[co-author: Wolfram Ott*]On October 8, 2023, California Governor Gavin Newsom signed into law Senate Bill No. 497, the “Equal Pay and Anti-Retaliation Protection Act.” The new law amends California Labor Code sections 98.6, 1102.5, and 1197.5 to create a “rebuttable presumption of retaliation” if an employee experiences an adverse employment action within 90 days of engaging in any protected activity covered by the specified sections. This new law, which will become effective on January 1, 2024, also entitles a prevailing plaintiff civil penalties for each violation.Section 98.6 concerns the exercise of employee rights afforded under the Labor Code, including engaging in protected conduct related to wage claims, claims arising from violations of the employee’s political and civic rights, claims for recovery via the Private Attorneys General Act (PAGA), and filing a claim or participating in a proceeding relating to employee rights that are under the jurisdiction of the Labor Commissioner. Section 1102.5 concerns certain whistleblower activity and an employee’s right to refuse to participate in conduct that would result in a violation of state or federal laws or regulations. Section 1197.5 concerns protected act

SB 497 (the Equal Pay and Anti-Retaliation Act) goes into effect on January 1, 2024. The new law amends California Labor Code Sections 98.6, 1102.5, and 1197.5 to create a rebuttable presumption of retaliation if an employer takes an adverse action against an employee within 90 days of the employee engaging in certain protected activity.An employee must first establish a prima facie case of retaliation by demonstrating that: (1) the employee engaged in a protected activity; (2) the employer engaged in an adverse action against the employee (such as a discharge, demotion, threat of discharge or demotion, suspension, pay cut, or reduced hours); and (3) a causal nexus between the protected activity and adverse action. The burden then shifts to the employer to identify a legitimate, non-retaliatory reason for the action. Thereafter, the burden shifts back to the employee to show that the employer’s non-retaliatory reason was merely a pretext for retaliation.Now, SB 497 makes it easier for employees to satisfy their initial burden if the adverse action occurs within 90 days of the employee engaging in protected activity. As an example

tions or to mandate private arbitration shall have no effect. Any moneys recovered will go to the affected workers, and all civil penalties recovered under this section will be paid to the General Fund of California.What Should Employers Do?Due to the bevy of legislative changes on the horizon, both California-based employers and out-of-state-employers with employees in California should promptly review their policies, procedures, and practices to ensure compliance with these new laws. Generally, a law becomes “effective” on January 1 of the year following its enactment. Cal. Const., art IV, § 8, subd. (c)(1). AB 2188 was also discussed in last year’s update on new employment laws in California. See R. Bertrand et al., California Expands Employee Protections: A Dozen New Employment Laws Impacting Employers, Paul Hastings Client Alert (Oct. 10, 2022) (available at: https://www.paulhastings.com/insights/client-alerts/california-expands-employee-protections-a-dozen-new-employment-laws). Cal. Lab. Code § 1102.5(f)(2). See Cal. Civ. Code § 47. 44 Cal. 4th 937, 955 (2008). Cal. Bus. & Prof. Code § 16600.1(a). Id. Cal. Bus. & Prof. Code § 16600. Cal. Bus. & Prof. Code § 16600.5(a). Cal. Bus. & Prof. Code §§ 16600.5(b)-(d). Cal. Bus. & Prof. Code §§ 16600.5(e)(1)-(e)(2). New York, the Federal Trade Commission, and the Department of Labor are also passing laws and regulations impacting employee mobility and post-employment restrictive covenants. See J. Baldocchi et al., Developments in Employee Mobility: California’s SB 699, New York’s 203-f and FTC/DOL Collaboration, Paul Hastings Client Alert (Oct. 5, 2023) (available at: https://www.paulhastings.com/insights/client-alerts/developments-in-employee-mobility-californias-sb-699-new-yorks-203-f-and-ftc). The new law applies to “all employers, employees, places of employment, and employer-provided housing,” with a few specific exemptions: 1) health care facilities and employers covered by California’s existing workplace prevention standard for the healthc

