California Governor Gavin Newsom went on a bill-signing frenzy earlier this month, enacting 17 new bills into law. Below, we highlight the “Big Five” which will have a certain and critical impact on any business with workers in the Golden State.
AB 51 – Prohibiting Mandatory Arbitration. California’s battle against arbitration wages on! For agreements “entered into, modified, or extended” on or after January 1, 2020, AB 51 prohibits employers from requiring current employees or applicants to “waive any right, forum, or procedure for a violation” of the Fair Employment and Housing Act or the California Labor Code. This necessarily means that an employer will not be permitted to require applicants or employees to consent to mandatory arbitration as a condition of employment. Notably, employees may still voluntarily consent to arbitration, and AB 51 does not apply to “postdispute” settlement agreements or “negotiated” severance agreements, terms that beg for clarification. AB 51 prohibits retaliation against individuals who refuse to consent to such agreements and even authorizes injunctive relief and attorneys’ fees to any plaintiff who proves a violation. There is no doubt that this bill will be challenged under the Federal Arbitration Act (“FAA”), which preempts any state law that “stands as an obstacle” to enforcing arbitration agreements. While the bill contemplates and tries to avoid preemption by expressly stating it is not “intended to invalidate a written arbitration agreement that is otherwise enforceable under the [FAA],” similar attempts by the state have been rejected.
Takeaway: AB 51 does not invalidate current arbitration agreements or those entered into before January 1, 2020. There is also buzz that it could be enjoined or at the very least declared “DOA” once challenged in court. Until then, however, it’s critical to have an arbitration plan in place prior to January 1 for current employees and future hires that makes sense for your operations.
AB 749 – Prohibiting Future Employment Restraints. AB 749 prohibits settlement agreements, entered into on or after January 1, 2020, from containing any provision that “prohibits, prevents, or otherwise restricts” a settling party from obtaining future employment with the employer. AB 749 does not prohibit parties from agreeing to: (1) end the current employment relationship or (2) restrict the employee from obtaining future employment if the employer made a “good faith determination that the person engaged in sexual harassment or sexual assault.” The bill further states that an employer is not required to continue to employ or rehire a person if there is a legitimate nondiscriminatory or nonretaliatory reason for terminating or refusing to rehire the person, standards that are ripe for litigation. Hard to believe that the legislature thought that sexual harassment and sexual assault are the only wrongdoings sufficient to warrant an express statutory exception. Oh well, it is California!
Takeaway: Since the new law does not require employers to continue to employ or rehire a person if there is a “legitimate non-discriminatory or non-retaliatory reason for terminating the employment relationship or refusing to rehire the person,” as always, timely and accurate documentation of these legitimate reasons is critical.
SB 142 – Expanding Employer’s Duties to Accommodate Lactating Employees. SB 142 requires employers to provide a lactation room, other than a bathroom, in close proximity to the employee’s area, shielded from view and free from intrusion. The room must also be: (1) clean, safe, and free from hazardous materials; (2) contain a surface to place a breast pump and personal items; (3) contain a place to sit; and (4) have access to electricity, extension cords or charging stations needed to operate an electric breast pump. Under the new law, employers must also provide access to a sink with running water and a refrigerator (or company-provided cooler) suitable for storing milk in close proximity to the employee’s workspace. Finally, if the room is designed for multiple uses, pumping must take precedence. There is an exception for companies with fewer than 50 employees.
Takeaway: One of the keys to this new law is proper notice to employees of their rights. Employees must be notified of their rights to request lactation accommodation ahead of time, the procedure for making such a request, the employer’s obligation to respond, and the employee’s right to file a complaint for any violation of her rights. Having a properly drafted and implemented policy that addresses these issues is not only important, but legally required; and violations constitute a failure to provide a rest break under the Labor Code (i.e., a new “PAGA” trigger) and subjects employers to a $100 penalty per violation.
SB 188 – Prohibiting Discrimination on Hairstyles Historically Associated with Race. Also known as “the CROWN Act,” SB 188 mirrors New York law and expands the California FEHA’s definition of “race” to include traits historically associated with race, such as hair texture and protective hairstyles, defined to include braids, locks, and twists. The CROWN Act is aimed at addressing unfair grooming policies that have a disparate impact on black workers who are unfairly affected by workplace dress codes and policies prohibiting natural hair such as afros, braids, twists, and locks.
Takeaway: All FEHA provisions prohibiting discrimination, harassment, and retaliation based on race now apply to situations when a protective hairstyle or other race-associated trait is implicated. A major key to compliance with the CROWN Act is knowledge, i.e., ensuring those implementing your dress code and other personnel policies understand the new law and what it protects. To implement that knowledge, SB 188 should be accurately and timely reflected in well-drafted policies as well as manager training.
AB 9 – Expands FEHA’s Administrative Exhaustion Period from One to Three Years. AB 9 extends the period of time within which employees who wish to sue under the FEHA (which includes claims for harassment, discrimination and retaliation) must file their administrative complaint with the Department of Fair Housing and Employment from one to three years. Notably, AB does not revive lapsed claims.
Takeaway: Again, timely and accurate documentation and proper retention schedules are now more important than ever, particularly since employers will find themselves defending older claims where witnesses have moved, memories have faded, and the general reliability of evidence has deteriorated with the passage of time…the same considerations served by a shorter statute of limitations. As a result, reliable and available documentation—including e-data—will take center stage at litigation.
Unfortunately, but not surprisingly, this list is non-exhaustive. There are many more changes around the corner for California employers, not the least of which includes AB-5 which we previously wrote about here, and which drastically limits the lawful use of independent contractors in California.