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: 5/27/14
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 declares that a waiver or release of claims
under the California Fair Employment and Housing Act (FEHA) is
contrary to public policy and unenforceable, unless the waiver
or release of claims is knowing and voluntary.
Senate Floor Amendments of 5/27/14 strike out the conditions in
which a waiver or release of claims are not knowing or
voluntary.
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
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information, marital status, sex, gender, gender identity,
gender expression, age, sexual orientation, or military and
veteran status.
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 declares that a waiver or release of claims under FEHA
is contrary to public policy and unenforceable, unless the
waiver or release of claims is knowing and voluntary.
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).
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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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
SUPPORT : (Verified 5/28/14)
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 5/28/14)
Air Conditioning Trade Association
Associated Builders and Contractors - San Diego Chapter
Associated Builders and Contractors of California
California Chamber of Commerce
California Employment Law Council
California Farm Bureau Federation
California Framing Contractors Association
California Grocers Association
California Manufacturers and Technology Association
California Pool and Spa Association
California Retailers Association
California State Association of Counties Excess Insurance
Authority
Civil Justice Association of California
National Federation of Independent Business
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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.
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.
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."
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AL:e 5/28/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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