On September 30, 2018, Gov. Jerry Brown signed into law several bills that greatly expand the rights of employees to pursue sexual harassment lawsuits in California. The majority of these laws require immediate attention as they become effective January 1, 2019. This  discusses these laws and provides recommendations for how employers can act to avoid liability.

Expanded Liability for Sexual Harassment

SB 1300 makes numerous changes to existing law with regard to liability for alleged sexual harassment. In serial form, beginning on January 1, 2019, employers will:

• Be prohibited from requiring a release of Fair Employment and Housing Act (FEHA) claims in exchange for a bonus, raise, employment or continued employment;
• Be prohibited from recovering fees and enhanced costs through use of statutory (Cal. Code of Civil Procedure §998) offers to compromise, except where the employer can show (1) the lawsuit was frivolous, unreasonable and/or without merit; or (2) the employee continued to litigate a claim after becoming aware his/her case had no merit;
• Be potentially liable for any kind of unlawful harassment by nonemployees;
• Be potentially liable even where the harassment was a single instance or “stray remark” by a non-decision-maker;
• Be less likely to prevail on a sexual harassment case through a motion for summary judgment.

The statute of limitations refers to the “window” of time following an event within which an alleged victim can bring a civil action. Claims of sexual harassment can include a claim of sexual assault, in which the victim claims he/she was sexually touched without consent, or coerced or forced to engage in a sexual act. AB 1619 expands the limitations period for sexual assault claims to 10 years after the act, or 3 years after the alleged victim discovers the injury, whichever is later.

Expanded Definition of Sexual Harassment

SB 224 expands the list of professional relationships which can form the basis of a claim for sexual harassment. To the previous list, which included physician, psychotherapist, dentist and real estate agent, the bill adds individuals who present themselves as able to assist one in establishing a business, service or professional relationship. The law specifically identifies lobbyists, elected officials, directors, producers and investors.

Limits on Nondisclosure of Allegations and/or Settlements

Settlements of sexual harassment claims have historically included nondisclosure clauses, preventing the alleged victim from disclosing details about the claim and settlement. SB 820 prohibits provisions that prevent the disclosure of factual information relating to certain claims of sexual assault, sexual harassment, or discrimination based on sex, that are filed in a civil or administrative action.

The bill makes such provisions in a settlement agreement on or after January 1, 2019, void as a matter of law and against public policy. The bill creates a limited exception for a provision that shields the identity of the claimant and facts that could lead to the discovery of his or her identity, if that provision is included in the agreement at the claimant’s request.

Additionally, AB 3109 renders void and unenforceable any clause that prevents a party to a settlement agreement from testifying about alleged criminal conduct or sexual harassment in an administrative, legislative or judicial proceeding.

Additional Sexual Harassment Prevention Training

California law currently requires employers with 50+ employees to provide their supervisors with sexual harassment prevention training every 2 years. Effective January 1, 2020, SB 1343 requires any employer who employs 5 or more employees, including temporary or seasonal employees, to provide at least 2 hours of sexual harassment prevention training to all supervisory employees, and at least 1 hour of such training to all nonsupervisory employees, once every 2 years. The bill also requires the Department of Fair Employment and Housing (DFEH) to develop or obtain 1-hour and 2-hour online training courses on the prevention of sexual harassment in the workplace.

What Should Employers Do

Many of these new laws will impact how employment lawyers do their job, and will likely make it more difficult to resolve sexual harassment claims and lawsuits without a trial. However, employers remain primarily responsible and should examine their practices to ensure they maintain a harassment-free workplace.

Consideration should be given to getting a head start on sexual harassment prevention training, including for non-supervisory personnel. Employers with questions about how to reduce their chances of being targeted by a sexual harassment claim should contact their qualified employment law counsel.

Politicians in several states have been lobbying for years to make “bullying” in the workplace illegal. While Tennessee is the only state with such a law currently on its books, California took a step closer when Governor Brown signed AB 2053, which will require certain employers to provide “abusive conduct” training as a component of already mandatory sexual harassment prevention training for supervisory employees.

The existing requirement, found in Government Code section 12950.1, applies to employers with 50 or more employees and requires supervisory employees receive two hours of sexual harassment prevention training, within six (6) months following their assumption of a supervisory role. Follow up training is required every two years.

Here is what the amendment adds to Section 12950.1:

• Training must now include a component on the “prevention of abusive conduct.” This need not necessarily extend the length of the training beyond two hours.
• “Abusive conduct” is “conduct with malice that a reasonable person would find hostile, offensive, and unrelated to an employer’s legitimate business interests.”
• “Abusive conduct” may include repeated infliction of verbal abuse (e.g., derogatory remarks, insults, and epithets), verbal or physical conduct that a reasonable person would find threatening, intimidating, or humiliating, or the gratuitous sabotage or undermining of a person’s work performance.
• “Abusive conduct” need not be based on any otherwise protected classification, such as race, age, gender, disability or religion.
• A single act does not constitute “abusive conduct” for purposes of the training, unless it is especially severe or egregious.
• The amendment takes effect January 1, 2015.

What Employers Should Do – Employers with 50 or more employees should immediately consult with their regular employment attorneys to update training to comply with the new law.

The California Supreme Court will decide whether the terms of a franchise agreement, or the franchisor’s conduct at-odds with that agreement, govern for purposes of whether the franchisor can face liability for (mis-)treatment of a franchisee’s employee.

The issue is simpler than it sounds, but an opinion could have wide-ranging implications for franchisors doing business in California.  In Patterson v. Domino’s Pizza, a 16 year-old employee of a Domino’s franchise sued, not only the franchisee and its manager, but also Domino’s, for alleged sexual harassment, retaliation and constructive wrongful termination.  The franchisee petitioned for bankruptcy protection and Domino’s obtained summary judgment on the grounds that the operative franchise agreement placed sole responsibility for recruiting, hiring, training and supervising employees on the franchisee, such that the franchisee was an independent contractor for liability purposes.

In June, 2012, the California Court of Appeal for the Second District issued and certified for publication an opinion that reversed the summary judgment in Domino’s favor.  In a nutshell, the Court of Appeal looked well outside the terms of the franchise agreement, focusing instead on the course of conduct between Domino’s and its franchisee.  Among the items of evidence cited by the court was Domino’s specific hiring requirements applicable to all franchisees, including rules about qualifications, appearance standards and required training software programs.  The court also pointed to testimony from the franchisee owner about Domino’s practices, including specific direction to fire certain franchisee employees (including the alleged harasser) and tactics, including “mystery shoppers,” designed to exert control over individual franchise stores.  Triable issues remained, the Court of Appeal concluded, whether “there was a lack of local franchisee management independence” which could render Domino’s liable.

Accepting Domino’s petition for review, the Supreme Court has ordered the parties to limit analysis to the question whether Domino’s is entitled to summary judgment on plaintiff’s claim that it is vicariously liable for tortious conduct by a supervising employee of the franchisee.

If the Supreme Court’s opinion is unfavorable to Domino’s, it could change in a very material way the degree of control franchisors maintain over their franchisee’s employment practices.  If it results in a shifting of responsibility to the franchisor, I imagine it will increase franchise purchase costs, trigger different or additional insurance provisions, with corresponding cost increases, and overall make franchise arrangements less appealing in our golden state.