California Governor Jerry Brown recently signed into law several bills that will have significant impact on employers’ workplace obligations. Effective January 1, 2019, the new laws will restrict nondisclosure agreements and certain settlement agreements covering harassment and discrimination claims, significantly expand harassment training obligations (including for employers of under 50), require female quotas on California-headquartered boards of directors, and potentially require updating lactation accommodations.

SB 1300 – Restricts Employer Releases and Non-Disparagement Agreements and Codifies Standards in Harassment Suits

SB 1300 prohibits an employer, as a condition of employment, including for a raise, bonus or continued employment, from requiring an employee to execute (1) a release of FEHA claims or rights, (2) an agreement preventing the employee from disclosing information about unlawful workplace acts, including but not limited to sexual harassment, or (3) a statement that he or she “does not possess any claim or injury against the employer.” These limitations do not apply to “negotiated” settlement agreements to resolve a claim filed by an employee in court, an administrative agency or ADR forum, or through an employer’s internal complaint process. “Negotiated” in this context means that the employee agreed voluntarily, deliberately, and knowingly after notice and an opportunity to retain an attorney (so, actual representation by counsel is not required). The law does not explain whether it covers employee severance agreements, which are arguably not entered “as a condition of employment.”

SB 1300 also expands employer responsibility for harassment activity by nonemployees based upon all classifications protected by the FEHA (existing law only imposed such liability for sexual harassment).

SB 1300 raises the standard for prevailing defendants in FEHA cases to recover attorneys’ fees and costs—even after a plaintiff has rejected a C.C.P. § 998 settlement offer. Now, such recovery is only available if the court finds the plaintiff’s action was “frivolous, unreasonable, or groundless when brought, or the plaintiff continued to litigate after it clearly became so.”

SB 1300 also codifies a statement of Legislative intent that may reduce summary judgments against hostile environment cases, declaring that:

• Hostile work environment cases are rarely appropriate for disposition on summary judgment.
• A sexual harassment plaintiff need not prove that his or her tangible productivity has declined as a result of the harassment. 
• A single incident of harassing conduct is sufficient to create a triable issue regarding a hostile work environment if the conduct unreasonably interfered with the plaintiff’s work performance or created an intimidating, hostile, or offensive work environment.
• The existence of a hostile work environment depends upon the totality of the circumstances and a “stray remark” by a non-decision maker may be relevant, circumstantial evidence of discrimination.

SB 820 – Restrictions on “Secret Settlement” Nondisclosure Agreements

SB 820 prohibits any settlement agreement provision that prevents disclosure of factual information relating to certain claims of sexual assault, harassment, discrimination, and retaliation that had been in a civil or administrative action. Any such provision entered into on or after January 1, 2019 will be void as a matter of law and against public policy.

SB 820 does not affect settlement agreements entered pre-litigation, such as in response to a demand letter. SB 820 does not prohibit provisions that preclude disclosure of the amount paid in settlement. SB 820 also allows for provisions that shield the claimant’s identity and facts that could lead to the discovery of that identity, so long as the claimant requests the provision be included and no government agency or public official is a party to the agreement.

SB 1343 – Expanded Harassment Training Requirements

Existing California law has required employers with 50 or more employees to provide two hours of sexual harassment prevention training to all supervisors every two years or within six months of assuming a supervisory position. In recent years the training requirement has been expanded to require training on abusive conduct as well as harassment based on gender identity, gender expression, and sexual orientation. SB 1343 extends these training requirements to employers with 5 or more employees, including temporary or seasonal employees.

Perhaps an even more substantial expansion is a new requirement that employers with 5 or more employees provide at least one hour of training to all nonsupervisory employees by January 1, 2020, and every two years thereafter. California has never required such training of nonsupervisory employees.

The bill further requires the Department of Fair Employment and Housing (DFEH) to post compliant one-hour and two-hour online sexual harassment prevention training courses on its website. The DFEH is also required to make information posters and fact sheets, as well as the online courses, available to employers and the public in various languages.

AB 1976 – Expands Lactation Accommodation Obligations

AB 1976 requires employers to make reasonable efforts to provide a room “other than a bathroom” (replacing “other than a toilet stall”) to accommodate employees expressing breast milk. It authorizes employers to make “temporary” private, lactation-only spaces available if the employer is unable to provide a permanent location because of operational, financial, or space limitations. The law makes special accommodation for agricultural employers. It also adds a narrow undue-hardship exception taking into account the size, nature, or structure of the employer’s business. AB 1976 may require some employers to physically alter their workspace to comply with these requirements by January 1, 2019.

SB 826 – Requires Female Presence on Public Company Boards of Directors Headquartered in California

A publicly held domestic or foreign corporation whose principal executive offices, according to the corporation’s SEC 10-K form, are located in California must: 

• No later than December 31, 2019, have a minimum of one female director on its board. A corporation may increase its number of directors to comply with this requirement.
• No later than December 31, 2021, (1) have a minimum of three female directors if it has six directors or more; (2) have at least two female directors if it has five directors; or (3) have at least one female director if it has four or fewer directors.

The law also requires the Secretary of State to publish statistical reports on both the number of complying corporations as well as corporations relocating their headquarters or becoming private. The Secretary of State may impose fines for violations of this section in future-adopted regulations. Notably, Governor Brown acknowledged that “serious legal concerns have been raised” about the bill.

AB 2282 – Clarifies Salary History Legislation

Employers should also be aware of AB 2282, signed into law in July, which clarifies salary-history requirements established in October 2017. That October 2017 legislation, AB 168, prohibited employers from asking job applicants for “salary history information” and required employers to give “applicants” the “pay scale” for a position upon “reasonable request.” AB 2282 clarifies that: 

(1)  “Applicant” means an individual who is seeking employment (not a current employee applying internally for transfer or promotion);

(2)  “Pay scale” means a salary or hourly wage range (not including bonuses or equity-based compensation); and

(3)  “Reasonable request” means a request made after an applicant has completed an initial interview.

AB 2282 also clarifies that, although employers may not ask an applicant for salary history information, they may ask about an applicant’s “salary expectation” for the position. In addition, employers are not prohibited from making a compensation decision based on a current employee’s existing salary, so long as any wage differential resulting from that compensation decision is justified by one of the Equal Pay Act factors (seniority or merit system, production system, or a bona fide factor such as education, training, or experience). 

Vetoed Bills

Employers may be interested to note that Governor Brown vetoed the following three bills: 

• AB 3080, which would have banned mandatory workplace arbitration agreements and confidential agreements regarding workplace sexual harassment;
• AB 1867, which would have required large employers to maintain records of sexual harassment for at least five years after the last day of employment of both the complainant and alleged harasser; and
• AB 1870, which would have extended the period to file certain DFEH discrimination complaints from one year to three years.