As we enter the new year, now is a good time to
review your employment-related policies and procedures and update them as
needed to reflect the newest employment law developments.
Responding to greater awareness generated in part
by the “Me Too” movement, the California
Legislature passed several pieces of legislation addressing sexual
harassment in the workplace and an employer’s attempts to limit disclosure of
such allegations. These new laws became effective on January 1, 2019. In
addition, gender composition on corporate boards was addressed for the first
time by the Legislature. Finally, a key
employment case on non-solicitation agreements that will affect the way many
California businesses operate was decided in 2018.
Prohibiting Limitations on Disclosure of Sexual
Harassment Allegations
California Civil Code Section 1670.11 and makes
unenforceable any provision in a contract or settlement, entered into after
January 1, 2019, that prevents a party to the contract from testifying in an
administrative, legislative, or judicial proceeding about alleged criminal
conduct or sexual harassment by the other party to the contract or its
employees/agents.
Settlement of Sexual Harassment Claims
California Code of Civil Procedure Section 100 invalidates
any provision of a settlement agreement, entered into after January 1, 2019,
that prevents the disclosure of factual information pertaining to claims of
sexual assault, sexual harassment, gender discrimination, or related
retaliation filed in court or before an administrative agency. The new law does
not prevent the parties to the agreement from, at the claimant’s request, including
a provision that limits the disclosure of the claimant’s identity or of facts
that would lead to the discovery of the claimant’s identity. This new law
expressly does not prohibit a settlement agreement provision that precludes the
disclosure of the settlement amount.
New Sexual Harassment Prevention Training Requirements
Existing law requires employers with 50 or more
employees to provide supervisors with sexual harassment prevention training. Now,
employers with 5 or more
employees must comply with the training requirement. The law requires employers
to provide at least 2 hours of training to supervisory employees and at least
one hour of training to non-supervisory employees by January 1, 2020, and once
every two years thereafter. It also requires the DFEH to develop and publish
training materials for employers to use for these purposes.
Amendments to the Fair Employment and Housing Act
(“FEHA”)
Under existing law, an employer may be responsible
for the acts of nonemployees in a sexual harassment claim, if the employer knew
or should have known about the conduct and failed to act. Non-employees include persons such as
applicants, unpaid interns or volunteers, or persons providing services under a
contract. One aspect of this new law
expands employers’ potential liability for the acts of non-employees to any
form of harassment prohibited under FEHA, not just sexual harassment. It applies
the same standard—if the employer knew or should have known of the non-employee’s
conduct, and failed to take immediate and appropriate corrective action, the
employer may be liable. Another aspect of this new law prohibits an employer,
in exchange for a raise or bonus, or as a condition of employment or continued
employment, from (i) requiring the execution of a release of a claim or right
under FEHA, or (ii) requiring an employee to sign a non-disparagement agreement
that purports to deny the employee the right to disclose information about
unlawful acts in the workplace, including, but not limited to, sexual
harassment. It is important to note that the new law does not apply to
negotiated settlement agreements to resolve a claim filed by an employee in
court, before an administrative agency, alternative dispute resolution forum,
or through an employer’s internal complaint process. Another aspect of the new law expressly provides
that a prevailing employer shall not recover attorney’s fees and costs unless
the court finds the employee’s action was frivolous, unreasonable, or
groundless when brought or that the plaintiff continued to litigate after the
action clearly became such.
Gender Composition On Corporate Boards of Directors
To address gender discrimination and inequality,
the Legislature passed this new law (Corporations Code Section 301.3) providing
that by the end of 2019, any publicly held domestic or foreign corporation with
principal executive offices in California must have at least one female
director on its Board of Directors. By the end of 2021, these corporations must
comply with the following: (1) If its number of directors is six or more, the
corporation shall have at least three female directors; (2) If its number of
directors is five, the corporation shall have at least two female directors;
(3) If its number of directors is four or fewer, the corporation shall have at
least one female director.
Non-Solicitation Agreements: AMN Healthcare, Inc. v. AYA Healthcare
Services, Inc.
Turning now to developments in case law, the Courts
of Appeal published several significant rulings in 2018, but few more
significant than the decision of the Fourth Appellate District in AMN Healthcare, Inc. v. AYA Healthcare
Services, Inc., in which Solomon Ward represented AYA Healthcare Services,
Inc. and its nurse recruiters. The AMN v. AYA decision clarifies California’s rules
limiting the validity of non-solicitation of employee agreements.
AMN and Aya are competitors in the business of
providing temporary nurses to health care facilities, in particular “travel
nurses.” The individual defendants were former employees of AMN who left AMN and
went to work for Aya as travel nurse recruiters. Each had signed an agreement
with AMN not to solicit AMN employees for at least one year post-employment. Travel
nurses were deemed to be employees of AMN while on temporary assignment for
AMN.
AMN sued Aya and the individual defendants for various
claims, including breach of contract and misappropriation of confidential
information, including trade secrets. Aya and travel nurses (“Defendants”)
moved for summary judgment on the grounds that the non-solicitation agreement
was void and unenforceable under California law. The court ruled in favor of
defendants and enjoined AMN from enforcing the non-solicitation agreement against
any former AMN employee in California.
The Court focused on California’s broad public
policy in favor of allowing individuals to seek employment. The Court ruled
that AMN’s non-solicitation of employee agreement was void and unenforceable
under California law; and that AMN violated California’s Unfair Competition Law
by having the provision in its employment contracts.
Also rejecting the misappropriation claim, the
Court ruled that the nurses’ names and contact information were not AMN’s trade
secrets. The nurses’ identity and contact information were known to AYA before any of the individual defendants
left AMN.
In light of the Court’s ruling, employers should carefully
review their non-solicitation and trade
secret agreements with their employment counsel.
Conclusion
These are only some of the many changes that continue to affect California employers. To the extent that any of these changes affect your business, we suggest that you amend your policies, practices, and procedures accordingly. If the need arises, we look forward to assisting you with any questions or concerns you may have with respect to your employment practices.
***The information provided in this article is for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice regarding any particular issue or problem.***
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