United States: Governor Brown Signs Final Round Of Employment-Related Legislation

Once again, Governor Jerry Brown ends the legislative year by signing a flurry of employment-related legislation. This  year, however, is Governor Brown's last year to do so, and next year we will report about the employment-related legislation that the new governor (whoever that is) undoubtedly will have signed.

This year's legislation includes significant sexual harassment- related and nonsexual harassment related employment legislation. In this article, we address the nonsexual harassment related employment legislation the governor signed. This legislation concerns areas such as government-mandated gender quotas for publicly-traded companies, criminal history inquiries, lactation accommodations, and paid family leave. Unless otherwise noted, all laws take effect on January 1, 2019.

Female Director Quotas for Public Corporations

Senate Bill (SB) 826 adds Section 301.3 to the California Corporations Code and requires that publicly-held corporations appoint female directors to their boards of directors. The law applies to publicly-traded companies incorporated in any state with principal executive offices in California according to the corporation's SEC 10-K form.

More specifically, by the end of 2019, covered corporations must include at least one female on their boards of directors.  By the end of 2021, covered corporations with five or more directors on their boards must include at least two female directors, while corporations with six or more directors on their boards must include at least three female directors.

Covered corporations may increase the number of directors on their boards to facilitate compliance. A corporation is in compliance if a female director holds the seat "for at least a portion of the year." The law defines a "female" as "an individual who self-identifies her gender as a woman, without regard to the individual's designated sex at birth."

The penalties for noncompliance are significant. The law authorizes the California secretary of state to implement regulations that fine noncompliant corporations $100,000 for the first violation and $300,000 for any subsequent violation.

The law also requires the California secretary of state to publish a report revealing the number of covered corporations that have complied with the quota requirement. Interestingly, among other statistics, the secretary of state also must publish the number of corporations that moved their headquarters out of California to another state.

In his signing statement, Governor Brown acknowledged that the law has "potential flaws that indeed may prove fatal to its ultimate implementation." Legal experts have pointed out that gender quotas have been held unconstitutional in other contexts. Moreover, the law may conflict with federal corporate law. Governor Brown nevertheless signed the bill, referring in part to "recent events in Washington, D.C." that "make it crystal clear that many are not getting the message."

Right to Copies of Pay Records

SB 1252 amends California Labor Code Section 226, under which employers must afford current and former employees the right to inspect or copy records. The amended law adds that employees have a right to "receive a copy" of the records.

According to the bill's legislative history, the amendment's purpose is to clarify that employers must provide a copy upon request, rather than requiring the employee to make a copy. The amendment leaves in place the employer's right to charge the employee "the actual cost of reproduction."

Criminal History Inquiries

SB 1412 amends California Labor Code Section 432.7, which limits the information an employer may ask a job applicant about his or her criminal history.

The current law prohibits an employer from asking a job applicant to disclose information concerning arrests that did not result in a conviction (with exceptions), referrals to pretrial or posttrial diversion programs, or convictions that have been sealed, dismissed, expunged, or statutorily eradicated pursuant to law. The law makes exceptions for employers in certain circumstances, including when an employer is required by law to inquire about a conviction or is prohibited by law from hiring an applicant who has been convicted of a crime.

The amended law limits those exceptions to circumstances where the employer is required to inquire into a particular category of criminal offenses or criminal conduct, or where the employer is prohibited from hiring an individual with a particular conviction. "Particular conviction" means a conviction for specific criminal conduct or a category of criminal offenses prescribed by any federal law, federal regulation, or state law that contains requirements, exclusions, or both, expressly based on that specific criminal conduct or category of criminal offenses. Also, the amendment clarifies that in such instances, the employer may inquire about convictions that have been expunged, judicially ordered sealed, statutorily eradicated, or judicially dismissed following probation.

Expansion of Paid Family Leave

SB 1123 amends the California Family Temporary Disability Insurance Program, also known as the paid family leave program, by adding another leave category eligible for state wage replacement benefits.

Currently, the California Employment Development Department (EDD) provides wage replacement benefits to workers who take time off work to care for a seriously ill family member or to bond with a minor child within one year of birth or placement.

