By Evan K. McNally, Esq.
On October 8, 2023, Senate Bill 497 (“SB 497”) was signed into law by Governor Gavin Newsom. The bill, also known as the Equal Pay and Anti-Retaliation Protection Act, amends the California Labor Code and makes it less difficult for employees to establish retaliation. SB 497 will go into effect on January 1, 2024.
With this new law, California employees have an easier path to proving workplace retaliation against employers. The new law creates a “rebuttable presumption in favor of the employee’s claim” when the employee suffers an adverse employment action (i.e., discharge or other disciplinary action) within ninety days of engaging in specific activities identified in the California Equal Pay Act and the California Labor Code.
Before this change in the law, the employee must first establish a baseline case of retaliation with evidence that (1) the employee engaged in protected activity; (2) the employer engaged in an adverse action; and (3) there was a connection between the protected activity and the adverse action. Only after establishing that baseline was it necessary for the employer to show a legitimate, non-retaliatory reason for the actions taken. And then the burden shifted back to the employee to prove that the employer’s non-retaliatory reason was a pretext for retaliation. That was a fairly complicated process that was not easy for employees to hurdle.
But with the passage of SB 497, the employee’s path to proving retaliation is going to be much easier. By way of illustration, if an employee reports what he or she believes to be, for example, an unlawful business practice, and within ninety days of doing so, the employee is demoted or terminated – for any reason – then California law will presume that the employee has shown the baseline case of retaliation. The employer can still defend itself, but the baseline presumption of retaliation has become a lot easier for the employee to establish.
There are also monetary teeth to the new law. As an additional deterrent to any workplace retaliation, SB 497 provides, “in addition to other remedies,” that California employers are now exposed to paying a new “civil penalty not exceeding $10,000 per employee for each violation of this provision, to be awarded to the employee who was retaliated against.”
California employers should not take the passage of SB 497 lightly. The new law will almost certainly increase the frequency and risks of retaliation claims. And being mindful of the 90-day window will become a new and important task for human resources professionals and attorneys working as general counsel for California employers. Employers should carefully review their policies to confirm that employee performance evaluations and disciplinary actions, if and when taken, are thoroughly documented and that the non-retaliatory reason(s) for anything that could be characterized as a “disciplinary action” is clearly communicated to an employee in a timely manner. Employers should also review SB 497 with managers and leaders that have supervisory responsibilities to confirm that they understand how the new law will work, including what amounts to protected activity and adverse employment actions under California law.
Evan K. McNally, Esq., is an associate attorney with the law firm of Dunn DeSantis Walt & Kendrick. Evan’s practice is in civil litigation, with a focus in labor and employment law, and commercial disputes.
Dunn DeSantis Walt & Kendrick provides a broad spectrum of legal services to businesses of all sizes, from small, local start-ups and non-profits to large, national companies. DDWK’s real estate development and construction practice includes representing all segments of the development and construction industries on both private and public projects.
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