California Employment Legislation Update: What’s New for 2019

A number of new and significant California employment laws have been added to the books and will take effect on January 1, 2019. Employers should take note of the following key statutory developments and adjust their policies and practices accordingly.

“Me-Too” Developments

A number of laws were enacted in response to the #MeToo movement. See our previous detailed analysis here. These new statutes expand existing protections and add several new requirements around the issue of workplace sexual harassment and diversity and inclusion, and include the following:

FEHA Amendments (SB 1300)

SB 1300 amends the Fair Employment and Housing Act (FEHA) as follows: (1) it makes employers liable not only for claims of sexual harassment, but for any kind of unlawful harassment by non-employees where the employer knew or should have known of the harassment and failed to take appropriate corrective action; (2) it prohibits employers from requiring an employee to release a FEHA claim in exchange for a raise or bonus or as a condition of employment or continued employment; (3) it prohibits an employer from requiring an employee to sign a non-disparagement agreement or other document by which the employee would be restrained from disclosing information about unlawful acts in the workplace; (4) it provides guidance on bystander intervention training; and (5) it adds declarations of the  Legislature’s intent with regard to the application of the anti-harassment laws. Among other things, the Legislature has declared that a single incident may be sufficient to create a triable issue regarding the existence of a hostile work environment; that harassment cases are rarely appropriate for disposition on summary judgment; and that the legal standard for sexual harassment does not vary by type of workplace.

Settlement Agreements Regarding Claims of Sexual Assault, Sexual Harassment, Gender Discrimination, and Related Retaliation (SB 820)

For settlement agreements entered into on or after January 1, 2019, SB 820 prohibits provisions that prevent disclosure of factual information regarding claims of sexual assault, sexual harassment, gender discrimination or related retaliation in civil or administrative actions. SB 820 still allows the parties to agree not to disclose the settlement amount. The claimant may also request that the settlement agreement limit the disclosure of his or her identity or facts that would lead to the discovery of his or her identity.

Sexual Harassment Training for All Employees and Small Employers (SB 1343)

Currently, employers with 50 or more employees are required to provide at least 2 hours of sexual harassment prevention training to all supervisors and managers every 2 years, or within 6 months of an employee becoming a supervisor or manager. SB 1343 expands the requirement to include employers with at least 5 employees. The amendment also requires employers to provide at least one hour of training to non-supervisory employees by January 1, 2020, and once every 2 years thereafter. The DFEH is charged with creating training materials as an option for employers to use.

Freedom to Testify About Criminal Conduct and Sexual Harassment (AB 3109)

AB 3109 invalidates any provision in an agreement (e.g., an employment agreement, an arbitration agreement, or a settlement agreement) that prevents a party to the agreement from testifying about criminal conduct or sexual harassment in an administrative, legislative, or judicial proceeding, when that party has been required or requested to testify at the proceeding pursuant to a court order, subpoena, or written request from an administrative agency or the Legislature.

Statute of Limitations for Sexual Assault Claims (AB 1619)

AB 1619 adds Section 340.16 to the Code of Civil Procedure establishing the statute of limitations for filing a civil sexual assault action as 10 years after the alleged assault, or 3 years after the plaintiff discovered or reasonably should have discovered that an injury or illness resulted from the alleged assault, whichever is later.

Female Directors on Corporate Boards (SB 826)

SB 826 requires publicly-held domestic and foreign corporations with principal executive offices in California to have a minimum of one female director on their boards by the end of 2019. By the end of 2021, these corporations must meet the following minimums: (1) if it has six or more directors, the corporation must have a minimum of three female directors; (2) if it has five directors, the corporation must have a minimum of two female directors; (3) if it has four or fewer directors, the corporation must have at least one female director. SB 826 also requires the Secretary of State to publish statistical information on its website concerning the gender composition of the Boards of Directors of publicly-held corporations.

