Bill Exposes Employers to Costly Labor Litigation

Job Killer IconA California Chamber of Commerce-led coalition is strongly opposing a job killer bill that expands employer exposure to lawsuits for adverse employment decisions.

AB 524 (Wicks; D-Oakland) exposes employers to costly litigation under the Fair Employment and Housing Act (FEHA) by creating a new protected class of employees under California employment rights laws — the employee’s family caregiver status — which is broadly defined to include any employee who contributes to the care of any person of their choosing, and creates a de facto accommodation requirement that will burden small businesses.

The bill was sent to the Senate Appropriations Committee Suspense File when legislators returned from the summer break on August 14 and is among hundreds of bills awaiting action today when the committee reviews proposals on the Suspense File.

The coalition — made up of groups representing employers from multiple industries and many local chambers of commerce — has emphasized to legislators that, if passed, AB 524 will increase the cost of doing business in California and the costs of goods and services. The bill is a significant expansion of FEHA and the provisions in it have been rejected by the Legislature for the last two years.

AB 524’s broad definition of the protected class of employees would encompass essentially every worker and create an automatic basis for an individual in that new classification to challenge any adverse employment action, the coalition said.

Further, the new classification could be used to require employers, including small businesses, to accommodate all caregiving needs beyond what is already required under existing law or else they may face a discrimination claim, depending on how courts interpret the term “special” accommodation.

AB 524 was amended in the Senate Judiciary Committee to say an employer is not required to provide “special” accommodation, but it remains unclear what “special” means. If an employee requests a schedule change or time off that is denied and they subsequently violate an attendance policy or are terminated for refusing to work a different schedule, they could surely sue, alleging discrimination.

Subjective Determination

Because whether an employee “contributes” to the care of another is a subjective determination, the employer has no ability to dispute an employee designating themselves as having family caregiver status. Any dispute would open the employer to costly litigation.

Further, adding this broad new classification to the FEHA list would limit any employer’s ability to enforce policies, including attendance policies. Any action taken by the employer could be challenged as discrimination based on the employee’s “family caregiver status.”

That possibility will significantly limit an employer’s ability to address discipline issues in the workplace, maintain stability, and eradicate any issues without costly litigation.

Existing Leave Laws

Many existing laws have parameters that provide employees time to act as a caregiver. Examples include leave for situations where a school or childcare center is unavailable; leave to care for a family member or other designated person of the employee’s choice; and “kin care” laws that allow the use of sick time to care for someone else.

The California Family Rights Act was broadened just this year to include “designated persons” (nonfamily members) in the list of people for whom the employee can take time off.

Any employer who retaliates against an employee for using these leaves is liable for unlawful retaliation.

If the Legislature finds these leaves insufficient, rather than imposing new burdens on employers, it should provide more flexible work options to workers by revising California’s overly rigid wage and hour laws that prohibit workplace flexibility.

Private Right of Action

AB 524 exposes employers, including small businesses, to costly litigation because FEHA includes a private right of action for any alleged discrimination against a protected classification. Liability includes compensatory damages, injunctive relief, declaratory relief, punitive damages, and attorney fees.

A 2017 study by insurance provider Hiscox estimated that the cost for a small to mid-size employer to defend and settle a single plaintiff discrimination claim was approximately $160,000, which was a $35,000 increase from Hiscox’s study just two years earlier. This amount, especially for a small employer, reflects the financial risk associated with defending a lawsuit under FEHA.

In 2016, Hiscox found that U.S. companies had a 10.5% chance of having an employment charge filed against them. For California, that percentage was 56.5%. According to two annual reports of the Civil Rights Department (formerly the Department of Fair Employment and Housing), thousands of complaints are filed every year, with more than 70% of those employees choosing to immediately pursue civil litigation instead of having the department investigate their claim.