BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 1407|
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THIRD READING
Bill No: SB 1407
Author: Jackson (D)
Amended: 4/28/14
Vote: 21
SENATE JUDICIARY COMMITTEE : 5-2, 5/6/14
AYES: Jackson, Corbett, Lara, Leno, Monning
NOES: Anderson, Vidak
SUBJECT : Employment discrimination
SOURCE : California Employment Lawyers Association
DIGEST : This bill invalidates the waiver or release of claims
made under the Fair Employment and Housing Act (FEHA) by an
individual against an employer, unless the waiver or release of
claims is knowing and voluntary, and clearly stated as part of a
negotiated settlement agreement of the claims.
ANALYSIS :
Existing law:
1.Prohibits, under FEHA, as a matter of public policy,
discrimination in housing and employment on the basis of race,
religious creed, color, national origin, ancestry, physical
disability, mental disability, medical condition, genetic
information, marital status, sex, gender, gender identity,
gender expression, age, sexual orientation, or military and
veteran status.
CONTINUED
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2.Provides that the rights and procedures established by FEHA
are established for a public purpose and cannot be contravened
by private agreement, but provides that agreements that are
knowingly and voluntarily negotiated and entered into between
an employer and employee may be upheld.
3.Prohibits an employer from requiring the execution of a
release of a claim or right on account of wages due, or to
become due, or made as an advance on wages to be earned,
unless payment of those wages has been made. A release made
in violation of this provision shall be null and void and a
violation of this provision by the employer is a misdemeanor.
4.Regulates the formation of contracts and provides that anyone
may waive the advantage of a law intended solely for his/her
benefit, but provides that a law established for a public
reason cannot be waived by private agreement. Authorizes the
court to refuse to enforce a contract, or provision thereof,
if the court finds the contract to have been unconscionable
when made.
5.Provides that a general release does not extend to claims
which the creditor does not know or suspect to exist in
his/her favor at the time of executing the release, which if
known by him/her must have materially affected his/her
settlement with the debtor.
This bill:
1.Provides that any waiver or release of claims under FEHA is
contrary to public policy and shall be unenforceable, unless
the waiver or release of claims is knowing and voluntary and
clearly stated as part of a negotiated settlement agreement of
the claims.
2.Provides that a waiver or release of claims shall not be
considered knowing and voluntary unless the following
conditions are met:
A. The waiver or release is part of a negotiated agreement
between the individual and the employer that is written in
plain language and in a manner calculated to be understood
by that individual or by the average individual eligible to
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enter into a negotiated agreement;
B. The waiver or release shall be in conspicuous writing,
specifically refer to the individual's claims under FEHA,
and refer by name to FEHA in connection with the waiver or
release;
C. The individual waives or releases claims under FEHA only
in exchange for consideration in addition to anything of
value to which the individual already is entitled;
D. The individual is advised in writing to consult with an
attorney prior to executing the final negotiated agreement;
E. The agreement shall not have the effect of misleading,
misinforming, or failing to inform participants and
affected individuals. Any advantages or disadvantages
described shall be presented without exaggerating the
benefits or minimizing the limitations;
F. The individual shall be given at least 21 days after
receipt to consider the final negotiated agreement;
G. The agreement shall provide that, for at least seven
days following the execution of the agreement, the
individual may revoke the agreement, and the agreement
shall not become effective or enforceable until that
seven-day period or a longer negotiated period has expired;
and
H. The waiver or release of claims is prohibited when the
consideration for the waiver or release is employment,
continued employment, or the payment of wages, including,
but not limited to, a raise or a bonus, unless the
individual has previously initiated a written claim to an
administrative agency or a court, or presented a written
grievance or complaint to the employer. In those
instances, the waiver or release of claims shall reference
the written claim, grievance, or complaint.
1.Prohibits a waiver of any right or claim that arises following
the execution of the waiver.
2.Defines "release of claims" to include, but is not limited to,
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requiring an individual to execute a statement that he or she
does not possess any claims or injuries against the employer.
3.Provides that a waiver agreement does not affect the
Department of Fair Labor and Housing's authority and
responsibilities to enforce FEHA, and a waiver shall not be
used to justify interfering with the protected right of an
individual to file a charge or participate in an investigation
or proceeding conducted by the department.
Background
Existing law, under FEHA, prohibits discrimination in housing
and employment because of race, religious creed, color, national
origin, ancestry, physical disability, mental disability,
medical condition, genetic information, marital status, sex,
gender, gender identity, gender expression, age, sexual
orientation, or military and veteran status (protected
characteristics).