Other Noteworthy Developments

Disclosure Regarding Confidentiality Prior to Mediation (SB 954)

SB 954 amends California Evidence Code Section 1122 and adds Section 1129. Under current law, anything said in the course of a mediation consultation or mediation is inadmissible in evidence and is not subject to discovery, and settlement communications and negotiations are confidential. Except in a class or representative action, SB 954 requires an attorney representing a person participating in a mediation consultation or mediation to provide his or her client with a printed disclosure regarding the confidentiality restrictions of mediation, and to obtain a printed acknowledgement signed by the client that the client understands the confidentiality restrictions. The disclosure must take place as soon as reasonably possible before the client agrees to participate in the mediation consultation or mediation. If a person retains the attorney after he or she has already agreed to participate in a mediation consultation or mediation, the attorney must comply with the disclosure and acknowledgement requirements as soon as reasonably possible after being retained. Failure of an attorney to comply with these requirements does not invalidate a settlement agreement prepared during or as a result of mediation. Evidence of an attorney’s compliance with these requirements is not confidential and may be used in an attorney’s disciplinary proceeding as long as it does not disclose anything said or done in mediation.

Pay History (AB 2282)

While California’s salary history ban took effect on January 1, 2018, AB 2282 amends and clarifies that law. Effective January 1, 2019, California Labor Code Section 432.3 provides that employers need not provide pay scales except to applicants, upon their request, who have completed an initial interview and who have made a request for this information. Thus, neither current employees nor every applicant are entitled by law to pay scale information. AB 2282 also expressly authorizes employers to ask job applicants about their “salary expectations” for the desired position. With regard to current employees, Labor Code Section 1197.5 is amended to authorize employers to make compensation decisions based upon an employee’s current salary so long as any wage differential resulting from that compensation decision is justified by one or more specified factors, such as a seniority system or merit system.   

Copy of Payroll Records (SB 1252) 

Current California law provides that employees have a right to inspect or copy their payroll records, and that they must be allowed to do so within 21 days of such a request. SB 1252 amends Labor Code Section 226 to clarify that employees have the right “to receive” a copy. Thus, upon request, the employer must provide a copy of pay statements, as opposed to requiring the employee to copy payroll records themselves.

Lactation Accommodation (AB 1976) 

Current law requires all California employers to provide “a reasonable amount of break time to accommodate an employee desiring to express breast milk” for a child and to make reasonable efforts to provide a location, other than a toilet stall, in close proximity to the employee’s work area, to enable the employee to express milk in private. 

Pursuant to this amendment to Labor Code Section 1031, the lactation space provided must be a place other than a bathroom. A temporary location may be sufficient, provided certain conditions are met, including: (1) the employer is unable to provide a permanent location due to operational, financial or space limitations; (2) the temporary location is private and free from intrusion while being used for lactation purposes; and (3) the temporary location is not used for other purposes while being used for lactation. California employers may be exempt from these new requirements if they can demonstrate undue hardship and they make reasonable efforts to provide a lactation location other than a toilet stall (including, in this instance only, a bathroom). Agricultural employers may comply with the new law by providing an employee a private, enclosed, and shaded space, including an air-conditioned cab of a tractor or truck. 

Criminal History Inquiries (SB 1412)

California law limits employers’ ability to conduct criminal history inquiries and to use criminal history information in employment decisions. Labor Code Section 432.7 makes an exception for employers who are required by law to inquire into an applicant’s or an employee’s criminal history. SB 1412 amends the Labor Code to tighten the exception to apply only where an employer is required by law to inquire into a “particular conviction,” or where the employer cannot by law hire someone with a “particular conviction.” A “particular conviction” is defined to mean “a conviction for specific criminal conduct or a category of criminal offenses prescribed by any federal law, federal regulation or state law that contains requirements, exclusions, or both, expressly based on that specific criminal conduct or category of criminal offenses.” Thus, in light of SB 1412, an employer may gather criminal conviction history only as to those “particular convictions” that are either required by state or federal law to be reviewed or that would preclude an applicant from holding the position sought under state or federal law. 

Paid Family Leave Use for Call to Active Duty/Military Service (SB 1123)

Under California’s temporary disability insurance program, partial wage replacement benefits are provided to employees who take time off work for specified purposes. Effective January 1, 2021, SB 1123 expands the scope of the disability insurance program to provide these  benefits  to employees who take time off for reasons associated with being called to active duty or the call to duty of the employee’s spouse, domestic partner, parent or child.

