BILL ANALYSIS
AB 793
Page 1
Date of Hearing: April 21, 2009
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
AB 793 (Jones and Brownley) - As Introduced: February 26,
2009
As Proposed to Be Amended
SUBJECT : EMPLOYMENT COMPENSATION: STATUTE OF LIMITATIONS
KEY ISSUE : SHOULD STATE LAW REGARDING THE COMMENCEMENT OF THE
LIMITATIONS PERIOD FOR VIOLATIONS OF EMPLOYMENT COMPENSATION
LAWS BE CONSISTENT WITH FEDERAL LAW IN REJECTING THE REASONING
OF A CONTROVERSIAL U.S. SUPREME COURT DECISION WHICH, BY ONE
VOTE, OVERTURNED MANY YEARS OF SETTLED LAW?
FISCAL EFFECT : As currently in print this bill is keyed
non-fiscal.
SYNOPSIS
This measure grows out of a controversial 2007 U.S. Supreme
Court decision in Ledbetter v. Goodyear Tire & Rubber Co. That
decision was the subject of significant commentary during the
last Presidential election, and was recently repudiated at the
federal level in the first legislation signed by President Obama
just days after taking office. This bill effectively reproduces
the federal act to ensure that state law remains consistent, as
it was for many years prior to the Ledbetter decision. The
problem addressed by the bill is exemplified by the facts of
that case. When Lily Ledbetter retired after 19 years, she
discovered through an anonymous note that her salary was
thousands less than her lowest-paid male counterpart. She
proved her case for sex discrimination in court. But, by one
vote, the Supreme Court rejected long-established precedent and
deprived her of that verdict, ruling that she and other victims
should not be allowed to have their cases decided based on the
facts because, the court held, an administrative complaint must
be filed within 180 days after the discrimination began years
earlier. The remainder of the court condemned the decision and
called for the change just enacted by Congress. According to
the author and supporters of this bill, AB 793 seeks to
similarly ensure that victims of pay discrimination have a fair
opportunity to present the facts of their case and seek redress
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in the courts for violations of state law. It is supported by
numerous women's groups and other civil rights and employment
advocates who argue that the bill is needed to preserve fair
access to and enforcement of protections against unlawful
discrimination. Just as the business advocates opposed the
federal legislation, the opposition to this bill comes from
business and related groups who contend that the bill creates a
statute of limitations rule that is broad and limitless and
would constitute a major expansion of employer liability. In
opposition to a related bill last year, they urged instead that
the Ledbetter ruling be adopted, not rejected, arguing that it
set forth a clear and common sense rule.
SUMMARY : Clarifies the meaning and effect of state employment
compensation laws with respect to statutes of limitation.
1)Provides that for the purpose of filing a claim or complaint
for any unlawful employment practice with respect to
compensation, including, but not limited to, discrimination
claims and Labor Code violations, a cause of action accrues
when any of the following occurs: (a) A compensation
decision or other practice is adopted; (b) An individual
becomes subject to a compensation decision or other practice;
(c) An individual is affected by the application of a
compensation decision or other practice, including each time
when wages, benefits, or other compensation is paid, resulting
in whole or in part from the compensation decision or other
practice.
2)Clarifies that when an administrative complaint is filed,
liability may accrue and an aggrieved person may obtain relief
where the unlawful employment practices that have occurred
during the applicable administrative complaint filing period
are similar or related to unlawful employment practices with
regard to compensation that occurred outside the time for
filing an administrative complaint.
3)States the intent of the Legislature in enacting this section
to construe and clarify the meaning and effect of existing law
and to reject the interpretation given to federal law by the
United States Supreme Court in Ledbetter v. Goodyear Tire &
Rubber Co. (2007) 550 U.S. 618.
EXISTING LAW :
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1)Under state law, prohibits unlawful discrimination and other
employment practices regarding compensation and establishes
procedures for an employee who has suffered discrimination or
other unlawful practices, as defined, to file a complaint with
the Fair Employment and Housing Department and/or the State
Labor Commissioner, and under certain circumstances, to bring
a civil action within specified time periods. (E.g.,
Government Code Section 12926 et seq.; Labor Code Section 98,
et seq.; Labor Code section 1197.5.)
