All I can say is, what a year! It was filled with twists and turns that no one was really expecting. In the ever riveting world of labor and employment law, it sure was a doozy. From sexual harassment prevention bills to Dynamex, there was never a dull moment. So here is the overall update that you and/or your clients should know regarding two major topics—Dynamex and sexual harassment prevention.
Let’s start with Dynamex, oh Dynamex, the bane of my existence. For those who missed the prior blog post on this issue or have simply lived in a hole for the last two months of session, the California Supreme Court issued a decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles, No. S222732 (April 30, 2018), in which it set forth a new standard for distinguishing between an employee versus an independent contractor. This new test, called “ABC,” has never existed in any form in California law, either in statute or by regulation.
The ABC test is the first time in U.S. history that such a test has been imposed by a court, without legislative approval, with three independently dispositive factors for wage and hour purposes. The new test has significant consequences for independent contractors and California businesses alike. Basically, if the test is strictly applied, the freelance industry will essentially be eliminated in this state. Despite this, the Legislature decided not to introduce legislation to pause the implementation of the test. That simply means the saga continues and 2019 will hopefully bring some much needed relief for workers who choose freelance work.
Now to the sexual harassment prevention bills signed or vetoed, let’s start with the biggies:
AB 1870 (Reyes) was vetoed. This veto was probably the biggest surprise for the employment community regarding bills touted as sexual harassment prevention bills. While this bill was widely publicized as a sexual harassment bill and had multiple bipartisan co-authors, the bill actually applied to all employment harassment and discrimination claims.
However, the problem with the bill is that it would have impeded the ability of the employer to eradicate inappropriate, potentially unlawful, behavior by extending the statute of limitations from 1 to 3 years. While Governor Brown highlighted this concern in his veto message, don’t be surprised if we see this bill again next year.
AB 2770 (Irwin) was signed. This was a CalChamber sponsored bill. The bill 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.
AB 3080 (Gonzalez Fletcher) was vetoed. This was the last of CalChamber’s “Job Killer” bills of the year and the only one that reached the Governor’s desk. While AB 3080 was also touted as a sexual harassment prevention bill, it actually had a sweeping effect on all employment claims either under the Labor Code or FEHA. AB 3080 would have significantly expanded employment litigation and increased costs for employers and employees by banning settlement agreements for labor and employment claims as well as arbitration agreements made as a condition of employment. As stated in the Governor’s veto, this bill is likely preempted under the Federal Arbitration Act. Regardless of the federal preemption, I have a feeling we will see this one again next year.
SB 820 (Leyva) was signed. This bill bans nondisclosure provisions in settlement agreements involving sexual misconduct. However, this bill has some unintended consequences including preventing the ability to informally resolve civil cases that include an allegation of harassment or failure to prevent harassment.
SB 1300 (Jackson) was signed. SB 1300 limits the use of nondisparagement agreements and general releases, expands employer liability for unlawful harassment by nonemployees and limits the ability of the defendant to recover attorney’s fees and costs. Additionally, through the codified intent language, the bill attempts to restrict the ability to summarily adjudicate harassment claims and attempts to lower the legal standard for actionable harassment claims by providing a directive to the courts on how they should interpret the law.
SB 1343 (Mitchell) was signed. This bill expands sexual harassment training requirements. Employers who have 5 or more employees, including temporary or seasonal employees, now must provide at least 2 hours of sexual harassment training to all supervisory employees and at least one hour of sexual harassment training to all nonsupervisory employees every two years.
While there was a slew of other employment related bills signed or vetoed, including additional sexual harassment related ones, these were the hot topics of the year that made it through the end of session.
Next year is sure to be as exciting…stay tuned.