New law addresses employee retaliation action rules

2017 LEGISLATIVE SESSION

Gov. Jerry Brown recently signed Senate Bill 306, which takes effect on Jan. 1, 2018. This bill amended an existing Labor Code section and added three new code sections to address employee retaliation actions.

Existing law prohibits a person from being discharged, discriminated against, or retaliated against for having engaged in certain protected conduct. This law applies to existing employees as well as those applicants for employment. These individuals can file a complaint with the Division of Labor Standards Enforcement. When a complaint is filed, then the labor commissioner may investigate. If successful, an employee or applicant for employment is entitled to reinstatement or employment and reimbursement for lost wages and work benefits. This bill makes several significant changes to the law that tilt the "scales of justice" in the favor of employees.

First, the DLSE is now authorized to commence an investigation of an employer with or without a complaint having been filed if the DLSE suspects retaliation or discrimination during its wage claim or other investigation (including field inspections and suspected immigration-related threats) that the labor commissioner is conducting. This is contained in newly-added Labor Code Section 98.7(a)(2).

Second, upon a finding of reasonable cause, the commissioner is authorized to petition a superior court for injunctive relief on a temporary or preliminary basis. This is a new standard, which is much lower than prior law and benefits employees. Under prior law, this could not occur until after an investigation was completed and a determination was made of the employer's liability. And, prior law required a showing of irreparable harm and likelihood of success on the merits.

Under SB 306, a court would be required to order appropriate injunctive relief based on a belief that a violation has occurred. The court must do so if it determines that relief to be "just and proper." These provisions are contained in newly-added Labor Code Section 98.7(b)(2).

This same section of law now also requires the court to "consider the chilling effect on other employees asserting their rights under those laws in determining if temporary injunctive relief is just and proper." In a minor benefit to the employer community, the bill provides that injunctive relief under this new provision would not prohibit an employer from disciplining or terminating an employee for conduct that is unrelated to the claim of retaliation.

Third, the labor commissioner is now authorized to issue citations directing specific relief to those determined to be responsible for violating the law. Under prior law, the labor commissioner pursued enforcement via a civil action. This is provided for in newly-added Labor Code Section 98.7(c)(1). The labor commissioner is also entitled to reasonable attorney's fees if it is a prevailing party in an enforcement action.

In addition, there are review procedures, such as for requesting a hearing before a hearing officer for petitions for writ of mandate. Under prior law, employers could challenge a labor commissioner action in trial de novo court actions. Pursuant to SB 306, the employer challenge occurs with a writ of mandate and the posting of a bond.

Employers who willfully fail to comply with labor commissioner orders can be subject to civil penalties made payable to the employee. This penalty is $100 per day for each day of noncompliance by the employer, up to a maximum of $20,000. This is found in newly-added Labor Code Section 98.7(c)(3).

Fourth, employees are authorized to seek injunctive relief from a court in addition to their civil action. If such injunctive relief is granted, it is not stayed pending appeal. These new powers are intended to protect employees from retaliatory conduct by employers. With a lower standard to obtain injunctive relief, the employer community will have to watch the actions of the labor commissioner to determine whether the new powers are used in appropriate instances.

This bill represents a major win for organized labor in this state. The California business community offered many amendments, but most of them were rejected. Their concern is that employees may be reinstated immediately, even if it takes 2-3 to investigate and make a final determination of a business' liability.