The 12 Days of California Labor and Employment Series – Day 6 "Employers Beware - Rebuttal Presumption Potentially Available for Retaliation Claims"

In the spirit of the season, we are using our annual "12 days of the holidays" blog series to address new California laws and their impact on California employers. On the sixth day of the holidays, my labor and employment attorney gave to me six geese-a-laying and SB 497.

Employers know all too well that they are prohibited from discharging an employee or, in any manner, discriminating, retaliating, or taking any adverse action against any employee or applicant for employment because the employee or applicant engaged in protected conduct. If an employer takes such action, the employee shall be entitled to reinstatement and reimbursement for lost wages and work benefits caused by those acts of the employer.

California employers also know all too well that a new law is added every year that makes something more difficult for the employers. SB 497 exemplifies this as it creates a rebuttable presumption in favor of the employee's claim if an employer engages in any action prohibited by this provision within 90 days of the protected activity, which includes reporting an employer's wage and hour violations and/or equal pay violations.

SB 497

SB 497 takes effect on January 1, 2024, and amends California Labor Code Sections 98.6 and 1197.5. It creates a rebuttable presumption of retaliation if an employer takes adverse action against an employee within 90 days of the employee engaging in a protected activity.

Protected activity includes, but is not limited to:

• complaining about unpaid wages,
• reporting suspected unlawful activity in the workplace, and
• complaining about equal pay violations.

What Does This Mean for Employers?

It means the employee has no burden of proof at the onset. The employee only needs to show a protected activity and a subsequent adverse action.

The employer then has the burden of rebutting the presumption. Under current California law, an employee bears the initial burden of establishing a prima facie case of retaliation, which includes:

1. engaging in a protected activity,
2. suffering from an adverse employment action, and
3. establishing a causal nexus between the protected activity and adverse employment action.

Adding the rebuttable presumption will make it easier for an employee to satisfy the initial burden when the adverse action occurs within 90 days of specified protected activities.

Along with the presumption, SB 497 increases the civil penalty from a maximum of $10K total to a maximum of $10K per employee per violation to be awarded to the employee who was retaliated against.

Employer Takeaways

• If an employer receives such a claim, it can defend and rebut the presumption by arguing a legitimate, nonretaliatory reason for the employment action.
• Employers should be aware of and monitor the 90-day period if/when an employee has reported any wage and hour violations.
• If such an employee has performance issues or some other employment-related issue unrelated to their reporting of wage and hour violations, it would be wise to, if at all possible, wait until the 90-day period is over before proceeding with any potential disciplinary action.
• Management and human resources should be trained and updated on these timeframes to avoid the availability of this presumption.