Governor Brown Ends His Last Legislative Session Signing Several #MeToo Movement Bills and Penning Last Minute Vetoes

10.18.2018

The 2018 California legislative session closed September 30, 2018, with Governor Jerry Brown waiting until the last hours of the session to sign and veto numerous bills affecting employers. Below is a summary of the employment-related bills that were signed into law and vetoed by Governor Brown. Unless otherwise noted, changes to the law are effective January 1, 2019.

AB 1565 - Contractor Liability for Sub-Contractors’ Workers
This bill follows up on last year’s AB 1701. AB 1565 repeals provisions of AB 1701 that required direct contractors to assume, and be liable for, wage claims against a subcontractor acting under the direct contractor, for performance of labor under the original contract. For contracts entered into on or after January 1, 2019, AB 1565 repeals the existing law that contractors’ obligations and remedies under these provisions are in addition to any obligations and remedies otherwise provided by law, except that the provisions are not to be construed to impose liability on a direct contractor for anything other than unpaid wages and fringe or other benefit payments or contributions, including interest owed.

Further, to withhold payments as disputed pursuant to the law, the direct contractor must specify in its contract with the subcontractor, the specific documents and information that the direct contractor will require the subcontractor to provide. Subcontractors may include the same requirements in their contracts with lower tiered subcontractors and may withhold as disputed all sums owed if a lower tiered subcontractor does not provide the information requested, until that information is provided.

Employer Action: Contractors and subcontractors should review the content of their contracts to confirm each party’s obligations and to ensure required information is timely provided.

AB 1619 – Extension of Sexual Assault Statute of Limitations
This bill extends the statute of limitations for an adult to bring a civil action for the recovery of damages as a result of sexual assault from two years to ten years.

Employer Action: Employers dealing with sexual assault allegations in the workplace should be aware of, and take into consideration, the extended of the statute of limitations for such claims.

AB 1654 – PAGA Carve Out For Construction Industry Collective Bargaining Agreements
AB 1654 exempts construction workers covered by certain Collective Bargaining Agreements (“CBAs”) from litigation of the Private Attorneys General Act of 2004 (“PAGA”).  CBAs will qualify for the exemption if they provide for, among other requirements, a regular hourly pay rate of not less than 30 percent more than the state minimum wage, and a grievance and arbitration procedure that addresses PAGA violations, an express waiver of the requirements of PAGA in clear and unambiguous terms, and permit an arbitrator to award any and all remedies otherwise available under PAGA, except for the award of penalties that would be payable to the State.

Employer Action: Signatory contractors are encouraged to evaluate the terms of their CBAs, and consider bargaining with applicable unions to include the language specified in AB 1654 for the PAGA carve out to apply.

AB 1976 – Lactation Accommodation
AB 1976 strengthens the requirements for lactation accommodation. Under existing law, employers who provide a temporary lactation location are required to provide a private room or location to the employee for lactation purposes, other than a toilet stall. AB 1976 specifies the room or location cannot be a bathroom unless the employer can show it would be an undue hardship to provide some other location.  Additionally, AB 1976 requires the location be free from intrusion and must only be used for lactation purposes while an employee expresses milk

AB 1976 further specifies agricultural employers must provide an employee with a private, enclosed, and shaded space for lactation purposes.

Employer Action: Employers should update their lactation policies and practices to ensure that the location provided is not a restroom and that it is used only for lactation when used for that purpose.

AB 2034 — Human Trafficking Awareness and Prevention Training
Existing law requires specified businesses and other establishments, including, among others, airports, intercity passenger rail or light rail stations, bus stations, and truck stops, to post a notice, as developed by the Department of Justice, that contains information relating to slavery and human trafficking, including information regarding specified nonprofit organizations that a person can call for services or support in the elimination of slavery and human trafficking.

This bill requires certain businesses that operate an intercity passenger rail, light rail, or bus station to provide training to new and existing employees on or before January 1, 2021.  The training must be provided to employees who may come into contact with victims of human trafficking or who are likely to receive, in the course of their employment, a report from another employee about suspected human trafficking. The training must help these employees recognize signs of human trafficking and how to report those signs to the appropriate law enforcement agency.

Employer Action:  Businesses or establishments that fail to comply with the requirements of these provisions are liable for a civil penalty of $500 for a first offense, and $1,000 for each subsequent offense.  Affected employers must implement training procedures for all employees who may interact with potential victims or perpetrators of human trafficking.

AB 2282 – California’s Fair Pay Act
This bill clarifies last year’s AB 168. AB 168 required California Employers to provide applicants with a pay scale for a position upon reasonable request. AB 2282 clarifies the terms “pay scale,” “reasonable request,” and “applicant” under AB 168.

