WPI State of the States: Employer Liability, Harassment, and Salary History Bans Continue to Occupy State Legislatures

As the summer months heat up, state legislative activity has noticeably cooled. Only two states (New Jersey and Massachusetts) are in active session, and Rhode Island, which had been in recess, is scheduled to adjourn at the end of the month. California's brief recess is set to end on August 6, when state lawmakers will try to usher a host of bills through committee and eventually to the governor's desk. Only a handful of other state legislatures will similarly reconvene after a summer recess. The few labor and employment bills and ordinances enacted in July address the same topics that have remained popular throughout the year: discrimination and harassment, equal pay, paid sick leave, and wage and hour. This month's State of the States discusses these enacted measures and those that moved in July 2018.

Discrimination & Harassment

Even though most legislative sessions have wrapped up, there was still plenty of action in the field of discrimination and harassment. On July 9, California Governor Jerry Brown signed Assembly Bill 2770 into law. Under the new law, employee and employer communications regarding reports of harassment will be considered privileged and therefore not subject to defamation claims, so long as the statements were not made with malice. The scope of this privilege extends to an employer's statement that it would not rehire an applicant based on the employer’s determination that the former employee committed sexual harassment. The law will take effect on January 1, 2019.1

Other anti-harassment-related bills in California advanced in July. One bill, AB 3109, would make any contract or settlement agreement void and unenforceable if it waives a party’s right to testify in an administrative, legislative, or judicial proceeding concerning alleged criminal conduct or sexual harassment. The proposal has passed the state assembly and a senate committee. Another California proposal, SB 820, focuses on nondisclosure clauses in settlement agreements. The measure would prohibit provisions in a settlement agreement that prevent the disclosure of factual information relating to claims of sexual assault, sexual harassment, or harassment or discrimination based on sex, unless a claimant requests the inclusion of such a provision. This bill has passed the state senate and an assembly committee.

Over on the East Coast, the District of Columbia introduced a bill (B 907) that would prohibit employers from requiring employees, as a condition of their employment, to enter into nondisclosure agreements that prevent them from disclosing factual information related to claims alleging misconduct. The bill would, however, allow agreements that prevent the disclosure of settlement amounts or, at the claimant’s request, the claimant's personally identifying information.

With respect to other types of discrimination, a new Salina, Kansas ordinance prohibits discrimination based on race, sex, familial status, disability, religion, age, color, national origin or ancestry in employment. The ordinance makes reports of any such discrimination the purview of the Human Relations Commission, which has the authority to investigate any complaints they receive.

During the same month, Michigan's attorney general issued an opinion that state law does not prohibit discrimination based on sexual orientation or gender identity. The Michigan Civil Rights Commission had interpreted the state’s civil rights law to include these categories under its prohibition against discrimination based on "sex." By contrast, the attorney general specified that “sex” refers only to biological differences between males and females, and that the Commission had overstepped its bounds.  While lacking the same force as legislation, an attorney general opinion is binding on state agencies. Nonetheless, the Michigan Civil Rights Commission directed the agency to continue investigating complaints of discrimination based on sexual orientation and gender identity.

Also in Michigan, the city of Cadillac is considering an anti-discrimination ordinance. Cadillac’s ordinance would cover “age, color, disability, education, familial status, gender expression, gender identity, height, marital status, national origin, race, religion, sex, sexual orientation, or weight.”

Salary History Bans

Hawaii joined the growing list of jurisdictions with salary history bans when its governor signed Senate Bill 2351 into law on July 5, 2018.2 The law prohibits employers from inquiring about prior wages, benefits, or other compensation, or from using salary history information they discover to determine an applicant’s compensation.  There is an exception if employees voluntarily, without prompting, disclose their salary history. In that instance, the employer can use the disclosed salary history to determine the applicant’s compensation. Employers with at least one employee in the state of Hawaii are covered by the law.

The California legislature passed an amendment to its existing salary history ban to clarify some of its terms. The amendment clarifies that an employer can use a current employee’s current salary to determine that employee’s salary in a new position, so long as any wage differential results from an approved factor, such as a seniority or merit system. The amendment provides definitions for “pay scale,” “reasonable request,” and “applicant for employment.” Under the amendment, “pay scale” means a salary or hourly wage range, “reasonable request” means a request made after an applicant has completed an initial interview with the employer, and “applicant for employment” means individuals seeking employment with a company they are not currently employed with in any capacity or position. These changes will take effect on January 1, 2019.

