Over the weekend, Governor Brown finished off his last rounds of approving and vetoing bills passed by the Legislature. One of the bills that was vetoed by Governor Brown over the weekend that was of particular importance to employers in California was Assembly Bill 3080 (“AB 3080”) which would have prohibited employees from being forced to sign arbitration and/or non-disclosure agreements as a condition of employment under the California Labor Code. Governor Brown stated in his veto message that the bill plainly violates federal law based on the case law which states the Federal Arbitration Act governs both the enforcement of arbitration agreements and the initial formation of the arbitration agreement.
COUNSEL TO MANAGEMENT:
Governor Brown, despite the passage of AB 3080 through the Legislature, was always expected to veto this bill given his past veto of a similar bill and the Supreme Court’s rulings over the past two years concerning arbitration agreements, particularly in Kindred Nursing Centers Ltd. Partnership v. Clark, which was noted in the veto message and in Epic Systems Corp. v. Lewis. Going forward, it would appear that any further challenges to mandatory arbitration agreements would be DOA now that the Supreme Court has ruled definitively on the subject.
A summary of other labor and employment-related bills signed/vetoed by Governor Brown during this legislative session are below. As you’ll read, many of these bills are in response to the #MeToo Movement which has overtaken American politics during 2018, including one bill that requires publicly traded companies to include a minimum number of females on its board of directors in direct response to the Judge Brett Kavanaugh confirmation proceedings:
* SB 826 (passed): Requires public companies whose principal executive offices are located in California to have at-least one female director on its board by the close of 2019. By the close of 2021, must comply with the following standards:
* Four or fewer board members: minimum of 1 female director;
* 5 board members: 2 female directors;
* 6+ board members: minimum of 3 female board members.
Governor Brown noted that this bill is likely illegal in his signing letter here, and, in a certainly interesting move that will raise eyebrows around the Judge Kavanaugh confirmation, cc'ed the U.S. Senate Judiciary Committee stating, "I don't minimize the potential flaws that indeed may prove fatal to [the law's] ultimate implementation. Nevertheless, recent events in Washington, D.C.—and beyond—make it crystal clear that many are not getting the message."
It is likely that this bill will be challenged in courts almost immediately.
* AB 3081 (vetoed): This bill would have made a business jointly liable for harassment of workers supplied by its labor contractor and would have established an automatic, 30-day rebuttable presumption period of unlawful retaliation based on the employee’s status as a victim of domestic violence, sexual assault, sexual harassment or stalking if an employer discharged, demoted or in took any adverse employment against the employee.
Governor Brown stated in his veto message that the joint liability standard was ill-defined and that most of the provisions are contained in current law elsewhere.
* SB 1343 (passed): This bill will require an employer of five or more employees—including seasonal and temporary employees—to provide sexual harassment training within 6 months of assuming their position and once every two years thereafter. By January 1, 2020, all supervisors must receive at least two hours of training, and all nonsupervisory employees must receive at least one hour. This bill requires the Department of Fair Employment and Housing to make available both a one hour and a two hour online training course in multiple languages that employers may utilize to meet this new requirement.
* SB 1300 (passed): Employers will be prohibited, with certain exceptions, from requiring an employee to sign a release of claims under the Fair Employment and Housing Act in exchange for a raise or bonus, or as a condition of employment or continued employment. Employers are also prohibited from requiring an employee to sign a non-disclosure agreement that aims to deny the employee the right to disclosure unlawful acts in the workplace, including sexual harassment.
This bill also expands an employer’s potential FEHA liability for acts of non-employees to all forms of unlawful harassment, whereas in the past, the employer only had FEHA liability for sexual harassment if the employer (or its agents) knew or should have known of the conduct and failed to take immediate and appropriate corrective action.
* AB 2770 (passed): AB 2770 codifies case law to ensure victims of sexual harassment and employers are not sued for defamation by the alleged harasser when a complaint of sexual harassment is made and the employer conducts its internal investigation. This bill specifically deems complaints of sexual harassment based on credible evidence as a privileged communication that will not subject a party to a defamation claim from the alleged harasser.
This bill also provides additional protections to employers by expressly allowing employers to inform potential employers about the sexual harassment investigation and findings, and whether or not the employer would hire the alleged harasser and whether the decision to not rehire is based upon the employer’s determination that the alleged harasser engaged in sexual harassment.
* SB 820: Beginning January 1, 2019, all settlement agreements entered into will prohibit and make void any provision that prevents the disclosure of factual information related to civil or administrative complaints of sexual harassment, sexual assault, workplace harassment, or discrimination based on sex. This bill does not prevent parties from mutually agreeing to settle, but it will prohibit individuals and/or businesses from requiring a claimant to remain silent about the alleged assault/harassment as a condition of settlement. Further, SB 820 will expressly authorize provisions that (1) preclude the disclosure of the amount paid in settlement of a claim and (2) protect the claimant’s identity and any fact that could reveal the identity, so long as the claimant has requested such anonymity and the opposing party is not a government agency or public official.
* AB 3109 (passed): This bill makes a provision in a contract or settlement agreement void and unenforceable if it waives a party’s right to testify in any proceeding concerning alleged criminal conduct or sexual harassment. In many settlement/severance agreements, it is not uncommon to include a provision that a former employee will not participate in any actions against the employer or will not make any disparaging remarks against the employer. Now, any provision that does not allow an employee to testify when they are required by subpoena or requested in writing by an administrative agency or legislature will be void.
It remains to be seen how this statute will be used and whether it applies to providing evidence by the way of formal declarations or informal testimony that is not taken under oath.
* AB 1976 (passed): This bill, beginning January 1, 2019, requires employers to make reasonable efforts provide workers with a use of a room or private area that is not a restroom to pump breast milk. Existing law required that employers only make a reasonable effort to provide both a lactation space that is not a bathroom stall. If an employer can demonstrate that providing a separate room (other than a bathroom) would create an undue hardship, an employer shall make reasonable efforts to provide an employee with the use of a room or other location, other than a toilet stall, in close proximity to the employee’s work area, for the employee to express milk in private.
An agricultural employer would be deemed in compliance with this law if the employer provides an employee with a private, enclosed, and shaded space.
Proponents of AB 1976 argued that the bill would create cleaner and safer areas for pumping while opponents argued that it would create an undue hardship on employers and create frivolous lawsuits. Employers should make all reasonable efforts to provide a clean, comfortable space for breast feeding and work with the employee who needs the accommodation to ensure that the space provided is acceptable.
* AB 1654 (passed): This bill exempts employer in the construction industry from claims under the Private Attorneys General Act of 2004 (“PAGA”) if the employees are covered under a valid collective bargaining agreement in effect any time before January 1, 2025 that expressly provides for the wages, hours of work, and working conditions of employees. This applies to any CBA in currently in effect until the CBA expires or January 1, 2028, whichever is earlier.
* SB 970 (passed): This bill requires that by January 1, 2020 and every two years thereafter, hotels and motels must provide at least 20 minutes of training and education regarding human trafficking awareness to an employee who will likely interact or come into contact with victims of human trafficking, such as an employee who works in a reception area, performs housekeeping duties, help customers in moving their possessions, or drives customer.