AB 2282 defines an “applicant” as an individual seeking employment with the employer, not a current employee. A “reasonable request” for pay scale information is limited to requests made after the applicant has completed the initial interview. “Pay scale” is now defined as a salary or hourly wage range, not including bonuses or equity ranges.

Under AB 168 employers are still prohibited from relying on the salary history information of an applicant as a factor in determining whether to offer employment or how much pay to offer; however, employers are permitted to ask an applicant about salary expectation.

This legislation also clarifies that an employer may make a compensation decision based on an employee’s current salary as long as any wage differential resulting from that decision is justified by one or more of the following factors: (1) a seniority system; (2) a merit system; (3) a system that measures earning by quantity or quality of production; or (4) a bona fide factor other than race or ethnicity such as education, training, or experience.

Employer Action: Employees involved in hiring and interviewing applicants should be made aware of these clarifications and be careful not to violate these rules. Companies may want to consider preparing specific and accurate pay scales in anticipation of requests. Careful documentation of all interview communications and negotiations that lead to a final compensation decision is imperative.

AB 2587 – Amendment to Paid Family Leave
This bill clarifies prior changes to California Paid Family Leave Act (“PFL”). Before January 1, 2018, individuals were eligible for PFL benefits after a seven day waiting period.  AB 908 (2016) removed this waiting period effective January 1, 2018. However, other language in PFL rules remained relating to vacation time use. AB 2587 removes this inconsistent language, because there is no longer a waiting period to which vacation time can be applied.

Employer Action: Employers should review their policies to ensure they contain language consistent with the latest amendments to PFL.

AB 2605 – Rest Periods For Safety Sensitive Employees at Petroleum Facilities
AB 2605 creates different rules for ten minute rest periods that petroleum facility employers authorize and permit to safety sensitive employees covered by applicable collective bargaining agreements.  The bill allows such employers to require safety sensitive employees to carry a communication device during their rest periods, without triggering a violation of the law for failing to authorize and permit such employees a duty-free rest period. 

Employer Action: Employers in the refinery industry subject to collective bargaining agreements should review the requirements of AB 2605 prior to bargaining with the employees’ collective bargaining representative to see if the beneficial contact language can be included in the next agreement.

AB 2770 – Privileged Communications Regarding Sexual Harassment
AB 2770 designates three types of employer communications regarding sexual harassment as “privileged” communications. This means such communications cannot form the basis of a defamation claim, unless they are made with “malice” (complete disregard for the truth, spite, ill will, or hatred). The bill protects (1) employee reports of sexual harassment that are based on “credible evidence;” (2) employer communications with “interested persons” regarding sexual harassment allegations; and (3) statements by the employer to a former employee’s potential future employer regarding whether the employee is eligible for rehire based on a determination the employee engaged in  sexual harassment. 

Employer Action: Employers should continue to limit information provided in response to reference checks.  While this rule provides an additional defense against defamation claims, the employer still has the burden of proving the privilege applies.

AB 3018 – Increased Penalties Associated with “Skilled and Trained Workforce” Requirements for Public Works Projects
AB 3018 confirms existing requirements for contractors to use a “skilled and trained workforce” to perform certain types of work connected to public agency contracts.  A “skilled and trained workforce” refers to specified apprenticeship graduation requirements.  Existing law requires contractors to provide public entities a report showing compliance with this requirement each month during performance of the contract.  AB 3018 additionally requires the public agency to forward a copy of this report to the Labor Commissioner for enforcement if a contractor does not comply. AB 3018 allows a public agency to withhold 150 percent of the value of a contractor’s monthly billing for noncompliance, and allows a contractor to withhold the same from a subcontractor for noncompliance.  AB 3018 adds a civil penalty of $5,000 per month if the Labor Commissioner determines a contractor did not meet the requirements of a “skilled and trained workforce,” and a penalty of $10,000 per month for a second violation within a three-year period. The bill additionally requires contractors to obtain a signed declaration of compliance, under penalty of perjury, from subcontractors before issuing their final payment, bars contractors from bidding on public works projects if they violate the requirements with intent to defraud; and requires the Labor Commissioner to publish a list of barred contractors on its website.

Employer Action:  Employers subject to skilled and trained workforce requirements, should continue to comply, and take into account these increased penalties for noncompliance.

AB 3109 – Contracts and Settlement Agreements – Waiver of Right to Testify
AB 3109 makes a provision in a contract or settlement agreement entered into on or after January 1, 2019, void and unenforceable if it waives a party’s right to testify in an administrative, legislative, or judicial proceeding concerning alleged criminal conduct or sexual harassment when 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.

Employer Action: Employers and their attorneys will need to review settlement agreements entered into on or after January 1, 2019 so they do not prohibit any party from testifying in an administrative, legislative, or judicial proceeding concerning alleged criminal conduct or sexual harassment.