d when the agreement was signed. AB 1076 buttresses SB 699’s prohibition by codifying Edwards v. Arthur Andersen LLP (2008) 44 Cal. 4th 937, to void even narrowly tailored non-compete agreements in the employment context. Together, under SB 699 and AB 1076, the only non-compete provisions that remain enforceable in California are those that concern the sale or dissolution of a corporation, partnership or limited liability corporation. These provisions go into effect January 1, 2024.AB 1076 further requires employers, by February 14, 2024, to notify all current and former employees hired after January 1, 2022, and who executed non-compete agreements void under this bill, that such agreements are void. Notice must be via a written individualized communication to the last known address and email address of the employee or former employee.Retaliation Rebuttable Presumption SB 497 makes it easier for employees to establish retaliation claims by amending California Labor Code Sections 98.6, 1102.5 and 1197.5 to create a rebuttable presumption of retaliation if an employee is subject to adverse action within 90 days of engaging in certain protected activity. Protected activity includes, but is not limited to, complaining about unpaid wages, reporting suspected unlawful activity in the workplace and complaining about equal pay violations.SB 497 specifies that employers are liable for a civil penalty of up to $10,000 per employee, per violation, which would be awarded to the employee who was retaliated against. SB 497 goes into effect on January 1, 2024.Employers Expanded Rights to Seek TROs on Behalf of Employees Under existing law, California employers are permitted to seek an injunction and temporary restraining order (TRO) on behalf of any employee who has suffered unlawful violence or a credible threat of violence from any individual that can reasonably be construed to be carried out or to have been carried out at the workplace.Starting January 1, 2025, AB 428 modifies Sectio

e of the limited exceptions set forth in California Government Code Section 12952(d) is met. Such exceptions include the following: (1) a position for which a state or local agency is otherwise required by law to conduct a conviction history background check; (2) a position with a criminal justice agency; (3) a position as a farm labor contractor; or (4) a position where an employer or agent thereof is required by state, federal, or local law to conduct criminal background checks for employment purposes or to restrict employment based on criminal history.In sum: (a) employers can still prohibit employees from using or being impaired by cannabis at work, but cannot prohibit cannabis use away from work that does not affect their work; and (b) employers cannot ask applicants about their cannabis use or even check their criminal history for cannabis use (unless certain limited exceptions apply).Additional Whistleblower Protections (SB 497)SB 497 amends California Labor Code Sections 98.6, 1102.5, and 1197.5 to create a rebuttal presumption of retaliation if an employee is disciplined or discharged within 90 days of certain protected activity.Labor Code Section 98.6 prohibits an employer from taking adverse employment action against an employee because the employee has reported wage and hour violationsLabor Code Section 1102.5 prohibits an employer from taking adverse employment action against an employee who threatens to disclose, or discloses, information to a government or law enforcement agency, where the employee has reasonable cause to believe that the information discloses a violation of a state or federal statute, rule, or regulationLabor Code Section 1197.5 prohibits an employer from taking adverse employment action against an employee for reporting or attempting to enforce rights pertaining to equal paySB 497 does not change the substance of the retaliatory acts that are prohibited. But if an employer takes adverse action against an employee within 90 days after that

On October 8, 2023, Governor Gavin Newsom signed into law Senate Bill (SB) No. 497—also referred to as the Equal Pay and Anti-Retaliation Protection Act. SB 497 amends California Labor Code Sections 98.6, 1102.5, and 1197.5 to create a rebuttable presumption of retaliation if an employee is disciplined or discharged within ninety days of certain protected activity. By doing so, SB 497 makes it easier for employees to establish a prima facie case of retaliation.Quick HitsSB 497 creates a rebuttable presumption of retaliation if an employee is disciplined or discharged within ninety days of engaging in certain activity protected by the California Labor Code and California’s Equal Pay Act.The presumption of retaliation makes it easier for an employee to establish a prima facie case of retaliation.The new law goes into effect on January 1, 2024.SB 497Under the current law, a retaliation claim includes three stages of a shifting burden of proof: (1) the employee must establish a prima facie case of retaliation; (2) the employer must identify a legitimate, non-retaliatory reason for their act(s); and (3) the employee must prove that the employer’s non-retaliatory reason was a pretext for retaliatio

