Trend? California employers to face raft of new #MeToo laws

Trend? California employers to face raft of new #MeToo laws

Excerpted from a Lexology blog by Fisher Phillips

Wrapping up a whirlwind weekend, California Governor Jerry Brown just signed several pieces of legislation that will create new employer obligations in the areas of sexual harassment and gender discrimination. Specifically, you will no longer be able to enter into non-disclosure agreements involving claims of sexual assault, sexual harassment, or sex discrimination; will be required to significantly increase your sexual harassment prevention training initiatives; and will be restricted in your ability to enter into certain settlement agreements related to harassment and discrimination claims.

Moreover, the governor also signed into law several other workplace law bills that will change the way you do business, including passing a new lactation accommodation law, a statute that will require businesses to install female corporate board members, and a new law that is intended to curtail human trafficking. And while the #MeToo movement dominated employment legislation in California in 2018, the biggest news from this weekend might be the large number of #MeToo movement priority bills that the governor vetoed.

A complete summary of the all of the relevant labor and employment legislation signed—and vetoed—follows.

1.California Takes a STAND Against Non-Disclosure Agreements
Governor Brown signed legislation on September 30 that will broadly prohibit non-disclosure clauses in settlement agreements involving sexual assault, sexual harassment, or sex discrimination. Known as the STAND (Stand Together Against Non-Disclosure) Act, the new law will take effect on January 1, 2019—and the provisions of any settlement agreement entered into on or after that date that violates the new prohibitions will be null and void.

Background: The #MeToo Movement Takes Aim At Secrecy
One of the more high-profile targets of the #MeToo movement has been the use of non-disclosure agreements in cases involving sexual harassment. Activists have pointed to examples involving high-profile executives like Harvey Weinstein, where so-called “secret settlements” were utilized. Critics have argued that these types of clauses serve to keep serious issues secret, which allows the perpetrator of sexual harassment to victimize other individuals.
For the average employer, the use of non-disclosure agreements is more nuanced. Many employers make the decision to settle a case because of business reasons, motivated to preserve resources by settling a case rather than litigating it regardless of whether it believes the case has any merit. Therefore, the mere fact that a claim is settled cannot be seen not an admission of guilt—and accompanying non-disclosure agreements are often negotiated to ensure that there is not a public presumption of guilt merely because a claim has settled. Nevertheless, despite these realities, the use of non-disclosure agreements in sexual harassment cases has been a primary target of the #MeToo movement in 2018.

New California Law Bans Non-Disclosure Agreements In A Wide Category Of Cases
For some time, California law has disfavored non-disclosure agreements in certain types of cases. For example, California law has prohibited confidential settlement provisions in civil cases for acts that could be prosecuted as a felony sex offense or other types of sexual assault since 2006. Confidentiality provisions are also disfavored under California law in elder abuse cases. With Governor Brown’s signature on Senate Bill 820, the category of settlement agreements in which non-disclosure provisions are prohibited has now been significantly increased.

SB 820 will soon prohibit any provision in a settlement agreement that prevents the disclosure of factual information related to a claim filed in civil court or complaint filed with an administrative agency regarding any of the following:

• An act of sexual assault not already covered by the existing 2006 law mentioned above;
• An act of sexual harassment prohibited by Civil Code Section 51.9 (prohibiting sexual harassment in certain “business, service or professional” relationships);
• An act of workplace harassment or discrimination based on sex, or failure to prevent an act of such harassment or discrimination, or an act of retaliation against a person for reporting harassment or discrimination based on sex; and
• Similar acts conducted by an owner of a housing accommodation and prohibited under the housing provisions of the Fair Employment and Housing Act (FEHA).

SB 820 also prohibits a court from entering (by stipulation or otherwise) an order that restricts the disclosure of information in such a manner.

Any provisions contained in a settlement agreement entered into on or after January 1, 2019 that violate these prohibitions will be void as a matter of law and against public policy. Therefore, the new law will not impact settlement agreements entered into prior to this date.

It is useful to point out a few notable features of the new law. First, it clearly covers a broader category of claims than simply sexual harassment, as the bill also prohibits non-disclosure agreements in settlements involving sex discrimination, failure to prevent, and retaliation. Therefore, SB 820 will have an impact beyond just the #MeToo movement and sexual harassment cases.

Second, the prohibition contained in the new law only applies to “claims filed in a civil action or a complaint filed in an administrative action.” Thus, the new law appears to not prohibit such clauses being used in settlements that occur in the “pre-litigation” phase (such as where a demand letter has been sent but no claim has been filed with an administrative agency or in court). Therefore, there may be a narrow set of circumstances in which such clauses may still be utilized in sexual harassment and other similar cases.

You can read the full post here.

 

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