SB 224 - Personal Rights: Civil Liability and Enforcement.
SB 224 expands the types of relationships that can form the basis of a sexual harassment claim and expands the investigative authority of the Department of Fair Employment and Housing with regard to enforcing the law. Under existing law, a plaintiff is able to establish a claim for sexual harassment by proving certain elements including: (1) there is a relationship (business, service, or professional) between the plaintiff and defendant and (2) there is an inability by the plaintiff to easily terminate the relationship. Existing law states that a relationship may exist between a plaintiff and certain persons, including an attorney, holder of a master’s degree in social work, real estate agent, and real estate appraiser.

SB 224 expands the types of relationships subject to sexual harassment claims to include one in which the defendant holds himself or herself out as being able to help the plaintiff establish a business, service, or professional relationship with the defendant or a third party. SB 224 specifically includes investors, elected officials, lobbyists, directors, and producers among those listed persons who may be liable to a plaintiff for sexual harassment. SB 224 further eliminates the requirement that the plaintiff prove there is an inability by the plaintiff to easily terminate the relationship.

Employer Action: This bill expands the list of individuals who may be subject to liability for harassment through professional or business relationships. Such individuals and businesses must be aware they may face harassment liability even though they have no employees as such claims may be made by third parties.

SB 820 - Settlement Agreements: Confidentiality.
SB 820 prohibits provisions in settlement agreements, entered into on or after January 1, 2019, that prevent the disclosure of factual information relating to certain claims of sexual assault, sexual harassment, or harassment or discrimination based on sex, that are filed in a civil or administrative action.

SB 820 authorizes provisions that shield the identity of the claimant and all facts that could lead to the discovery of his or her identity, if included at the request of the claimant. This exception is not applicable if a party is a government agency or public official. In addition, the bill authorizes a provision which precludes the disclosure of a settlement amount.

Employer Action: Confidentiality provisions will need to be carefully crafted depending on the allegations made and the parties involved.

SB 826 – Corporate Board of Directors
SB 826 requires, no later than the close of the 2019 calendar year, a domestic general corporation or foreign corporation that is a publicly held corporation, whose principal executive offices, according to the corporation’s SEC 10-K form, are located in California, to have a minimum of one female, on its board of directors. No later than the close of the 2021 calendar year, the bill would increase that required minimum number to two female directors if the corporation has five directors or to three female directors if the corporation has six or more directors. The bill would require the Secretary of State to publish various reports on its web site documenting the number of corporations in compliance with these provisions, and would authorize the Secretary of State to impose fines for violations of the bill.

Employer Action: While not exactly an employment law bill, SB 826 will require California-based corporations to install female directors following the ratios and timelines discussed above.

SB 1123 – Paid Family Leave for Military Service (effective January 1, 2021)
SB 1123 expands California’s PFL, administered by the California’s Employment Development Department (“EDD”), to pay benefits for time off for an employee to participate in a qualifying exigency related to covered active duty in the military, or call to covered active duty of the individual’s spouse, domestic partner, child, or parent in the armed forces of the United States.

Employer Action:  PFL is a benefit administered by the EDD.  The availability of benefits from the EDD may increase requests for qualifying exigency leave when this change takes place.

SB 1252 – Itemized Wage Statements
SB 1252 amends Labor Code section 226 to clarify that employees have the right “to receive” a copy—not just inspect or copy—their wage statements. 

Employer Action: This bill removes any argument that employees are not entitled to copies of records under Labor Code Section 226.

SB 1300 – Employer Liability for Acts of Non-Employees
Prior to SB 1300, an employer could be held responsible for the sexual harassing acts of nonemployees, e.g., if the employer knew or should have known of the conduct and failed to take immediate and appropriate corrective action. 

Under SB 1300, an employer can be held responsible for the acts of nonemployees, with respect to all types of harassment prohibited by the Fair Employment Housing Act (“FEHA”) (disability, national origin, race, age, etc.) of employees, applicants, unpaid interns or volunteers, or persons providing services pursuant to a contract in the workplace.

SB 1300 authorizes, but does not require, an employer to provide bystander intervention training to their employees that includes information and practical guidance on how to enable bystanders to recognize potentially problematic behaviors and to motivate bystanders to take action when they observe problematic behaviors. 

SB 1300 also prohibits an employer from requiring an employee to execute a release of a claim or right under FEHA in exchange for a raise, bonus, or as a condition of employment. It also prohibits an employer from requiring an employee to sign a nondisparagement agreement or other document that purports to deny the employee the right to disclose information about unlawful acts in the workplace.

