On September 30, 2018, for the final time during his tenure as Governor, Governor Jerry Brown acted on a series of bills passed by the legislature that would have far-reaching consequences for employers. Though employers can breathe a sigh of relief that some bills were vetoed, the Governor’s signature on several others signals big changes in the coming year.

What The Governor Vetoed

AB 3080 – Ban on Mandatory Workplace Arbitration Agreements

Most significantly, Governor Brown vetoed AB 3080, which we reported on in depth on August 23, 2018. AB 3080 would have imposed a ban on mandatory workplace arbitration agreements for all claims of employment discrimination, retaliation, and harassment, as well as wage and hour claims. In his veto message, Governor Brown did not mince words: “this bill plainly violates federal law.”

AB 1867 – Sexual Harassment Records

Governor Brown also vetoed AB 1867, which would have required employers to maintain internal records of employee complaints of sexual harassment for a minimum of 5 years after the last day of employment of the complainant or alleged harasser, whichever is later. Governor Brown’s veto message noted that the bill was “unwarranted” because “current law already requires personnel records – including records of complaints – be maintained for suitable periods of time.”

AB 1870 – Extending Deadline to File DFEH Complaints

The Governor also rejected AB 1870, which would have extended the time period for filing complaints of workplace discrimination and harassment with the Department of Fair Employment and Housing (“DFEH”) from one year to three years. Governor Brown explained that the one-year statute of limitations currently in place “not only encourages prompt resolution while memories and evidence are fresh, but also ensures that unwelcome behavior is promptly reported and halted.”

What The Governor Signed

Of particular importance for employers going forward, however, is what the Governor signed.

SB 1300 – Release of FEHA Claims; Nondisparagement Provisions; Harassment Claims

SB 1300, which goes into effect January 1, 2019, makes several important changes to the Fair Employment and Housing Act (“FEHA”).

First, it prohibits an employer, in exchange for a raise or bonus, or as a condition of employment or continued employment, from requiring an employee to sign an agreement that:

  • contains a “nondisparagement 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,” or
  • requires release of a claim or right under FEHA, including the right to file and pursue a civil action or other government complaint. This provision also prevents an employer from requiring an employee to execute a statement that he or she “does not possess any claim or injury against the employer.

Importantly, these restrictions 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.” In other words, the statute prevents employers from preemptively requiring employees to sign agreements with nondisparagement or claim release provisions before a dispute or claim arises.

Second, the bill amends Government Code Section 12940(j)(1) to extend employer liability for sexual harassment committed by nonemployees to all forms of harassment prohibited by FEHA, so long as the employer, or its agents or supervisors, knows or should have known of the conduct and fails to take immediate and appropriate corrective action.

Third, SB 1300 lowers the standard for what types of conduct are sufficiently “severe or pervasive” to constitute actionable harassment under FEHA. Specifically, the bill adds Section 12923(b) to the Government Code, which clarifies that “[a] single incident of harassing conduct is sufficient to create a triable issue regarding the existence of a hostile work environment.”

Fourth, the bill makes it harder for employers to win summary judgment on harassment claims by expressly codifying that “[h]arassment cases are rarely appropriate for disposition on summary judgment.” This provision makes it all the more important that employers are prompt, thorough, and vigilant in hearing out and responding to claims of harassment.

SB 820 – Ban on Nondisclosure Provisions in Settlements Involving Sexual Misconduct

SB 820 adds Section 1001 to the Code of Civil Procedure and prohibits a provision in a settlement agreement that prevents the disclosure of “factual information related to” certain claims of sexual assault, sexual harassment, or harassment or discrimination based on sex, filed in a civil action or with an administrative agency. Any such provision inserted into a settlement agreement after January 1, 2019 is void as a matter of law and against public policy. The statute does not define exactly what it covers, although it does specify that a provision preventing the disclosure of the amount paid in settlement of a claim is enforceable.

SB 1343 – Expanded Sexual Harassment Training Requirements

Employers who employ 5 or more employees, including temporary or seasonal employees, now must provide at least 2 hours of sexual harassment training to all supervisory employees and at least one hour of sexual harassment training to all nonsupervisory employees by January 1, 2020, and once every 2 years thereafter.

SB 826 – Female Members of Boards of Directors

SB 826 adds Section 301.3 to the Corporations Code, which will require that “[n]o later than the close of the 2019 calendar year, a publicly held domestic or foreign corporation whose principal executive offices, according to the corporation’s SEC 10-K form, are located in California shall have a minimum of one female director on its board.” The number of required female directors increases by the close of calendar year 2021. In a rare signing message, Governor Brown noted that although “serious legal concerns have been raised” about the bill, “recent events in Washington D.C. – and beyond – make it crystal clear that many are not getting the message.”

What Employers Need To Know

This was the summer of #MeToo legislation. Now is the time for employers to take stock of their sexual harassment policies and practices and ensure they are in compliance with existing law, and with the new laws going into effect in the new year.

Employers will also need to review their employment documents to ensure they do not run afoul of the new restrictions imposed by the Legislature:

  • As to SB 1300, employers should carefully review employment agreements (especially executive-level contracts), employment applications and employee policies to ensure that they neither require an advance waiver of FEHA claims or a disclaimer that the individual does not possess a FEHA claim, nor contain nondisparagement or confidentiality provisions that prevent employees from disclosing information about unlawful acts in the workplace, including sexual harassment.
  • As to SB 820, employers need to carefully review their standard form settlement, severance, and separation agreements to revise any confidentiality or non-disclosure provisions that prevent employees from disclosing factual information related to claims of sexual assault, harassment, or discrimination.

Finally, while sexual harassment training is nothing new, employers will need to make sure they are fully compliant going forward with the more stringent requirements imposed by SB 1343.