Governor Newsom signed Senate Bill No. 497 into law, the “Equal Pay and Anti-Retaliation Protection Act.” The new law amends California Labor Code sections 98.6, 1102.5, and 1197.5 to create a “rebuttable presumption of retaliation” if an employee experiences an adverse employment action within 90 days of engaging in any protected activity covered by the specified sections. This new law, which will become effective on January 1, 2024, also entitles a prevailing plaintiff civil penalties for each violation.
As explained by the California Supreme Court, Section 1102.5 of the Labor Code reflects the broad public policy interest in encouraging workplace whistle-blowers to report unlawful acts without fearing retaliation. (Green v. Ralee Engineering Co. (1998) 19 Cal. 4th 66). Under current law, penalties up to $10,000 can be assessed against an employer that is an LLC or corporation when the employer retaliates against an employee who was a whistleblower.
According to the author of this new law, “the fear of retaliation is still one of the main reasons workers are afraid to report labor violations. This is especially true for Black and Latinx workers who are more likely to experience retaliation. The Department of Industrial Relation’s most recent report of retaliation complaints filed with the Labor Commissioner’s Office found that just over 90% of retaliation claims were dismissed. In large part this is because when a complaint is filed with the Labor Commissioner’s office, the worker currently has the burden of proving that they were retaliated against because they were exercising their rights under the Labor Code. This burden of proof is extremely challenging for a worker who does not have the same level of access to information as the employer.”
The new law amends Labor Code Section 98.6 to allow the Labor Commissioner to identify retaliation more quickly. If a worker files a retaliation complaint with the Labor Commissioner and shows that their employer took a negative action against them within 90 days after exercising rights under the Labor Code, the employer must prove a legitimate reason for taking that negative action.
Similarly, this new law amends Labor Code Section 1197.5 to add a similar “rebuttable presumption” for any retaliation complaint under the Equal Pay Act. This kind of “rebuttable presumption” of retaliation already exists in other parts of the Labor Code, and is working well in protecting workers from immigration-related retaliation, such as threats of deportation, and retaliation for use of paid sick leave.
This new law also strengthens Labor Code Section 1102.5, the California Whistleblower Protection Act, by providing some financial relief to whistleblowers who report retaliation. Existing law requires some employers to pay a penalty of up to $10,000 to the State. The law would make sure that money goes directly to the worker victimized by illegal retaliation. The bill would also amend the law so that employers can’t use other corporate forms, such as limited liability partnerships, to evade paying penalties.
A coalition, including the California Chamber of Commerce, opposed the rebuttable presumptions in SB 497. It claimed there “is no justification for creating a presumption in these two code sections. Courts already take temporal proximity into account when evaluating retaliation claims and the courts should be allowed to consider other factors relevant to the specific case. Creating a presumption simply allows claims to proceed that should not be moving forward, which wastes valuable court and litigant resources.”
The California Labor Commissioner’s Office reported that in 2020, the Retaliation Complaint Investigation Unit (RCI) received 6,063 complaints. Of those cases, 2,067 were accepted for investigation by the Labor Commissioner. Among the complaints filed, 1,897 of them were for alleged retaliation prohibited under Section 98.6, 1,450 were for alleged retaliation prohibited under Section 1102.5, and 127 were for alleged retaliation prohibited under Section 1197.5