As we approach the New Year, for many California companies, ‘tis the season for important business decisions. In reflecting upon this year and re-evaluating business goals and strategy for the next, companies may be considering changes to their workforce. But before issuing transfers, disciplines, or final paychecks, California companies should be mindful of SB 497—a new law taking effect on January 1, 2024 that makes bringing a retaliation claim easier for employees in the Golden State.
What is Retaliation?
Broadly speaking, retaliation occurs when an employer takes an adverse action against an employee or applicant for engaging in legally protected conduct. What actions are considered “protected conduct” are specified in the Labor Code and include disclosing information or providing testimony to certain government entities, making good faith complaints about unlawful conduct in the workplace, or commencing an action for unequal pay practices. (See Labor Code Sections 98.6, 1102.5, and 1197.5.) “Adverse actions” are essentially actions that negatively impact the terms and conditions of an individual’s employment and can take many forms—such as discipline, demotion, or employment termination.
Existing retaliation law provides that the employee carries the initial burden of showing they were retaliated against; after which the burden shifts to the employer to show the action was taken for legitimate business reasons. If the employer can establish such legitimate business reason(s), the burden then shifts back to the employee to show that the purported business reason was actually a pretext (i.e., a guise) for retaliation. Employees who prevail on a retaliation claim may seek reinstatement, reimbursement for lost wages and work benefits (including interest), and even recover their often steep attorneys’ fees in doing so.
In evaluating retaliation claims, courts recognize that there often is no clear, direct evidence of retaliation. For example, there typically is not a formal letter stating, “you are being terminated for filing a good faith unpaid wage claim.” Instead, timing of the employment action is often a key factor in determining whether it was retaliatory. This is often referred to as “temporal proximity” and evaluates how soon after the employee engaged in protected conduct the employer took an adverse employment action. After all, there is comparatively a much stronger inference that an adverse action is retaliatory when it occurs the day after an employee engaged in a protected activity, as opposed to several years later.
Placing greater emphasis on this concept of temporal proximity, SB 497 creates a rebuttable presumption that adverse action taken within 90 days of a protected activity is presumed to have been retaliatory. This presumption makes it easier for employees to meet their initial burden of showing that that retaliatory conduct occurred. SB 497 also authorizes a civil penalty of up to $10,000 to be paid to the affected employee for each violation. The exact amount of the penalty will be based upon the nature and seriousness of the violation.
Next Steps for Employers
As many California employers discover each year, unfortunately timed employment decisions that lack supporting documentation, even where legitimate, can lead to costly retaliation lawsuits. With the introduction of SB 497 making employees’ initial burden of proof lighter than ever, employers should ring in the New Year by auditing their internal complaint procedures, retaliation policies, discipline practices, and of course their related trainings.
Remember that a company’s policies are only as strong as their implementation. It is not at all uncommon for a company with stalwart policies to discover that a supervisor nonetheless inadvertently took a poorly timed employment action due to ineffective training, unclear policies, or ill-defined communication channels between decision-makers. Employers must take steps to ensure supervisors are not simply receiving, but understanding the ramifications of the disciplines, transfers, and other adverse actions (as well as the potential implication of their timing).
Employers should also practice consistent and effective recordkeeping—particularly as to employee performance. In circumstances where an adverse action was taken due to poor performance, such documentation will be critical to show the adverse action was taken for legitimate performance reasons and rebut any presumption that it was retaliatory.
For more guidance on policy revisions, as well as managing employee complaints and disciplinary actions, contact an attorney at Cook Brown.