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October 25, 2024

In October 2023, California governor Gavin Newsom signed into law Senate Bill 497. This legislation makes it easier for employees to file lawsuits against their employers if they’re disciplined or fired within 90 days of engaging in protected activities. The new law exposes employers to all manner of lawsuits.

To address the potential issues S.B. 497 might bring, employment defense attorneys offer insight into the particulars of the law, as well as the steps employers can take to prevent litigation. Learn more about this law and what it means for you and your workforce.

S.B. 497: The Equal Pay and Anti-Retaliation Act

S.B. 497, also known as the Equal Pay and Anti-Retaliation Act, amends a number of California Labor Code Sections. It allows for what’s called a “rebuttable presumption of retaliation” if an employer takes any form of negative action against an employee who engaged in a protected activity in the previous 90 days.

Protected activities include complaining to Human Resources, testifying on behalf of another employee, or filing any type of formal complaint. If an employee experiences adverse actions from their employer, such as a demotion, suspension, or any disciplinary conduct, they can sue by claiming it was retaliation.

Employees already had rights regarding retaliation after a protected activity before the bill passed. However, S.B. 497 makes the process even easier. If they can prove (in the most cursory manner) that the two actions are connected, it falls on the employer to prove there were non-retaliatory reasons for what they did.

S.B. 497 also steps up the penalties employers face if they’re found to have retaliated against an employee. Such an employer could be liable for a civil penalty of up to $10,000 per violation and per employee. This would be in addition to any other remedies the employee might seek.

The Bill’s Ambiguities and the Questions It Raises

S.B. 497 poses more questions than it answers, especially in regard to retroactivity. It’s not clear whether employers should be worried about lawsuits for past actions. This may be established in court as new cases are admitted.

Another concern many employers have is when adverse actions will stop being seen as retaliatory. 90 days is the limit the law sets, but it’s not a hard border. Even if the adverse action was warranted, this ambiguity could result in employers being forced to spend time and money defending their actions.

This is particularly true because S.B. 497 doesn’t require nearly as much proof on the employee’s part to establish that the adverse action is connected to their protected activity — it’s simply assumed. In other words, the burden of proof falls squarely on the employer.

How Employers Can Protect Themselves From Lawsuits

Although it’s still early days when it comes to the law’s effects on businesses, employment defense attorneys recommend that employers take a few crucial actions to protect themselves and their interests from spurious lawsuits:

Implement Thorough Documentation Practices

Documenting every performance issue in writing immediately after it occurs is vital. Meticulous documentation can provide evidence of issues the employee had before they engaged in their protected activity, allowing you to demonstrate a pattern of behavior that merited an adverse action.

Be Transparent With Employees

Following any adverse action, whether it was taken within the 90-day time frame or not, it’s important to speak frankly with employees about why it occurred. This is a good practice to prevent lawsuits, but it can also help employees improve their performance by addressing unacceptable behaviors.

Work With Human Resources

Employers can also benefit from maintaining regular communication with their HR departments. HR personnel have to be fully aware of the new law and its potential consequences, and they must be prompted to maintain careful and detailed documentation of every employee interaction.

Since knowing an employee has engaged in a protected activity can help you make better decisions when it comes to adverse actions, it behooves HR to make you aware of any complaint filings.

Seek Legal Help

If you’re facing a lawsuit because of a presumed violation of S.B. 497, the first thing you should do is hire an experienced employment defense lawyer. There’s a lot on the line with these lawsuits, including the potential of significant fines on top of other compensation you may be ordered to provide the employee.

Your employment defense lawyer will investigate the circumstances surrounding the original complaint and the supposed retaliatory conduct. They’ll gather critical evidence, including documentation of previous adverse actions and performance reviews, witness statements, and anything else that can demonstrate you didn’t act in retaliation.

Crucially, your employment defense attorney will also help you prevent these issues from occurring in the future. They can help you find better ways of documenting performance concerns and can recommend a variety of strategies to avoid being accused of retaliatory behavior.

Navigating the Provisions of the New Bill

S.B. 497 shouldn’t keep you from running your business the way you want to. If a worker isn’t performing as expected, you have every right to address the matter. It’s important, however, to be aware of the new law so you can take appropriate action at the right moments.

Even if it isn’t your intention to retaliate against an employee, demoting them the week after they’ve made a complaint doesn’t look good — this is precisely the kind of response that could set you up for claims of unlawful retaliation. By being more aware of how your actions might be interpreted, you can avoid frivolous lawsuits.

That being said, there’s no way to prevent all lawsuits, no matter how careful you are. If you’re facing accusations of retaliatory behavior, the most important step you can take is to hire an employment defense attorney.

With an employment defense attorney in your corner, it will be much easier to demonstrate that your actions had nothing to do with the employee’s protected activity. The right legal representative can work to prevent the kind of serious consequences an apparent civil violation can have.

At Pearlman, Brown & Wax, LLP, our experienced employment defense attorneys can help you navigate these new legal challenges, ensuring you comply with the law while safeguarding your company’s interests.

Contact us today to discuss how we can assist you in mitigating risks and defending against retaliation claims.

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