See our article about SB 331, published in Law 360, available here.
On Monday, the California Supreme Court held that when an employee claimed she was denied a promotion for turning down sexual advances, the statute of limitations began to run when she knew or reasonably should have known that the promotion was denied, not when the promotion was given to someone else.
Plaintiff Pamela Pollock alleged that her employer passed her over for a promotion because she refused to have sex with an executive vice president. The promotion went to another employee, who received and accepted the offer in March 2017, with the promotion taking effect in May 2017. In April 2018, Ms. Pollock filed a claim with the Department of Fair Employment & Housing ("DFEH"), the agency that enforces California's discrimination laws ("Fair Employment and Housing Act," or "FEHA"). At the time, an employee seeking relief under FEHA had one year from the date when the unlawful practice “occurred” to file a claim with the DFEH (the Legislature has since extended that time-period to three years). For Ms. Pollock, this meant that if the failure to promote her had “occurred” in May 2017, as she argued, her claim was timely, but if it occurred in March 2017, as the employer argued, then the claim was time-barred. The state trial and appeals courts held that the claim was time-barred, concluding that the failure to promote “occurred” in March 2017 when the promotion was offered to and accepted by another employee.
The California Supreme Court disagreed with the lower courts’ and the parties’ framing of the issue. The Court held that the statute of limitations begins to run when an employee knows or reasonably should know of the employer’s refusal to promote the employee. The Court noted that its holding supports the purpose of FEHA, “to promote the resolution of potentially meritorious claims on the merits,” and that this approach “protect[s] defendants from the necessity of defending stale claims and require[s] plaintiffs to pursue their claims diligently.”
Because the record contained no evidence about the timing of Ms. Pollock’s knowledge of the promotion, the Court reversed and remanded the case for further proceedings. The decision, Pollock v. Tri-Modal Distribution Services, Inc., No. S262699 (July 26, 2021), is available here.
Posted by Ally Girouard
New California Laws: DFEH Exhaustion Deadline Extended to Three Years, and a Landmark (Maybe?) Ban on Forced Arbitration
Two important new employment laws will hit the books in California on January 1, 2020.
Two Additional Years to Exhaust Discrimination-Based Complaints. First, the time limit for filing a claim of discrimination, harassment, and retaliation with the Department of Fair Employment and Housing ("DFEH"), which is a prerequisite to filing such a claim in court, has been extended from one year to three years. The one-year deadline was unusually short among deadlines for legal claims (for example, California wage claims typically go back at least three years, and breach of written contract claims go back four years). The amendment will allow employees more leeway to decide whether, how, and when to enforce their rights when they experience unlawful discrimination or harassment. What will happen to claims that are currently time-barred but would be timely under the new law? The act states that it "shall not be interpreted to revive lapsed claims." This appears to mean that any claim accruing less than a year prior to the law taking effect will have another two years in which it can be brought; and any claim accruing more than a year before the law takes effect will be time-barred if a DFEH complaint has not already been filed (whether that reading is correct will likely be taken up by the courts after this law goes into effect). The law also helpfully states that the filing of an intake form with the DFEH stops the clock from running (under prior law, the clock ran until the DFEH issued a "complaint," which sometimes put employees in the hazardous position of relying on DFEH employees to move quickly to ensure that the deadline was met). The bill, AB-9, is available here.
A Ban on Forced Arbitration Agreements... Maybe? Second, the Legislature has limited the ability of employers to require employees to arbitrate disputes (with a major caveat set forth below). The new law will add section 432.6(a) of the Labor Code, which reads: "A person shall not, as a condition of employment, continued employment, or the receipt of any employment-related benefit, require any applicant for employment or any employee to waive any right, forum, or procedure for a violation of any provision of [the non-discrimination provisions of the Fair Employment and Housing Act ("FEHA")] or [the Labor Code], including the right to file and pursue a civil action...." This provision is also incorporated into FEHA by reference, and violation of it now constitutes an unlawful employment practice under FEHA. The law goes further to prevent a technique known as "opt-out" provisions in arbitration agreements, which allow the employee to take affirmative steps to "opt-out" of the arbitration provision within a specified period, such as the first 30 days of employment, by for example sending a letter to the company's legal department saying that they wished to opt out. Such "opt-out" provisions, which employees could be expected almost never to exercise, allowed employers to argue that the arbitration provision was not "mandatory" because the employee had voluntarily chosen not to opt out. This loophole is closed by new Labor Code section 432.6(c): "For purposes of this section, an agreement that requires an employee to opt out of a waiver or take any affirmative action in order to preserve their rights is deemed a condition of employment." The law also provides for attorneys' fees. The new law applies to "contracts for employment entered into, modified, or extended on or after January 1, 2020."
However, the law includes an exception that may swallow the rule. In an effort to head off preemption by the Federal Arbitration Act ("FAA"), which has repeatedly been used over the past decade to shut down efforts by California and its courts to preserve access to certain types of class actions, the law states: "Nothing in this section is intended to invalidate a written arbitration agreement that is otherwise enforceable under the Federal Arbitration Act." This may succeed in avoiding preemption, but will the effect be that most arbitration agreements are untouched by the new law? Time will tell, but in the meantime, employers in California will have to decide whether to keep arbitration agreements in place in reliance on this exception. The bill, AB-51, is available here.
California Limits Confidentiality in Settlements of Sexual Harassment and Gender Discrimination Claims
On September 30, 2018, Governor Brown signed into law SB 820, which prohibits provisions in settlement agreements that prevent “the disclosure of factual information related to a claim filed in a civil action or a complaint filed in an administrative action regarding … [a]n act of workplace harassment or discrimination based on sex, … or an act of retaliation against a person for reporting” such harassment or discrimination. See C.C.P. § 1001. The new law applies to agreements entered on or after January 1, 2019.
Aimed at preventing incidents of sexual harassment and gender discrimination from being hidden from public discourse, the new law will alter the calculus at the settlement stage. Employees will no longer need to be concerned about entering into agreements that prevent them from discussing issues they would prefer to discuss freely. Employers will no longer have the option of paying employees for silence about facts that may damage the employer's reputation.
The new law will still allow settlement amounts to be kept confidential, and will also allow confidentiality of the claimant's identity at the claimant's request.
The law appears to have a loophole: it applies only to “factual information related to a claim filed in a civil action or a complaint filed in an administrative action” – therefore, it does not appear to cover claims settled before an administrative complaint is filed.
If you have questions about confidentiality and sexual harassment settlements, feel free to contact Jhaveri-Weeks Law.
William Jhaveri-Weeks is the founder of The Jhaveri-Weeks Firm, a San Francisco-based civil litigation practice for individuals and organizations.