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New California Employment Laws 2019-Part III

By Alison Gibbs and JoLynn M. Scharrer

A number of new California laws impacting employers took effect at the start of the New Year. Here is the final installment of Hunt Ortmann Employment Law Group’s three-part series summarizing key developments in each of the newly-enacted bills:

AB 1565- Direct Contractor Liability for Wages/Benefits Owed to Subcontractor Employees (Revisions to Labor Code section 218.7)

AB 1565 was signed into law to clarify certain portions of Labor Code section 218.7, which went into effect January 1, 2018. Section 218.7 holds direct contractors liable, under certain types of construction contracts, for unpaid wages, benefits, or contributions that a subcontractor owes to its workers. AB 1565 provides that in order to withhold disputed payments, the direct contractor must specify in its contract with the subcontractor, what documents and information that the subcontractor is required to provide.This new provision specifies the exact nature of subcontractors’ obligations and what they must do to avoid withholding of payments. In addition, under AB 1565, subcontractors may include the same requirements in their contracts with lower-tiered subcontractors and may withhold disputed sums owed. AB 1565 also repeals a prior provision in Section 218.7 that the direct contractor’s liability for unpaid wages or benefits is in addition to any other existing rights and remedies. The bill went into effect immediately due to the need to resolve the confusion created by the existing language.

SB 1300- Expanded Harassment Liability

SB 1300 expanded liability for workplace harassment claims as follows:

  • SB 1300 makes employers liable not only for claims of sexual harassment, but for other harassment activity by non-employees where the employer knew or should have known of the harassment and failed to take appropriate corrective action.
  • SB 1300 makes it unlawful for an employer, “in exchange for a raise or bonus, or as a condition of employment,” to require an employee to sign a release of a claim or right under FEHA. Similarly, the new law prohibits an employer (in exchange for a raise, bonus or as a condition of employment) from requiring an employee to sign a non-disparagement agreement or other document that purports to deny the employee the right to disclose information about unlawful acts in the workplace, including, but not limited to, sexual harassment.  However, these prohibitions do not apply to a “negotiated settlement agreement to resolve an underlying claim under [FEHA] that has been filed by an employee in court, before an administrative agency, alternate dispute resolution forum, or through an employer’s internal complaint process.”
  • The bill provides guidance on bystander intervention training.
  • SB 1300 prohibits a prevailing defendant from being awarded attorney’s fees and costs unless the court finds the action was frivolous, unreasonable, or groundless when brought or that the plaintiff continued to litigate after it clearly became so. The Legislature also added declarations of intent with regard to the application of the anti-harassment laws. For example, the Legislature has declared: that a single incident of harassing conduct may be sufficient to create a triable issue regarding the existence of a hostile work environment; a plaintiff no longer needs to prove his or her “tangible productivity” declined as a result of harassment in a workplace harassment suit, and may instead show a “reasonable person” subject to the alleged discriminatory conduct would find the harassment altered working conditions so as to make it more difficult to work; any discriminatory remark, even if made by a non-decisionmaker or not made directly in the context of an employment decision, may be relevant evidence of discrimination in a FEHA claim; that harassment cases are rarely appropriate for disposition on summary judgment; and that the legal standard for sexual harassment does not vary by type of workplace.

AB 3109- Voids Waivers of Right to Testify About Alleged Criminal Conduct or Sexual Harassment

AB 3109 renders unenforceable any provision in a contract or settlement agreement entered into on or after January 1, 2019, that prevents or otherwise waives a party’s right to testify in an administrative, legislative or judicial proceeding about alleged criminal conduct or sexual harassment, on the part of the other party to the contract or settlement agreement, or on the part of the agents or employees of the other party, 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.

AB 3247- Amendment to California Arbitration Act

AB 3247 amends the California Arbitration Act (Cal. Code Civ. Proc. § 1280 et seq.), specifically, section 1281.2 of the California Code of Civil Procedure. Effective January 1, 2019, section 1281.2 will now state that a court may not enforce an arbitration agreement if “grounds exist for rescission of the agreement, [emphasis added]” as opposed to the prior language which called for “grounds [to] exist for the revocation of the agreement [emphasis added].”

For more information about these new laws, please contact the Hunt Ortmann Employment Law Group  at employment@huntortmann.com.

Alison Gibbs is an associate attorney at Hunt Ortmann who specializes in labor and employment law. She can be reached at gibbs@huntortmann.com.

JoLynn M. Scharrer is a shareholder at Hunt Ortmann and leads the firm’s Employment Law Group and Insurance Group. She can be reached at scharrer@huntortmann.com.

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