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California SB 497: California Labor Code Changes for 2024

October 20, 2023

The new California law, Senate Bill (SB) No. 497, also known as the Equal Pay and Anti-Retaliation Protection Act, was signed by Governor Gavin Newsom on October 8, 2023. SB 497 amends the state’s Labor Code Sections of 1197.5, 1102.5 and 98.6. The new law will go into effect on January 1, 2024. Now is the time for statewide employees and employers to take a deep dive into the text of SB 497 as the new year is quickly approaching.

SB 497 is significant as it empowers employees to more easily make retaliation claims against employers. Some business owners, labor relations experts, and employment attorneys are adamant the new law will change employment in California for years to come. Let's look at California's current employment law landscape and delve into the changes introduced by SB 497.

The Current Legal Landscape

The current law requires that employee retaliation claims progress through three stages. At the moment, California employees filing retaliation claims must establish a case of retaliation that is prima facie. Alternatively, California employers are burdened with pinpointing a valid reason for the non-retaliatory act in question. There is a burden on the employee to respond with proof that the employer’s allegedly non-retaliatory justification for the action was actually retaliatory.

Before going deeper into California’s legal landscape, let’s briefly pause to define the legal term “prima facie” as used above. Prima facie is a term commonly used by attorneys and judges to refer to something that is based on an initial impression or something viewed at first sight. Prima facie is a reference to the standard of proof that the party saddled by the burden of proof must meet for the claim to proceed.

If the individual with the burden of proof provides sufficient evidence to develop a rebuttable presumption that the assertion is true, the cause of action is legitimate. Most legal cases require that one party present such prima facie evidence to support elements of charges.

Employees must demonstrate three things to establish a prima facie case of retaliation under current law. For one, the employee must have partaken in an activity that was protected. The state’s Labor Code and Equal Pay Act define such protected acts, yet labor law attorneys have some room for interpretation as to what constitutes a protected activity in the workplace.

Secondly, the employer must have engaged in an action against an employee that was adverse, meaning harmful or disciplinary in some way. Thirdly, there must also have been the all-important element of causation. To be more specific, the employee’s attorney must prove there is a causal relationship between the activity that is protected and the supposed adverse action.

If the employee bringing the claim cannot convincingly demonstrate the three components of a prima facie retaliation case, the claim will fail. Oftentimes, it is the quality of each side’s employment law attorney that determines the outcome of the case. The top California employment law attorneys keep their finger on the pulse of legislation, including the changes to be implemented by the recently passed SB 497.

Key Changes Introduced by SB 497

SB 497 is a game-changer for employment law as it allows for the rebutting of the retaliation presumption if an employee is terminated or disciplined in a period of 90 days after partaking in an activity protected by the state’s Labor Code and Equal Pay Act.

Simply put, the presumption of retaliation facilitates the employee's use of the prima facie case of retaliation. Such facilitation is possible thanks to the generation of the rebuttable presumption that supports the employee’s accusation. The presumption is applicable if the employer engages in adverse action within a period of 90 days after helping to enforce specific Labor Code provisions or invoking those provisions.

Moreover, the new law mandates that the trier of fact operate under the assumption that the employer engaged in a retaliatory act against the employee if that organization disciplined the worker within 90 days of the exercising of the rights granted under the Equal Pay Act.

Implications for Employers

Employers are advised to pay close attention to the language of SB 497. The new law presents challenges that organizations statewide will undoubtedly find difficult to overcome. Some employers will benefit from modifying their employee discipline approach, implementing new standards, and operating procedures as necessary.

Even the subtleties of employee discipline documentation and ongoing training should be reviewed and altered to conform to the letter of the new law. It is also in every California employer's interest to meet with an employment law attorney to discuss what constitutes adverse employment actions and whether any such actions should be strategically timed to minimize potential legal liability.

Employers are also advised to formally define and list the specific reasons for employee discipline that are non-retaliatory. Some such reasons might be listed in the current version of the employee handbook, yet that handbook will require updating with the implementation of SB 497. Internal discussions and those with employment law attorneys are also necessary to formally and clearly define what constitutes adverse employment actions.

Examples of adverse employment actions include but are not limited to:

  • Termination
  • Suspension
  • Demotion

Employers are also encouraged to hold internal discussions about protected activities in the workplace such as hour violations and wage violations. The new law creates the presumption of rebuttable retaliation if discharged/disciplined in response to those actions. However, additional violations of law are also included under the umbrella of protected activities, making the guidance of an employment law attorney critically important for success in and out of the courtroom.

Civil Penalties and Legal Recourse

SB 497 will soon be law, meaning violating it carries legal consequences in the form of civil penalties. The new law awards civil penalties directly to employees who were negatively affected by the violation.

If the employer’s attorney fails to state a reason for the supposed retaliation that is not legitimate or non-retaliatory, the employee's claim will likely succeed. However, if the employee's response demonstrates that the discipline was retaliatory, the law provides that victim with civil penalties as he or she suffered the violation.

The new bill lays out remedies for wronged employees, including a civil financial penalty of $10,000 for each violation. Such violations pertaining to multiple employees may amount to an aggregate financial penalty upward of six figures for repeat offenders. Ideally, the penalty will make up for the employee’s lost wages, diminished earning capacity, and frustration. However, there is no guarantee that financial damages will equate or surpass the employee’s financial loss.

Looking Ahead

SB 497 will indelibly change California’s employment landscape unless amended or repealed. Employers will undoubtedly respond by changing how they approach formally reprimanding troublesome employees. Some businesses will refocus on how they document workplace performance problems.

Other California employers will go to the extent of retraining human resources employees to fully comply with the nuances of the new law. Statewide businesses will also touch base with workplace supervisors to ensure they understand just how important it is to fully document employee discipline, including the detailed reasons for that discipline.

California organizations will also be wise to closely analyze procedures and policies pertaining to disciplinary actions and complaints as stated in employee handbooks. Employee handbooks should be revised in unison with the new law that goes into effect on January 1, 2024. If you would like more information about alterations to California employment law, you can request a recording of the state’s latest legislative sessions and tune into webinars.

California Employment Law Is Becoming Increasingly Dynamic

To say change is the lone constant and recurring theme of the modern era would be an understatement. The state of California is as progressive as it gets, altering laws in accordance with the zeitgeist of the state and that of the current era. California SB 497 is symbolic of the state’s commitment to labor protection, even if that protection is arguably somewhat punitive to employers.

Stay tuned as the year ahead unfolds. California employment law is changing and will likely continue to change in unforeseen ways after SB 497 goes into effect. Though the new law favors employees, it isn’t guaranteed to result in significant setbacks for state employers. Those who adjust internal policies accordingly will enjoy a graceful transition into the new year. Interested parties can learn more about California SB 497 by clicking here for the full text of the new law.

Schedule a Consultation with Pasternak Law

Have you been wronged by an employer? If you know or suspect your current or previous employer has violated one or several employment laws, do not suffer in silence. Nor should you blame yourself for this injustice. Our San Francisco employment law attorneys will fiercely advocate on your behalf.

Reach out to us today to schedule a case review. We proudly offer no-cost initial consultations. You can reach our San Francisco office, located at 354 Pine St., by calling 415-693-0300.

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