On October 10, 2019, California Governor Gavin Newsom signed into law a number of bills that are designed to increase protections for employees. Collectively, these new laws will have significant implications for California employers of all sizes and across all industries. Among these new laws is a ban on mandatory arbitration agreements and a significant extension of the statute of limitations for discrimination claims under the California Fair Employment and Housing Act (FEHA). Below is a summary of key provisions from several of these laws, which will take effect on January 1, 2020, unless otherwise noted.
A.B. 51 prohibits employers from requiring employees—as a condition of employment, continued employment, or receipt of employment-related benefits--to waive “any right, forum, or procedure” to pursue a claim under the FEHA or the California Labor Code. While the law does not specify the “rights, forums, or procedures” it targets, mandatory arbitration agreements are plainly in its cross-hairs. The prohibition also likely encompasses agreements where an employee waives his or her right to a jury trial or the ability to bring or participate in a class action. A.B. 51 expressly excludes post-dispute settlement agreements and negotiated severance agreements from its scope.
Employers and employees remain free to enter into agreements waiving these rights, forums, and procedures, so long as the employee voluntarily agrees to the agreement and does not suffer (and is not under any threat of) adverse employment consequences as a result of rejecting the agreement. We expect, however, that courts will closely scrutinize the voluntariness of any such agreements when challenged by employees.
Violations of A.B. 51 will not only result in the invalidation of the offending agreement, but will also constitute an independent FEHA violation. In addition, a prevailing plaintiff-employee enforcing his or her rights under A.B. 51 may recover attorney’s fees. An A.B. 51 violation may also technically constitute a criminal misdemeanor under California Labor Code § 433.
Importantly, any effort to apply A.B. 51 to invalidate an arbitration agreement is likely to face challenge. In the past, California’s efforts to ban certain arbitration agreements have been largely unsuccessful because of preemption by the Federal Arbitration Act (FAA). The U.S. Supreme Court and other federal courts have broadly construed the FAA’s application to extend to most employment-based arbitration agreements. While A.B. 51 ostensibly excludes arbitration agreements that are enforceable under the FAA from its scope, we expect an effort by the plaintiffs’ bar and California courts to construe more narrowly the scope of arbitration agreements subject to the FAA, thus expanding the reach of A.B. 51. It is clear that A.B. 51 will kick off a significant new round of litigation over arbitration agreements in California, and it will be some time before there is clarity on the new law’s practical scope.
A.B. 51 will apply to contracts entered into, modified, or extended on or after January 1, 2020. In the meantime, employers should consult with legal counsel regarding continued use of mandatory arbitration agreements in California.
S.B. 142 expands existing requirements for employee lactation accommodations. The new law mandates that employers provide employees with safe and clean lactation facilities that are shielded from view, free from intrusion, and located in close proximity to the employee’s work area. Accommodations must also include a place to sit, a surface for a pump and personal items, electricity, and access to a sink and refrigerator or cooler. Employers with fewer than 50 employees may be exempt from certain requirements of this law if they can demonstrate that compliance would impose an undue hardship on their business. Employers are also required to develop, implement, and distribute to their employees a written lactation accommodations policy.
A.B. 9 – also known as the Stop Harassment and Reporting Extension (SHARE) Act—extends the deadline to file claims of unlawful workplace harassment, discrimination, or civil-rights-related retaliation under the FEHA from one year to three years.
Other Significant Employment Laws
Governor Newsom also recently signed into law the following bills that will impact California employers in various industries:
- A.B. 673: Authorizes employees to bring an independent civil action under the Labor Code to recover statutory penalties from employers for the late payment of wages. Previously, only the Labor Commissioner was permitted to seek such penalties. Employees may still seek civil penalties under the Private Attorneys General Act (PAGA) for unpaid wages, but they may not seek both statutory and civil penalties for the same violation.
- S.B. 188: Expands the FEHA to protect employees against discrimination based on their natural hairstyle, by expanding the definition of “race” to include “traits historically associated with race, including, but not limited to, hair texture and protective hairstyles.” Examples of “protective hairstyles” specified in the law include braids, locks, and twists.
- A.B. 5: As discussed in our earlier briefing, which can be found here, A.B. 5 codifies the state’s new employee classification standard, which determines whether a worker is an employee or independent contractor. This standard has drawn significant attention (and criticism) for substantially narrowing the opportunity to lawfully classify workers as independent contractors, even for work traditionally performed by independent contractors in California.
Employers of all sizes who maintain operations in California should review their current policies, practices, and agreements to ensure compliance with these laws, paying particularly close attention to areas where the new requirements differ from those under federal or local law.