Finally, SB 1300 prohibits a prevailing defendant from being awarded fees and costs unless the court finds the action was frivolous, unreasonable, or groundless when brought or that the plaintiff continued to litigate after it clearly became so.

Employer Action: Employers should review their policies to ensure they address all types of harassment claims against non-employees. As with the other bills addressing settlement agreements, employers must keep the provisions of SB 1300 in mind when drafting settlement agreements in harassment matters.

SB 1343 –Sexual Harassment Training
This bill expands the current FEHA requirement for employers with 50 or more employees to provide supervisors with sexual harassment training.  Under SB 1343, employers with at least five employees must provide at least two hours of sexual harassment training and education to all supervisory employees, and at least one hour of sexual harassment training to all non-supervisory employees, by January 2020 and once every two years thereafter.

Employer Action: More businesses will be required to provide sexual harassment training under SB 1343. 

SB 1402 – Joint & Several Liability for Customers of Port Drayage Motor Carriers
SB 1402 creates joint and several liability for certain clients of port drayage motor carriers by requiring them to share legal responsibility and liability with the carriers for certain violations of the Labor Code.  Areas of liability will include unpaid wages, failure to maintain workers’ compensation insurance, and misclassification of independent contractors, among others.  Shared liability applies if the carrier is identified on the Department of Labor Standards Enforcement’s (“DLSE”) list of carriers with unpaid judgments, tax assessments or tax liens, which will be published on the DLSE’s website. The DLSE must notify the carrier in advance that it will be added to the website, and the carrier is responsible for notifying its clients within a specified time period that it has outstanding judgments against it.  SB 1402 further prohibits adverse action by the customer or carrier against a driver who makes a claim or files a civil action for recovery of unpaid wages, unreimbursed expenses, damages or penalties, including applicable interest.  There are certain exceptions for carriers covered by a collective bargaining agreement and clients who terminate the relationship with the carrier within a certain period of time.  In addition, customers of port drayage motor carriers will be required provide proof of compliance to the DLSE upon request.

Employer Action:  Once the DLSE website becomes active, companies that contract with port drayage motor carriers should immediately review the website to ensure their carriers are not identified.  In the event a contracted carrier is identified, companies should consult with counsel to determine how to proceed so as to avoid liability under the law and under contract.  Companies should be careful to retain documentation of their compliance with the above.

SB 1412 – Criminal History Inquiries
Prior to the enactment of SB 1412, the law prohibited employers (including public agencies, private individual and corporations) from seeking or using information concerning participation in pretrial/post-trial diversion programs or convictions that had been judicially dismissed or ordered sealed.  Employers could not ask applicants to disclose this information, could not seek it from any source, and could not utilize it as a factor in determining any condition of employment, unless (1) the employer is required to obtain information regarding an applicant’s convictions, (2) the applicant would be required to possess/use a firearm in the course of employment, (3) an individual who has been convicted of a crime is prohibited by law from holding the position sought, regardless of whether the conviction has been expunged, judicially ordered sealed, statutorily eradicated, or judicially dismissed following probation, or (4) the employer is prohibited by law from hiring an applicant who has been convicted of a crime.

SB 1412 clarifies that the first, second, and fourth exceptions above do not apply to any conviction.  Rather, the employer may obtain or utilize otherwise-prohibited conviction information when [1] the employer is required to obtain information regarding an applicant’s particular convictions, [3] an individual with a particular conviction is prohibited by law from holding the position sought, regardless of whether the conviction has been expunged, judicially ordered sealed, statutorily eradicated, or judicially dismissed following probation, or [4] the employer is prohibited by law from hiring an applicant who has that particular conviction. 

“A particular conviction” is defined as “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.”

Employer Action: This bill makes narrow revisions to California’s Ban-the-Box law. Employers should review SB 1412’s provisions to see if it impacts their intake procedure.

VETOED BILLS
The Governor also vetoed several bills that AALRR tracked this legislative session, which are summarized below:

• AB 1867 - This bill would have required employers with 50 or more employees to maintain internal sexual harassment complaint records for a minimum of five years after the last day of employment of the complainant or any alleged harasser, whichever is later.
• AB 1870 - This bill would have extended the statute of limitations period from one year to three years for complaints alleging employment discrimination.
• AB 2496 - This bill would have expanded the definition of employee to specifically include employees of any person who holds a registration as a property service employer or a person who is required to hold that registration.
• AB 3080 - This bill would have limited and provided restrictions on various arbitration and settlement terms in employer contracts and litigation related to sexual harassment, wage and hour claims, discrimination, harassment and retaliation.
• SB 937 - This bill would have provided additional requirements for employers to accommodate lactation breaks and rooms and prepare applicable policies.

Employers with questions regarding application of any of the above bills may contact one of the authors or their usual labor and employment counsel at AALRR.