2)Provides under state law that a repeated pattern of
discrimination is actionable when a complaint is timely filed
within the series of discriminatory acts. (Richards v. Ch2m
Hill (2001) 26 Cal.4th 798; Yanowitz v. L'Oreal, 36 Cal. 4th
1028, 1057, 1058 n.18.)
3)Likewise prohibits discrimination in employment under federal
law on the basis of sex, among other characteristics and
permits a person aggrieved to file an administrative charge
within 180 days after the alleged unlawful employment practice
occurred. (E.g., 42 U.S.C. sections 2000e-2(a)(1),
2000e-5(f)(1).)
4)Provides, for the purposes of federal anti-discrimination law,
that an unlawful employment practice occurs with respect to
discrimination in compensation when a discriminatory
compensation decision or other practice is adopted, when an
individual becomes subject to a discriminatory compensation
decision or other practice, or when an individual is affected
by application of a discriminatory compensation decision or
other practice, including each time wages, benefits, or other
compensation is paid, resulting in whole or in part from such
a decision or other practice. (42 U.S.C. section
2000e-5(e)(3)(A).)
5)Specifies that liability may accrue and an aggrieved person
may obtain relief where the unlawful employment practices that
have occurred during the applicable administrative charge
filing period are similar or related to unlawful employment
practices with regard to discrimination in compensation that
occurred outside the time for filing a charge. (42 U.S.C.
section 2000e-5(e)(3)(B).)
COMMENTS : When an act of discrimination - such as the issuance
of a smaller pay check to a woman because of her gender - is
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part of a repeated pattern, when does the legal time period for
filing a complaint begin to run: from the date of the first act,
however clandestine, or each time the discrimination is
repeated, for example with each new discriminatory paycheck?
In support of this bill the author states, "AB 793 clarifies
that the time period for alleging an unlawful employment
practice with respect to compensation runs from the date of each
wage payment. This legislation ensures that victims of illegal
pay discrimination continue to have a fair opportunity to seek
redress in the courts for violations of state law. The decision
in Ledbetter ignores workplace realities. Most employees who
are victims of discrimination don't learn they are being
discriminated against until years into their employment. Salary
information is often confidential. The Ledbetter decision, if
it were applied to state law or employees feared it would be
applied to state law, could force employees to file needless
complaints simply to protect their rights before they have
enough information to determine whether they have been
discriminated against or not. Wage discrimination causes real
and ongoing harm and the remedies need to continue to be ongoing
as well."
Similarly, the federal "Ledbetter" Act recently signed by
President Obama declares: "The Supreme Court in Ledbetter v.
Goodyear Tire & Rubber Co., 550 U.S. 618 (2007), significantly
impairs statutory protections against discrimination in
compensation that Congress established and that have been
bedrock principles of American law for decades. The Ledbetter
decision undermines those statutory protections by unduly
restricting the time period in which victims of discrimination
can challenge and recover for discriminatory compensation
decisions or other practices, contrary to the intent of
Congress." The Act further declares, "The limitation imposed by
the Court on the filing of discriminatory compensation claims
ignores the reality of wage discrimination and is at odds with
the robust application of the civil rights laws that Congress
intended."
This Bill Is Modeled On And Consistent With The Federal Act
Overturning the Controversial Ledbetter Decision. In Ledbetter,
a one-vote majority voted to overturn decades of precedent and
substantially limited workers' ability to bring pay
discrimination claims. In her dissent, Justice Ruth Bader
Ginsberg called on Congress to correct the Court's
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misinterpretation of federal law. That legislation is evidently
the model on which this bill is based, using substantively
identical language.
Thus, the federal act provides that for purposes of federal
anti-discrimination law "an unlawful employment practice occurs
with respect to discrimination in compensation when a
discriminatory compensation decision or other practice is
adopted, when an individual becomes subject to a discriminatory
compensation decision or other practice, or when an individual
is affected by application of a discriminatory compensation
decision or other practice, including each time wages, benefits,
or other compensation is paid, resulting in whole or in part
from such a decision or other practice."
