California Gov. Jerry Brown signed a handful of bills into law last week that take major steps to combat sexual harassment in the wake of the #MeToo and #TimesUp movements. California employers should understand how these new harassment-related laws affect their businesses.
Ban on Nondisclosure Agreements
Senate Bill 820 prohibits nondisclosure provisions in settlement agreements related to civil or administrative complaints of sexual assault, sexual harassment and workplace harassment or discrimination based on sex. The bill expressly authorizes provisions that (i) preclude the disclosure of the amount paid in settlement and (ii) protect the claimant’s identity and any fact that could reveal the identity, so long as the claimant has requested anonymity and the opposing party is not a government agency or public official. Settlement agreements signed after January 1, 2019 should be reviewed by counsel to ensure compliance with the new restrictions.
More Mandated Sexual Harassment Prevention Training
Senate Bill 1343 expands the requirements relating to sexual harassment prevention training. Current law requires all employers with 50 or more employees to provide two hours of sexual harassment prevention training only to supervisors. The new law now mandates training for all employers with five or more employees and becomes effective in 2020. In addition, employers must ensure similar training in multiple languages for all workers so they know what sexual harassment is and what their rights are under the law. The Department of Fair Employment and Housing (DFEH) is charged with developing online training to satisfy the new training requirements, though Fox offers interactive and comprehensive sexual harassment training tailored to California employers and industries.
Ban on Requiring Employees to Waive Right To Testify
Assembly Bill 3109 prohibits contracts or settlement agreements requiring an employee to waive his or her right to testify in an administrative, legislative or judicial proceeding concerning alleged criminal conduct or sexual harassment. The law applies where “the party has been required or requested to attend the proceeding pursuant to a court order, subpoena, or written request from an administrative agency or the legislature.”
Expansion of Liability Under FEHA
Senate Bill 1300 significantly expands liability under the Fair Employment and Housing Act (FEHA). The bill also expressly affirms or rejects several court holdings, such as rejecting Kelley v. The Conco Companies, which supported different standards for hostile work environment harassment depending on the type of workplace. It also rejects the “stray remark” doctrine in Brooks v. City of San Mateo and affirms Nazir v. United Airlines, Inc., which disfavors summary judgment in hostile working environment cases, stating those cases involve issues “not determinable on paper.”
The bill also expands FEHA protection to any harassment by non-employees, rather than just sex harassment. It denies a prevailing defendant from being awarded attorney’s fees and costs unless the court finds the action was frivolous, unreasonable or groundless. This bill also prohibits release of claims under FEHA in exchange for a raise or a bonus or as a condition of employment or continued employment – however, this prohibition does not extend to separation agreements. Senate Bill 1300 amends Government Code sections 12940, 12965 and adds Government Code sections 12923, 12950.2 and 12964.5. These changes take effect in 2019 and we will monitor interpretations or guidance of these new and expansive provisions.
Gender Diversity in Corporate Governance
Senate Bill 826 requires public companies based in California to have at least one woman on their board of directors by the end of next year. The requirement increases to two female board members by 2021 if the company has five directors, or to three if the company has six or more directors. The bill also requires the Secretary of State to produce an annual report on compliant companies. However, the bill does not contain a requirement for companies to report the gender of each board member. In addition to other ambiguities in the law, this bill is expected to face challenges under civil rights and equal protection laws.
Veto on Prohibition of Mandatory Arbitration
Gov. Brown vetoed one of the most high-profile sexual harassment measures of the year, Assembly Bill 3080, which would have banned mandatory arbitration agreements. Brown vetoed similar legislation in 2015 and this law, if passed, likely would have faced challenges by the Federal Arbitration Act.
The Equal Employment Opportunity Commission (EEOC) reported a 50 percent increase in sexual harassment cases it pursued in fiscal year 2018, running from October 2017 through September 2018, over fiscal year 2017. In light of the new and expansive California laws, the EEOC and DFEH are likely to continue to increase their focus on post #MeToo harassment claims.
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