Paid Leave

Although no bills addressing paid sick leave advanced in July, ballot initiatives gained more traction. Michigan voters could decide whether employers must give their employees an hour of paid sick leave for every 30 hours worked. On July 27, 2018, the Michigan Board of State Canvassers certified signatures for the Michigan Paid Sick Leave Initiative. The state legislature will now have until September 5, 2018 to consider the initiative. If the legislature rejects it or fails to take action, voters will get to decide its fate on November 6, 2018. 

The November ballot in Cook County, Illinois will pose this question to voters: "Shall your municipality match the Cook County earned sick time law which allows for workers to earn up to 40 hours (5 days) of sick time a year to take care of their own health or a family member’s health?" The Cook County Board of Commissioners passed the Cook County Earned Sick Leave Ordinance on October 5, 2016. However, several municipalities within Cook County have opted out of the ordinance's coverage. Therefore, the ballot question will help gauge interest in the ordinance, and perhaps make voters aware of the leave ordinance in the first instance.

Finally, on August 8, the San Antonio, Texas City Council will hold a public hearing to discuss a paid sick leave proposal pending in that jurisdiction.

Wage & Hour/Scheduling

Wage and hour and predictive scheduling remain hot legislative topics. On July 27, 2018, Seattle's mayor signed a Domestic Worker’s Bill of Rights. The ordinance provides domestic workers, such as landscapers and house cleaners, with the same benefits that workers in other fields receive. To that end, the bill of rights creates a special panel of workers and employers that will set industry standards on topics such as wages, benefits, workers’ compensation, and sick leave.  

On the predictive scheduling front, Chicago is considering a fair workweek ordinance.3 Under the ordinance, employers within Chicago employing 50 or more employees who are subject to certain licensing requirements would have to provide a good-faith estimate of an employee's work schedule, including the median number of hours worked per week, before the employee's first day on the job. Employers would also need to provide schedules at least 14 days before the first day of the workweek, and to offer existing employees more hours before hiring additional staff.

For updates on other wage and hour issues, including minimum wage and overtime, see this month's edition of WPI Wage Watch.

Employer Liability

A number of bills addressing employer liability advanced in July. Missouri, for example, enacted a law (SB 608) clarifying that employers have no duty to guard against criminal or harmful acts on their property unless the employer knows the acts are being committed or knows that it is reasonably likely those acts would be committed. If the employer is not shown to have a duty to prevent those criminal or harmful acts on its premises, it cannot be held liable in any civil action for damages related to those acts.

A bill (SB 822) that cleared the New Jersey Senate would require employers that are subject to the state workers' compensation laws to maintain policies of general liability insurance for negligent acts. The insured amount would have to be no less than $500,000 for combined property damage and bodily injury to or death of one or more persons in any one accident or occurrence.

In California, SB 1038, which has cleared the state senate and an assembly committee, would amend the Fair Employment and Housing Act (FEHA) to impose personal liability against an employee of a covered employer for violating the prohibition against discharging or discriminating against a person who has opposed any practices prohibited under the FEHA or has filed a complaint, testified, or assisted in any proceeding for a violation, regardless of whether the covered employer knew or should have known of the conduct.

Noncompetition Agreements

Massachusetts is poised to enact a bill that will significantly change noncompete law in the Commonwealth. On July 31, 2018, the legislature passed the Massachusetts Noncompetition Agreement Act. This law would impose new minimum requirements for noncompetes, prohibit such agreements for numerous categories of employees, empower courts to reform or revise otherwise invalid noncompetes, and address the legality of other common contractual provisions.4 The bill is now on Governor Charlie Baker's desk.

What’s Next?

The California, Ohio, and Michigan legislatures are scheduled to reconvene later this month to consider outstanding bills before the end of their respective sessions. Next month's State of the States will cover movement on any significant labor and employment measures passed in those and other jurisdictions, as well as initiatives certified for the November ballot. Stay tuned.

See Footnotes

1 For more information on this new law, see Bruce Sarchet, California Enacts a Privileged Communication Law Regarding Sexual Harassment Claims, Littler ASAP (July 12, 2018).

2 See William J. Simmons, Martha J. Keon and Judy M. Iriye, Hawaii Joins Salary History Ban Trend, Littler ASAP (July 6, 2018).

3 See Kathryn E. Siegel, Chicago Considers Fair Workweek Ordinance, Littler ASAP (July 18, 2018).

4 See Melissa L. McDonagh and Kevin E. Burke, Massachusetts Legislature Passes Comprehensive Noncompete Reform, Littler ASAP (Aug. 2, 2018).

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.