The California Supreme Court (the Court) issued a unanimous decision on May 22, 2023, in the case of People ex rel. Garcia-Brower v. Kolla’s, Inc. The ruling broadened the interpretation of “disclose” under California Labor Code Section 1102.5, which protects employees from retaliation for “disclosing information” the employee has reasonable cause to believe is a violation of a state or federal statute. The Court held that whistleblowers are protected against retaliation even when the employer to whom they report alleged misconduct is already aware of it. This protection extends to instances where an employee reports to their employer about a violation committed by the employer themselves.DLSE’s InvestigationThe Court’s ruling in People ex rel. Garcia-Brower v. Kolla’s Inc. results from a Division of Labor Standards Enforcement (DLSE) (a division of California’s Department of Industrial Relations) enforcement action brought by Labor Commissioner Lilia Garcia-Brower on behalf of the employee. The Court referred to the employee as “A.C.R.” throughout the opinion due to immigration concerns.A.C.R. was employed as a bartender at Kolla’s, Inc., a nightclub located in Orange County, California. In April 2014, she complained to th

The California Supreme Court issued its unanimous decision on May 22, 2023 in People ex rel. Garcia-Brower v. Kolla’s, Inc., which expanded the definition of “disclose” under California Labor Code Section 1102.5. The court held that whistleblowers are protected from retaliation under Section 1102.5 even if the alleged misconduct they are reporting is already known to the recipient of the report.Labor Code Section 1102.5 prohibits an employer from retaliating against an employee for disclosing to the government or to an employer conduct that the employee reasonably believes to be a violation of law. Prior to Kolla’s, the case law interpreting “disclose” under Section 1102.5 had defined the term as “to reveal something that was hidden and not known.” Mize-Kurzman v. Marin Cmty. Coll. Dist., 202 Cal. App. 4th 832, 858-59 (2012).Under the Mize-Kurzman standard, an employee’s reporting conduct to their employer that the employer already knew was not considered protected activity under the statute.KOLLA’S DECISIONIn People ex rel. Garcia-Brower v. Kolla’s, Inc., A.C.R. worked as bartender for Kolla’s Inc. (Kolla’s), a nightclub. A.C.R. complained to her manager, who also was the club owner, that sh

The California Supreme Court has held that an employee who makes a whistleblower complaint to his or her employer may bring a retaliation claim under the whistleblower statute (California Labor Code § 1102.5(b)) even if the subject of the complaint was already known. Previous case law held that an employee whistleblower complaint regarding an alleged violation of the law that was already known to the employer that received the complaint was not protected by law. It is now clear, however, that employers may not retaliate against an employee who has made a whistleblower complaint, regardless of whether the employer or agency already had knowledge or information about the alleged violation.The Court’s decision in People ex rel. Garcia-Brower v. Kolla’s, Inc (May 22, 2023) arose from a complaint made by a bartender to her employer that she had not been paid wages owed to her for three shifts she had worked at Kolla’s Inc., a nightclub in Orange County, California. Upon receiving the complaint, the owner of the nightclub responded by threatening to report the employee to immigration authorities, terminating her employment, and telling her never to return to the nightclub. The employee then filed

Killgore v. SpecPro Prof’l Servs., LLC, 51 F.4th 973 (9th Cir. 2022)While consulting for an environmental project for the United States Army Reserve Command, Aaron Killgore believed he was being required to prepare an environmental assessment in a manner that violated federal law. Killgore was fired shortly after he reported the suspected illegality to his supervisor and the Army Reserve’s project leader Chief Laura Caballero, who Killgore alleged gave the unlawful directives. The district court granted SpecPro’s partial motion for summary judgment, but the Ninth Circuit reversed, holding that Killgore’s disclosure to his supervisor was actionable even though the supervisor to whom Killgore made the disclosure did not have “authority to investigate, discover, or correct the violation” within the meaning of Cal. Lab. Code § 1102.5(b). The Court also held that Killgore’s disclosure to Caballero was an actionable disclosure to a “government agency” within the meaning of the statute even though the disclosure was part of Killgore’s normal duties and Caballero may have been a “wrongdoer” who was the subject of the disclosure. However, the Ninth Circuit affirmed dismissal of Killgore’s retaliation claim, finding that Killgore failed to present evidence that he refused to participate in illegal activity within the meaning of Section 1102.5(c).[View source.]