Human Trafficking Training – Hotel/Motel Employers (SB 970) and Mass Transit Employers (AB 2034)

Existing law requires certain California businesses to post a notice relating to slavery and human trafficking. Training is now also required on these topics for specified California employers. First, SB 970 amends the FEHA to require that hotel and motel employers train and educate employees who are likely to come in contact with victims of human trafficking. More specifically, and by January 1, 2020, California’s hotel and motel employers must provide “at least 20 minutes of classroom or other effective interactive training and education regarding human trafficking awareness” to any employee “who works in a reception area, performs housekeeping duties, helps customers in moving their possessions, or drives customers.” SB 970 identifies specific topics to be covered during such training and mandates that the training take place within six months of hire of covered employees, and once every two years thereafter. Similarly, pursuant to AB 2034, employers who operate an intercity passenger rail, light rail, or bus station must provide, by January 1, 2021, at least 20 minutes of specified human trafficking training to employees who are likely to come in contact with human trafficking victims.     

Construction Contractor Liability (AB 1565) 

AB 1565 was passed as urgency legislation to clarify last year’s AB 1701, which created joint liability for construction contractors and subcontractors for unpaid wages, benefits, or contributions of laborers connected to certain construction contracts. Effective immediately upon Governor Brown’s approval in September 2018, the amendments provide requirements that must be met in order for a direct contractor to withhold payments to a subcontractor for “disputed sums.” As amended, California Labor Code Section 218.7 provides that, for contracts entered into on or after January 1, 2019, a direct contractor may not withhold payment unless it specifies in its contract with a subcontractor all items of information that will be requested of the subcontractor, such as payroll records and other information related to hours worked.

Talent Agencies Required to Provide Sexual Harassment Education (AB 2338)

AB 2338 requires talent agencies to provide educational materials on sexual harassment prevention, retaliation, and reporting resources to adult artists and minors aged 14 to 17 and their parents and legal guardians, within 90 days of retention. For adult model artists only, talent agencies are required to provide materials on nutrition and eating disorders. Talent agencies must retain records for three years showing that the required educational materials were provided.

Expansion of Relationships Subject to Sexual Harassment Claims (SB 224)

Civil Code Section 51.9 generally applies to work relationships where one person holds himself out as being able to help someone establish a business or professional relationship directly or with a third party, including a physician, attorney, accountant, landlord, and teacher, among several other positions. SB 224 amends Section 51.9 to expand the types of relationships that can be subject to a claim for sexual harassment to include lobbyists, elected officials, directors, producers, and investors.

PAGA Relief for Unionized Construction Employers (AB 1654) 

AB 1654 provides that unionized workers in the construction industry cannot bring claims under the Private Attorneys General Act (PAGA) where the collective bargaining agreement: (1) is entered into prior to January 1, 2025; (2) provides for the wages, hours of work, and working conditions of employees, premium wage rates for all overtime hours works, and a regular hourly pay rate of not less than 30 percent more than the state minimum wage rate; (3) prohibits all of the violations of the Labor Code that would be redressable by PAGA; (4) provides for a grievance and binding arbitration procedure to redress those violations, and authorizes the arbitrator to award any and all remedies otherwise available under the Labor Code (other than those that would be payable to the state); and (5) expressly waives PAGA rights.

Vetoed Bills of Note

• AB 3080 would have prohibited employers from requiring employees to agree to arbitrate claims arising under the Labor Code or FEHA. It also would have prohibited employers from requiring workers, as a condition of employment or any contract, to refrain from disclosing any instance of sexual harassment.
• AB 1867 would have required employers with 50 or more employees to retain records of any complaint of sexual harassment for at least 5 years following the last day of employment of the complaining employee or any alleged harasser, whichever is later.
• AB 1870 would have extended the statute of limitations from one year to three years for an employee to file an administrative complaint of discrimination/harassment/retaliation under the FEHA with the Department of Fair Employment and Housing.
• AB 3081 would have amended the FEHA and Labor Code to add status as a sexual harassment victim to existing prohibitions against discrimination of employees who are victims of domestic violence, sexual assault or stalking. It also would have created a rebuttable presumption of retaliation for any adverse employment action taken against an employee within 30 days of notice or knowledge of the victim’s status. Finally, the bill would have made a client employer jointly liable for harassment of an employee provided by a labor contractor.  

Need Additional Information?

For more information on what’s in store for California employers in 2019, please contact any of Davis Wright Tremaine’s California employment lawyers.