SB 1300: Arbitration, confidentiality, and non-disparagement

Effective on January 1, 2019, SB 1300 will dramatically change the way sexual harassment claims are litigated under California law.

First, SB 1300 lowers the legal threshold for establishing harassment, making it easier to bring workplace harassment claims. Rejecting the 9th Circuit’s opinion in Brooks v. City of San Mateo, 229 F.3d 917 (2000), the new law provides that harassment no longer has to be “severe or pervasive” to be unlawful. Instead, under the new law, a single incident of harassing conduct will be sufficient to create a triable issue regarding the existence of a hostile work environment. Additionally, the new law provides that the existence of a hostile work environment depends on the totality of the circumstances, meaning that “stray remarks” in the workplace will be considered relevant evidence of discrimination, even if they are not made in the context of the claimed harassment or adverse action.

Second, SB 1300 prohibits employers from requiring employees to sign waivers of potential California Fair Employment and Housing Act (FEHA) claims in exchange for employment, continued employment, a bonus, or a raise. It also makes unlawful a Non-Disclosure Agreement or provision (that is not part of a settlement agreement) that prohibits an employee from disclosing information about unlawful acts in the workplace, including, but not limited to, sexual harassment. This prohibition will not apply, however, to negotiated settlement agreements to resolve underlying claims filed in court, before administrative agencies, alternative dispute resolution forums, or an employer's internal complaint process, as long as the agreement is voluntary and involves valuable consideration.

Third, superseding Section 998 of the Code of Civil Procedure, SB 1300 provides that a prevailing defendant in a FEHA action can only recover attorney’s fees and costs if the court finds the action was frivolous, unreasonable, or groundless when brought, or the plaintiff continued to litigate after it was clear that the claim was meritless regardless of whether the plaintiff previously rejected a settlement offer.

Fourth, SB 1300 expands an employer's potential liability under FEHA for acts of third-party, non-employees. Under current law, employers can only be held responsible for sexual harassment by non-employees when they knew or should have known of the conduct and failed to take immediate and appropriate corrective action. Under SB 1300, an employer may now be responsible for the acts of non-employees for all forms of unlawful harassment when they knew or should have known of the conduct and failed to take immediate and appropriate corrective action. This includes harassment based on race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or military and veteran status.

Finally, SB 1300 authorizes, but does not require, employers to provide bystander intervention training to their employees, including practical guidance on how to recognize potentially problematic behavior and to take action when they observe such behavior. Bystander training seeks to minimize the “bystander effect,” a social psychological phenomenon in which the greater the number of people present, the less likely they are to help a person in distress.