A recent trend has emerged in which some employers are requiring
workers to sign employment documents, before, during, or upon
termination of employment, that contain inconspicuous terms
waiving or releasing liability of the employer for any and all
employment claims, including discrimination, harassment, and
retaliation claims protected under FEHA. In exchange for
signing these documents, the employer offers bonuses, raises, or
continued employment to those workers. Existing law invalidates
waivers of FEHA rights as a matter of public policy, but there
is no limitation on releasing FEHA claims.
This bill contains similar limitations on waivers of FEHA claims
as in AB 1715 (Assembly Committee on Judiciary, 2003), which
would have provided that any waiver of rights or procedures
under FEHA must be knowing, voluntary, and not made as a
condition of employment or continued employment. AB 1715 also
would have invalidated arbitration agreements between employers
and employees that relate to employment practices covered by
FEHA that are required as a condition of employment or continued
employment. AB 1715 was vetoed.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
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SUPPORT : (Verified 5/7/14)
California Employment Lawyers Association (source)
California Applicants' Attorneys Association
California Immigrant Policy Center
California Nurses Association
California Rural Legal Assistance Foundation, Inc.
Consumer Attorneys of California
Equal Rights Advocates
Legal Aid Society - Employment Law Center
Mexican American Legal Defense and Educational Fund
OPPOSITION : (Verified 5/7/14)
Air Conditioning Trade Association
Associated Builders and Contractors - San Diego Chapter
California Employment Law Council
California Farm Bureau Federation
California Grocers Association
California Manufacturers and Technology Association
California Pool and Spa Association
California State Association of Counties Excess Insurance
Authority
National Federation of Independent Business
Plumbing-Heating-Cooling Contractors Association of California
Western Electrical Contractors Association
Western Growers Association
ARGUMENTS IN SUPPORT : According to the author:
A disturbing practice has emerged in certain workplaces
where employers are engaging in ongoing sexual harassing
conduct, but are then exempting themselves from the law by
requiring workers to sign away their rights as a condition
of employment or receiving wages.
These employers routinely require workers to sign
'agreements' for bonuses, raises, or employment that
include inconspicuous terms that release the employer for
any and all claims, including sexual harassment claims;
prohibit workers from discussing the conditions of the
workplace; and that force workers into private arbitration
so that any claims brought against the employers remain
secret and outside a court of law.
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With the ability to engage in this kind of routine
employment practice, employers can sexually exploit their
workers, who are often very young women, without fear of
liability or public scrutiny.
Employees have argued that these releases should not be
upheld because the terms were inconspicuous and executed
along with and alongside other employment
materials/agreements (e.g.[,] receiving a raise or bonus).
As such, the releases were unconscionable and were not
knowingly or voluntarily entered into. Some arbitrators
have agreed with this argument and, in fact, one arbitrator
declared that this kind of practice "shocked the
conscience." However, other arbitrators have upheld the
releases and thereby prohibited any sexual harassment
claims from moving forward.
This bill would generally prohibit employers from requiring
workers to sign inconspicuous releases of claims in
exchange for employment and/or wages. More specifically,
this bill would state that any waiver or release of [Fair
Employment and Housing Act (FEHA)] claims is unenforceable,
unless knowing and voluntary and executed as part of a
negotiated settlement agreement. The bill would follow
federal law, under the Older Workers Benefit Protections
Act (29 U.S.C. [Sec.] 621), to require certain minimum
standards for what is considered "knowing and voluntary."
ARGUMENTS IN OPPOSITION : The California Employment Law
Council asserts that this bill, "is overly broad and could call
into question the validity of releases in the severance context,
which take place routinely and are important in concluding the
employment relationship." A coalition of opponents further
argues, "Mirroring the federal standard for older, more
vulnerable employees, SB 1407 also seeks to impose a delayed
implementation of any negotiated settlement agreement under FEHA
for all employees, regardless of the employee's capacity.
Specifically, SB 1407 requires that all employees have 21 days
to consider the terms and conditions of the agreement and then a
7-day period to revoke the agreement once signed. The basis for
federal law was to protect vulnerable workers who lack the
capacity to make immediate decisions. There is no basis to
impose such a delay in finalizing an agreement for all
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employees, especially those represented by counsel, who have
participated in the negotiations of the agreement."
AL:e 5/8/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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