October 5, 2018
On September 30, 2018, Governor Edmund G. Brown signed several new workplace laws, and vetoed others, that arose out of the #MeToo movement. We briefly review the newly signed legislation and also highlight bills that Governor Brown rejected. Unless otherwise indicated, these new laws will take effect on January 1, 2019.
Expanded Requirements for Harassment and Discrimination Training. Most California employers are aware that, under existing California law, employers with 50 or more employees must provide at least two hours of prescribed training regarding sexual harassment within six months of an individual’s hiring or promotion to a supervisory position and every two years while an employee remains in a supervisory position. SB 1343 expands this requirement in two critical ways:
SB 1343 also requires the California Department of Fair Employment and Housing (DFEH) to make available online training courses that employers may use to meet these requirements. However, employers may wish to work with their counsel and Human Resources departments to develop training that is specific to their business and industry, which is generally regarded as more effective than “one size fits all” trainings.
Education and Training for Employees in Entertainment Industry. AB 2338 requires, prior to the issuance of a permit to employ a minor in the entertainment industry, that the minor and the minor’s parents or legal guardians receive and complete sexual harassment training. The law also requires that talent agencies ensure that minors have a valid work permit, and that agencies provide adult artists with accessible educational material “regarding sexual harassment prevention, retaliation, and reporting resources,” as well as nutrition and eating disorders.
Restrictions on Non-Disclosure and Confidentiality Agreements and More Rigorous Sexual Harassment Standards. SB 1300 amends California’s Fair Employment and Housing Act (FEHA) to prohibit an employer from requiring an employee to agree to a non-disparagement agreement or other document limiting the disclosure of information about unlawful workplace acts in exchange for a raise or bonus, or as a condition of employment or continued employment. Employers are also prohibited from requiring an individual to “execute a statement that he or she does not possess any claim or injury against the employer” or to release “a right to file and pursue a civil action or complaint with, or otherwise notify, a state agency, other public prosecutor, law enforcement agency, or any court or other governmental entity.” Under the law, any such agreement is contrary to public policy and unenforceable. (Some of these activities, such as reporting to law enforcement, are already protected, of course.) While negotiated settlement agreements of civil claims supported by valuable consideration are exempted from these prohibitions, employers will want to review their various employee agreement templates to ensure none contain these or other types of prohibited clauses.
SB 1300 also codifies several legal standards that may make it more challenging for employers to prevail on harassment claims before trial. For example, the law provides that a single incident of harassing conduct may create a triable issue of fact in a hostile work environment case; that it is irrelevant to a sexual harassment case that a particular occupation may have been characterized by more sexualized conduct in the past; and that “hostile working environment cases involve issues ‘not determinable on paper.'” Employers can expect to see SB 1300 cited in any plaintiff’s opposition to summary judgment in a sexual harassment case, and they will need to give serious consideration as to whether and how to seek summary judgment in light of the new law.
Limitations on Confidentiality in Settlement Agreements. SB 820 prohibits provisions in settlement agreements entered into on or after January 1, 2019 that prevent the disclosure of facts related to sexual assault, harassment, and discrimination claims that have been “filed in a civil action or a complaint filed in an administrative action.” Note, however, that SB 820 does not prohibit provisions precluding the disclosure of the settlement payment amount, and the law carves out an exception for provisions protecting the identity of the claimant where requested by the claimant.
Expanded Sexual Harassment Liability to Cover Certain Business Relationships. Businesses in the venture capital, entertainment, and similar industries will want to be alert to SB 224, which modifies California Civil Code section 51.9 and would include within the elements in a cause of action for sexual harassment when the plaintiff proves, among other things, that the “defendant holds himself or herself as being able to help the plaintiff establish a business, service, or professional relationship with the defendant or a third party.” The law identifies additional examples of potential defendants under the statute, such as investors, elected officials, lobbyists, directors, and producers.
Limitations on Barring Testimony Related to Criminal Conduct or Sexual Harassment. AB 3109 prohibits waivers of a party’s right to testify in an administrative, legislative, or judicial proceeding concerning alleged criminal conduct or sexual harassment by the other party to a contract, 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.
SB 826 requires a minimum number of female directors on the boards of publicly traded corporations with principal executive offices in California. The location of a corporation’s principal executive office will be determined by the Annual Report on Form 10-K.
Under SB 826, a corporation covered by the law must have at least one female member on its board of directors by December 31, 2019, and additional female members by 2021 depending on the size of the board. If the corporation has a board of directors with:
The California Secretary of State can impose fines of $100,000 for a first violation and $300,000 for subsequent violations.
Potential challengers of this law argue that it suffers from numerous legal deficiencies, including that it violates the Commerce Clause and the Equal Protection Clause of the United States Constitution. Indeed, Governor Brown himself acknowledged in his signing statement that this new law has “potential flaws that indeed may provide fatal to its ultimate implementation” and will likely be subject to challenge. For more information on SB 826, please consult our Securities Regulation and Corporate Governance group’s analysis, available here.
Governor Brown also vetoed several bills relating to sexual harassment that could have significantly impacted employers in California, including:
Gibson Dunn lawyers are available to assist in addressing any questions you may have about these developments. We have been engaged by numerous clients recently to conduct investigations of #MeToo complaints; to proactively review sexual harassment policies, practices and procedures for the protection of employees and the promotion of a safe, respectful and professional workplace; to conduct training for executives, managers and employees; and to handle related counseling and litigation. To learn more about these issues, please contact the Gibson Dunn lawyer with whom you usually work or the following Labor and Employment or Securities Regulation and Corporate Governance practice group leaders and members:
Labor and Employment Group:
Catherine A. Conway – Co-Chair, Los Angeles (+1 213-229-7822, [email protected])
Jason C. Schwartz – Co-Chair, Washington, D.C. (+1 202-955-8242, [email protected])
Rachel S. Brass – San Francisco (+1 415-393-8293, [email protected])
Jesse A. Cripps – Los Angeles (+1 213-229-7792, [email protected])
Theane Evangelis – Los Angeles (+1 213-229-7726, [email protected])
Michele L. Maryott – Orange County (+1 949-451-3945,[email protected])
Katherine V.A. Smith – Los Angeles (+1 213-229-7107, [email protected])
Securities Regulation and Corporate Governance Group:
Elizabeth Ising – Co-Chair, Washington, D.C. (+1 202-955-8287, [email protected])
Lori Zyskowski – Co-Chair, New York (+1 212-351-2309, [email protected])
Stewart L. McDowell – San Francisco (+1 415-393-8322, [email protected])
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