Frankfurt Kurnit Klein & Selz

January 28th, 2019

California Employment Law Changes You Need to Know

A raft of legislative changes affect hiring practices, employment agreements, employee classification, training, and more. Here’s a handy summary.

Nondisclosure Prohibition (SB 820). After January 1, 2019, any settlement agreement that prevents the disclosure of factual information related to a claim of sexual assault, sexual harassment, or gender discrimination filed in a civil or administrative action is void as a matter of law. The law does provide exceptions for nondisclosure of (i) the amount paid in settlement and (ii) the claimant’s identity and any fact that could reveal the identity, so long as the claimant has requested anonymity and the opposing party is not a government agency or public official.

Nondisparagement Prohibition (SB 1300). This change prohibits companies from requiring their employees to agree to nondisparagement clauses as a term or condition of employment or in exchange for a raise or bonus. More significantly, it essentially forecloses employers’ motions for summary judgment in harassment cases by providing that, “a single incident of harassing conduct is sufficient to create a triable issue regarding the existence of a hostile work environment if the harassing conduct has unreasonably interfered with the plaintiff’s work performance or created an intimidating, hostile, or offensive working environment.”

Gag Order Prohibition (AB 3109). Citing the “secret settlements” that “allow perpetrators to escape any public shame and to limit the consequence they face for their actions,” after January 1, 2019, any contract or settlement agreement that attempts to bar a person from testifying in an administrative, legislative, or judicial proceeding about alleged criminal conduct or sexual harassment is void and unenforceable in California.

Mandates for Female Board Members (SB 826). By the end of 2019, every publicly held company whose principal executive offices are located in California must have at least one female member on its board of directors. By the end of 2021, companies that have five directors must have at least two female members and companies that have six or more directors must have at least three women on their board. Fines for violating these requirements may be $100,000 for the first violation (failure to have a female board member for at least a portion of the calendar year) and $300,000 for the second and third violations.

Expansion of Workplace Sexual Harassment Training (SB 1343). Currently, California employers that have at least fifty employees are required to train and educate all their supervisors in the prevention of sexual harassment in two hour training sessions which must take place every two years. As of January 1, 2020, the minimum number of employees to trigger this training requirement drops to five (including seasonal, temporary, or employees hired to work for less than six months) and will also require one hour of training for non-supervisors within six months of the employee’s assignment. Clarification on Salary History Inquiries (AB 2282). In 2017, California banned employers from asking job applicants about their salary history as a factor in making employment decisions and required employers to provide the position’s pay scale upon the applicant’s request. AB 2282 clarifies that employers are allowed to ask applicants about their salary expectations and must provide a pay scale to an applicant only if the applicant is an external candidate and only after at least one interview.

Clarification on “Ban the Box” (SB 1412). In 2018 California prohibited employers from using either an applicant’s or an existing employee’s criminal history (including convictions that have been dismissed or sealed) in making employment decisions. This became known as the “ban the box” law because it required employers to remove from employment applications the requirement that a person “check the box” if he or she had been convicted of a crime. California employers may now ask an applicant (or seek information) about a particular conviction if, pursuant to federal law, federal regulation, or state law: (1) the employer is required to obtain information regarding the particular conviction of the applicant, regardless of whether the conviction has been expunged, judicially ordered sealed, statutorily eradicated, or judicially dismissed following probation; (2) the applicant would be required to possess or use a firearm in the course of his or her employment; (3) an individual with that particular conviction is prohibited by law from holding the position sought; or (4) the employer is prohibited by law from hiring an applicant who has that particular conviction.

Independent Contractor Classification. In April 2018, the California Supreme Court changed the standard to determine whether a worker should be classified as an employee or independent contractor for purposes of California wage orders which govern minimum wages, maximum hours, and meal and rest breaks. While the prior standard focused primarily on the right to control the worker, the Court has altered the test to a presumption that all workers are employees, and to overcome the presumption the employer must apply what is now known as the “ABC” test: workers can be classified as independent contractors only if the employer can show the following three factors: (a) that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of the work and in fact; and (b) that the worker performs work that is outside the usual course of the hiring entity’s business; and (c) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

Prohibitions on Soliciting Employees of Former Employer Are Not Enforceable. For decades, anti-raiding provisions have been a staple of California employment contracts. But in late 2018 a California appeals court voided an employer’s contract that restrained former employees from soliciting current employees for a one-year period. The court suggested that any anti-raiding provision may be void under “California’s strong public policy of protecting the right of its citizens to pursue any lawful employment and enterprise of their choice.” While the case may be limited to its facts (the former employees were in the business of recruiting, meaning that enforcement of the anti-raiding provision actually restrained their ability to compete) – the 2018 case certainly calls anti-raiding provisions into question.

If you have questions about these or other California employment law developments, contact Tricia L. Legittino at 310 579 9632 or tlegittino@fkks.com, Tiffany R. Caterina at 310 579 9620 or tcaterina@fkks.com, or any other member of the Frankfurt Kurnit Employment Group.