This bill likewise states that for the purpose of filing a claim
or complaint under state law for "any unlawful employment
practice with respect to compensation, including, but not
limited to, discrimination claims and Labor Code violations, a
cause of action accrues when any of the following occurs: (a)
A compensation decision or other practice is adopted; (b) An
individual becomes subject to a compensation decision or other
practice; (c) An individual is affected by the application of a
compensation decision or other practice, including each time
when wages, benefits, or other compensation is paid, resulting
in whole or in part from the compensation decision or other
practice."
Similarly, the federal act states that employees may recover
"when unlawful employment practices that have occurred during
the applicable administrative charge filing period are similar
or related to unlawful employment practices with regard to
discrimination in compensation that occurred outside the time
for filing a charge." This provision is designed to allow a
complaint to bring the entire pattern of alleged wrongful
conduct to the attention of the fact-finder and to obtain
appropriate relief for unlawful acts regardless of whether prior
acts were the subject of a separate administrative charge. This
provision is related to the well established notion that after
an administrative charge is filed a complainant who suffers
further wrongful acts related or similar to the conduct alleged
in the original complaint need not refile, based on the
principle rooted in prudence and economy that subsequent acts by
the respondent are within the scope of the investigation to be
conducted by the administrative agency. As proposed to be
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amended, AB 793 would likewise provide that "when an
administrative complaint is filed, liability may accrue and an
aggrieved person may obtain relief where the unlawful employment
practices that have occurred during the applicable
administrative complaint filing period are similar or related to
unlawful employment practices with regard to compensation that
occurred outside the time for filing an administrative
complaint."
Concern Regarding Affect On Prior Unlawful Acts. As set out
below, the opposition argues that this bill "is not limited to
prospective claims and therefore appears to retroactively apply
to pending cases and could breathe life into stale claims not
yet filed." This argument appears to encompass two separate
issues: (1) whether the bill would apply to pending cases; and
(2) whether it revives claims that have already expired as of
its effective date.
The normal rule is that statutes that clarify existing law apply
to cases pending as of their effective date because they do not
actually change the law. "[A] statute that merely clarifies,
rather than changes, existing law does not operate
retrospectively even if applied to transactions predating its
enactment. [T]he Legislature amends a statute for a purpose,
but that purpose need not necessarily be to change the law. ?
[C]onsideration of the surrounding circumstances can indicate
that the Legislature made material changes in statutory language
in an effort only to clarify a statute's true meaning. Such a
legislative act has no retrospective effect because the true
meaning of the statute remains the same." (Western Security
Bank v. Superior Court (1997) 15 Cal. 4th 232, 243). Because
the Ledbetter decision has apparently not yet been finally and
definitively applied to any California statutes, this bill may
properly be understood as working merely a clarification of
existing law. (Carter v. California Dept. of Veterans Affairs
(2006) 38 Cal. 4th 914, 922-23.) If that is the authors'
intent, they may wish to make that point explicit by amending
the bill to so state.
In addition, new laws (both statutes and decisional law) that
effect procedural changes - as distinguished from substantive
changes - also apply to cases pending when the change is
effective. (E.g., Coachella Valley Mosquito & Vector Control
Dist. v. California Public Employment Relations Bd. (Cal. 2005)
35 Cal. 4th 1072.) Because this bill is directed at the statute
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of limitations, and which acts are to be considered within an
administrative charge, it evidently relates to procedure - not a
substantive change in the acts constituting an unlawful
employment practice subject to these procedural changes - and
should therefore apply to cases pending upon its effective date.
Application to pending cases, however, is not the same as
reviving causes of action that have lapsed. The Legislature is
entitled to revive old claims, subject to constitutional limits,
and has done so on occasion, but the language of those statutes
is explicit about revival. (E.g., Code of Civil Procedure
sections 340, 340.1 (r) and (s), 340.10 (b). Cf. AB 2870 of
2007.) This bill by contrast does not purport to revive lapsed
causes of action.