The bill adds Section 3302.1 to the California Unemployment Insurance Code. The addition provides that beginning on January 1, 2021, the EDD also will pay benefits for time off "to participate in a qualifying exigency related to the covered active duty, or call to covered active duty of the individual's spouse, domestic partner, child, or parent in the Armed Forces of the United States."

The law defines "covered active duty" to include deployment to a foreign country. A "qualifying exigency" includes activities undertaken by the employee within a week of the call to duty, attendance at military events such as ceremonies or briefings, arranging for or providing child care or other family care, and other similar events specified in the law.

Lactation Accommodation

Assembly Bill (AB) 1976 amends California Labor Code Section 1031, which requires that employers provide lactating employees with breaks and rooms other than a toilet stall to express breast milk. Under the law as amended, employers must provide rooms other than a bathroom to express milk.  An employer may comply with amended Section 1031 by providing a temporary lactation location if the employer is unable to provide a permanent lactation location because of operational, financial, or space limitations. The temporary location must be private, free from intrusion when in use, and not used for other purposes when in use.  The amended law provides a limited undue hardship exception to some of these requirements and specifies lactation accommodations required for agricultural employees.

Industry-Specific Laws

PAGA Carve Out for Unionized Construction Workers

AB 1654 provides a limited exception to Private Attorneys General Act (PAGA) liability for certain construction industry employers that have entered into collective bargaining agreements that include specified provisions.

The exception applies to collective bargaining agreements entered into before January 1, 2025, that contain provisions, such as a regular hourly wage rate that is at least 30 percent higher than the state minimum wage rate, an express waiver of PAGA, and a grievance and binding arbitration procedure that authorizes arbitrators to award remedies available under PAGA.

The law includes a January 1, 2028, sunset clause.

Safety-Sensitive Positions at Petroleum Facilities

AB 2605 exempts unionized employees who hold safety-sensitive positions at petroleum facilities from the rest and recovery period requirements found in the California Labor Code. Employers can require covered employees to carry and monitor a radio, pager, or other communication device; respond to emergencies; and remain on the employer's premises during breaks. When breaks are interrupted, employers must provide another rest period "reasonably promptly."  If circumstances do not so allow employers must pay a one-hour rest break premium. The new law is effective immediately and includes a January 1, 2021, sunset clause.

Human Trafficking Training for Hotel Operators

SB 970 requires hotel and motel operators to provide 20 minutes of human trafficking awareness training to "employees who are likely to interact or come into contact with victims of human trafficking." Such employees include employees who work in reception areas, "perform housekeeping duties, help customers in moving their possessions, or drive[] customers." Employers must satisfy the training obligations by January 1, 2020, and must provide the relevant training to covered employees every two years thereafter.

Joint Liability for Customers Using Port Drayage Motor Carriers

SB 1402 provides that customers that use a port drayage motor carrier shall be jointly liable with the motor carrier employer for the full amount of any unpaid wages, unreimbursed expenses, damages, and penalties owed to truck drivers. The law does not apply to customers that hire a motor carrier with unionized workers under a collective bargaining agreement with specified terms.

Sexual Harassment Legislation

SB 1343 amends the California Fair Employment and Housing Act by expanding both which employers must provide supervisor sexual harassment training and to whom they must provide it.  Under current law, supervisors with 50 or more employees must provide at least two hours of sexual harassment training to supervisors every two years or within six months of an employee becoming a supervisor.

SB 1343 expands that mandate to employers with five or more employees. Moreover, covered employers must provide at least one hour of training to nonsupervisory employees as well. Employers must complete this training by January 1, 2020.

The legislation tries to alleviate employers' burdens somewhat by instructing the Department of Fair Employment and Housing to prepare and make publicly available two- and one-hour harassment prevention training videos and written materials in various languages. 

Governor Brown also signed numerous other sexual harassment-related bills. In addition to SB 1343, Governor Brown signed legislation that addresses contracts and settlement agreements prohibiting a party from testifying in sexual harassment proceedings (AB 3109), liability for sexual harassment ( SB 224), confidential settlement agreements related to sexual harassment claims ( SB 820), and sexual harassment liability under the Fair Employment and Housing Act (SB 1300). Our recent article, " New California Sexual Harassment Legislation Will Make It More Difficult for Employers to Resolve Claims" covers these laws in detail.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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