary judgment in harassment cases. New Government Code Section 12923 declares the state’s affirmation of its approval of the standard set forth by Supreme Court Justice Ruth Bader Ginsburg in her concurrence in Harris v. Forklift Systems (1993) 510 U.S. 17, 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.”
The new statute also declares that a single incident of alleged harassment is sufficient to create a triable issue of fact regarding the existence of a hostile work environment. The statute further states 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 nondecision-maker, may be relevant, circumstantial evidence of discrimination. The statute further states that the legal standard for sexual harassment should not vary by type of workplace. Lastly, in case there was any confusion left, the statute specifically states, “Harassment cases are rarely appropriate for disposition on summary judgment. In that regard, the Legislature affirms... that hostile working environment cases involve issues ‘not determinable on paper.’”
SB 1300 also amends Government Code 12940. Section 12940 already provided that an employer may be responsible for the acts of nonemployees, with respect to sexual harassment of employees, applicants, unpaid interns or volunteers, or persons providing services pursuant to a contract in the workplace, if the employer, or its agents or supervisors, knows or should have known of the conduct and fails to take immediate and appropriate corrective action. Section 12940 is now amended to make the above provision apply with respect to any type of harassment prohibited under FEHA of employees, applicants, unpaid interns or volunteers, or persons providing services pursuant to a contract in the workplace.
SB 1300 also adds Government Code Section 12950.2, which permits (but does not require) employers who are subject to the state’s mandatory sexual harassment training provisions to now include “bystander intervention training.” This training would include 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. The training and education may include exercises to provide bystanders with the skills and confidence to intervene as appropriate and to provide bystanders with resources they can call upon that support their intervention.
SB 1300 also adds Section 12964.5 to the Government Code. This new provision makes it unlawful for employers to require employees, as a condition of receiving raises or bonuses or as a condition to hire or for continued employment, to sign releases of any types of claims under FEHA or to require them to sign nondisparagement agreements that purport to prohibit the disclosure of information about unlawful acts in the workplace, including, but not limited to, sexual harassment. Any such releases or agreements are unenforceable and contrary to public policy.
Senate Bill 1343
This bill requires employers with five employees or more to conduct training on sexual harassment, abusive conduct and harassment based upon gender. Employee headcounts include temporary and seasonal employees. This training had previously been required only of employers with 50 or more employees. The training is also expanded to nonsupervisory employees; supervisory employees must receive at least two hours of sexual harassment training every two years, while nonsupervisory employees must receive at least one hour of training every two years. The bill requires the California Department of Fair Employment and Housing to create online training courses to satisfy the requirements, which will reduce the cost burden on employers. The date by which newly covered employers must provide such training is January 2, 2020.
Assembly Bill 1976
Existing law requires employers to provide a private space other than a toilet stall in which an employee may express breast milk. AB 1976 amends Labor Code 1031 to require that the space be provided shall be something other than a bathroom. The space provided must have electrical outlets, must be of a certain size, and must provide for breast milk storage. Existing law already requires employers to provide female employees with “reasonable” break time for lactation. Unlike federal law, existing state law does not limit the length of time following birth that employees may lactate.
Governor Brown vetoed bills that would have (i) increased the statute of limitations from one to three years on claims brought under FEHA (AB 1870) and (ii) prohibited employers from requiring employees to enter into mandatory arbitration agreements (AB 3080). Earlier this year, the New York State Legislature passed a bill that prohibits employers from requiring employees to enter into predispute agreements to arbitrate sexual harassment claims “except where inconsistent with federal law.” It is possible that the Federal Arbitration Act may preempt this prohibition. New York also enacted legislation requiring that any confidentiality provision in a sexual harassment settlement agreement must be at the “complainant’s preference,” and that any such preference be specifically stated in the settlement agreement.
What This Means for Employers
Particularly in view of the fact that employers are unlikely to be able to terminate sexual harassment and gender-based claims by way of summary judgment, education and prevention are paramount. Smaller employers will now be required to conduct sexual harassment training, and all employers with five or more employees will now need to train nonsupervisory employees as well. Now is the time for employers to plan for 2019 training sessions, to review the confidentiality provisions in their release forms and to consider whether to provide “bystander intervention training.” Employers should also ensure that their lactation practices are compliant and California-based public companies need to take a close look at the composition of their boards of directors.