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New California Laws Impacting Employers-Three Part Series

By JoLynn M. Scharrer

The California Legislature had a prolific year with over 15 significant pieces of legislation impacting employers scheduled to become law in 2019. The following summary of the new laws is designed to serve as a guide for further action by employers to seek education and advice regarding compliance. Hunt Ortmann’s Employment Law Group is ready to assist with document drafting and revision, training, and general advice to provide our clients with peace of mind and confidence as the statutory landscape for the California employer changes.

AB 2770 – Privileged Communications

This bill amends Civil Code section 47 to include among privileged communications complaints of sexual harassment by an employee, without malice, to an employer based on credible evidence, and communications between the employer and interested persons regarding a complaint of sexual harassment. The amendment allows an employer to answer, without malice, whether the employer would rehire an employee and whether or not a decision to not rehire is based on the employer’s determination that the former employee engaged in sexual harassment. This subdivision also protects communications from a current or former employer concerning the job performance or qualifications of an applicant for employment made at the request of a prospective employer, so long as the communication is based upon credible evidence and made without malice.

SB 224 – Harassment in Professional Relationships

Section 51.9 of the Civil Code provides the elements necessary to state a claim of sexual harassment in California. This bill amends that section to require a claimant alleging sexual harassment to prove, among other things, that the defendant holds himself or herself out as being able to help the plaintiff establish a business, service, or professional relationship with the defendant or a 3rd party. The bill would eliminate the element that the plaintiff prove there is an inability by the plaintiff to easily terminate the relationship.
The Department of Fair Employment and Housing (“DFEH”) is responsible for receiving, investigating, conciliating, mediating, and prosecuting complaints alleging violations of specified civil rights. This bill would also make the DFEH responsible for the enforcement of sexual harassment claims. The California Fair Employment and Housing Act (“FEHA”) makes it an unlawful practice under its provisions for a person to deny or to aid, incite, or conspire in the denial of certain civil rights. This bill would also make it an unlawful practice to deny or aid, incite, or conspire in the denial of rights of persons related to sexual harassment actions under FEHA.

SB 1343 – Sexual Harassment Training

FEHA makes specified employment practices unlawful, including the harassment of an employee directly by the employer or indirectly by agents of the employer with the employer’s knowledge. FEHA requires employers with 50 or more employees to provide at least two hours of prescribed training and education regarding sexual harassment, abusive conduct, and gender harassment, as specified, to all supervisory employees within six months of their assumption of a supervisory position and once every two years. This bill would instead require an employer who employs five or more employees, including temporary or seasonal employees, to provide at least two hours of sexual harassment training to all supervisory employees and at least one hour of sexual harassment training to all nonsupervisory employees by January 1, 2020, and once every two years thereafter.

SB 820 – Settlement Agreement Confidentiality Restrictions

SB 820 prohibits the parties to a settlement agreement from restricting disclosure of factual information relating to certain claims of sexual assault, sexual harassment, or harassment or discrimination based on sex, that are filed in a civil or administrative action. Any provision in a settlement agreement that prevents the disclosure of factual information related to the above claims entered into on or after January 1, 2019, is void as a matter of law and against public policy. The bill would create an exception, not applicable if a party is a government agency or public official, for a provision that shields the identity of the claimant and all facts that could lead to the discovery of his or her identity, if the provision is included within the settlement agreement at the request of the claimant.

SB 826 – Composition of Corporate Boards

In general, domestic corporations are formed by the execution and filing of articles of incorporation with the Secretary of State. The business and affairs of these corporations are managed by, and all corporate powers exercised by or under, the direction of their boards of directors, and each director is elected by shareholder vote, with certain exceptions. Foreign corporations may transact intrastate business by obtaining certificates of qualification from the Secretary of State, and are required to meet certain criteria to comply with some of the same provisions applicable to domestic corporations to the exclusion of the law of the jurisdiction in which the foreign corporation is incorporated.
At the close of 2019, every domestic general corporation or foreign corporation that is a publicly held corporation, as defined in the bill, whose principal executive offices, according to the corporation’s SEC 10-K form, are located in California must have a minimum of one female on its board of directors. No later than the close of the 2021 calendar year, the bill would increase that required minimum number to two female directors if the corporation has five directors or to three female directors if the corporation has six or more directors. The bill requires the Secretary of State to electronically publish reports documenting the number of corporations in compliance with these provisions, and authorizes the Secretary of State to impose fines for violations of the bill, as specified.

JoLynn (Pollard) 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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