Despite the foregoing, the author may wish to clarify the
application of the bill to pending cases, as the federal
Ledbetter act did in providing:
Section 6. This Act, and the amendments made by this Act,
take effect as if enacted on May 28, 2007 and apply to all
claims of discrimination in compensation under title VII of
the Civil Rights Act of 1964 (42 U.S.C. 2000e et seq.), the
Age Discrimination in Employment Act of 1967 (29 U.S.C. 621
et seq.), title I and section 503 of the Americans with
Disabilities Act of 1990, and sections 501 and 504 of the
Rehabilitation Act of 1973, that are pending on or after
that date.
ARGUMENTS IN SUPPORT : Among other supporters, the California
Commission on the Status of Women writes, "This measure ensures
that victims of pay discrimination continue to have a fair
opportunity to seek redress in the courts for violation of state
law." Among other supporters, Public Advocates Inc. states, "AB
793 would preserve Californians' long-standing protections to
secure fair pay for equal work. AB 793 clarifies that the
Supreme Court's decision in Ledbetter v. Goodyear Tire & Rubber
Co. - which overturned decades of precedent by severely limiting
workers' ability to bring pay discrimination claims - does not
apply in California. ? The Supreme Court's decision ignores
workplace realities. Salary information is often confidential,
and most employees who are the victims of wage discrimination do
not learn they are being discriminated against until years into
their employment. Wage discrimination causes real, enduring
harm; the remedy needs to endure as well. AB 793 ensures that
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state antidiscrimination laws are not weakened by the Supreme
Court's Ledbetter decision and reaffirms our state's commitment
to non-discrimination in compensation. It is a counterpart to
The Lilly Ledbetter Fair Pay Act of 2009, the first bill signed
into law by President Obama, which corrects the Court's reading
of federal antidiscrimination law."
ARGUMENTS IN OPPOSITION : A coalition of business and employer
advocates argues as follows:
AB 793 (Jones) ? would revise the statute of limitations
law for any workplace claim or lawsuit relating to
compensation so that the statute of limitations is renewed
each time an employee's compensation is "affected,"
including each time it is paid. AB 793 is not limited to
any particular statute, and thus would apply to any
California law impacting employers, including but not
limited to the Labor Code and the Fair Employment and
Housing Act.
First, AB 793 could effectively eliminate the statute of
limitations for lawsuits challenging any California
employer decision that impacts pay or benefits. This would
encompass a broad array of workplace decisions, including
hiring, job evaluations, and promotions. For example, if an
employee believes that he or she was denied a pay increase
at the time of an annual performance evaluation, each
paycheck impacted from that one decision would restart the
statute of limitations, regardless of whether 10, 15, or 20
years has transpired.
Second, AB 793 is far more expansive than federal law.
Although AB 793 is modeled after the federal Lilly
Ledbetter Fair Pay Act of 2009, enacted earlier this year,
there are major differences. One difference is that AB 793
applies to any California statute, while the federal law
was limited to certain statutes. Additionally, California's
labor and employment laws are more expansive than federal
laws. Thus, application of the federal "Ledbetter" law to
California's statutory framework will result in far greater
liability exposure for employers.
Third, AB 793 violates the public policy behind statutes of
limitations - which is to ensure that a defendant is not
faced with stale claims that cannot be defended due to the
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passage of time and the dissipation of fresh and available
evidence. Additionally, statutes of limitation encourage
employees and employers to address the alleged wrongdoing
when it first takes place.
Finally, AB 793 is not limited to prospective claims and
therefore appears to retroactively apply to pending cases
and could breathe life into stale claims not yet filed.
AB 793, if passed, would further destroy the balance
between employer and employee interests that should be
maintained when the Legislature creates workplace laws.
Ignoring this balance harms both employers and employees
alike, when the weight and cost of too much litigation
causes employers to reduce workforces, close their doors,
or relocate to states with less hostile legal systems.
Prior Related Legislation Vetoed. Prior to enactment of the
federal "Ledbetter" law in January 2009, the author carried a
related measure last year. AB 437 would have simply declared
"The Legislature, in order to construe and clarify the meaning
and effect of existing state law regarding statutes of
limitation, rejects the interpretation given to federal law by
the United States Supreme Court in Ledbetter v. Goodyear Tire &
Rubber Co. (2007) 127 S. Ct. 2162." That bill was vetoed by the
Governor whose veto message stated:
This bill proclaims the Legislature's rejection of a recent
United States Supreme Court case regarding gender pay
inequity. However, instead of clarifying existing law,
this measure would create uncertainty regarding the accrual
of the statute of limitation for wage discrimination. This
uncertainty will undoubtedly lead to unnecessary
litigation. As I have stated before in vetoing similar
well-intentioned but poorly crafted bills, I support the
fight against gender pay inequity put cannot support
legislation that will encourage more frivolous litigation
against employers.
Author's Clarifying Amendments . In response to opposition
concerns and to more closely conform the language of the bill to
the cognate federal act, the author judiciously proposes to
amend the bill as follows:
(b) When an administrative complaint is filed, a complainant
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may challenge liability may accrue and an aggrieved person may
obtain relief where the unlawful employment practices that have
occurred during the applicable administrative complaint filing
period are similar or related instances of to unlawful
employment practices with regard to compensation that occurred
outside the time for filing an administrative complaint
occurring after the administrative complaint has been filed
without the necessity of filing another administrative complaint
(c) Nothing in this Act is intended to change current law
treatment of when pension distributions are considered paid.
(d) With regard to any complaint under any law, nothing in this
Act is intended to preclude or limit an aggrieved person's right
to introduce evidence of an unlawful employment practice that
has occurred outside the time for filing a charge of
discrimination.
(c) (e) It is the intent of the Legislature in enacting this
section to construe and clarify the meaning and effect of
existing law and to reject the interpretation given to federal
law by the United States Supreme Court in Ledbetter v. Goodyear
Tire & Rubber Co. (2007) 550 U.S. 618.
REGISTERED SUPPORT / OPPOSITION :
Support
American Civil Liberties Union (ACLU)
American Federation of State County and Municipal Employees
(AFSCME)
California Applicants' Attorneys Association
California Commission on the Status of Women
California Communities United Institute
California Labor Federation / AFL-CIO
California National Organization for Women (NOW)
California Nurses Association (CNA)
California Rural Legal Assistance Foundation
Consumer Attorneys of California
Glendale City Employees Association
Organization of SMUD Employees
Planned Parenthood Affiliates of California
Public Advocates, Inc.
San Bernardino Public Employees Association
San Luis Obispo County Employees Association
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Santa Rosa City Employees Association
Opposition
California Chamber of Commerce
Aerojet-General Corporation
Associated General Contractors of California
Association of California Insurance Companies
Auto Medics
Auto Supply Company
California Association of Joint Powers Authorities
California Bankers Association
California Building Industry Association
California Business Properties Association
California Citizens Against Lawsuit Abuse
California Employment Law Council
California Farm Bureau Federation
California Financial Services Association
California Grocers Association
California Hospital Association
California Independent Grocers Association
California Lodging Industry Association
California Manufacturers and Technology Association
California New Car Dealers Association
California Restaurant Association
California Retailers Association
California Taxpayers Association
Center City Automotive Repair
Civil Justice Association of California
CompWest Insurance
Contractors Wardrobe
CSAC Excess Insurance Authority
Employers Group
FoamPRO Mfg, Inc.
Fulton Village Green Investors, LLC
GeoSolve, Inc./BioTech Restorations
Hydra
Idyllwild Arts Foundation
International Institute of Los Angeles
Lake Arrowhead Resort and Spa
Lawyers Against Lawsuit Abuse
League of California Cities
Long Beach Area Chamber of Commerce
Los Angeles Dental Society
Lustre-Cal Corporation
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Mother's Nutritional Center
National Federation of Independent Business
Pacific Heart & Vascular Medical Group
Pacific World Corporation
Personal Insurance Federation of California
Quality Aluminum Forge
Rosewood Bar and Grill
Sander, Jacobs, Cassayre & Griffin Inc.
S.D. Deacon Corp. of California
SVTC Technologies
The Reunion Committee, Inc.
Western Electrical Contractors Association
Western Growers Association
Wine & Roses
Young Horizons Child Development Center
Zymo Research Corporation
Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334