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More Changes Enacted to CA Employment Laws

First up, mandatory arbitration. California passed a law prohibiting mandatory arbitration agreements for sexual harassment and similar claims. Under the new law, California employers may not condition employment or other employment-related benefits on an employee waiving rights, forums, or procedures for alleged violations of the California Fair Employment and Housing Act (FEHA). Employers may not retaliate or discriminate against employees because of their refusal to waive any of these rights, forums, or procedures for alleged FEHA or other labor code violations. Employers are also required to pay arbitration fees on time or face harsh consequences. The provision applies to agreements made beginning in January 2020. The law carves out arbitration agreements enforceable under the Federal Arbitration Act from its application. The U.S. Supreme Court has already held that state laws obstructing the enforcement of arbitration agreements under the FAA are preempted.

Additionally, the statute of limitations for filing a charge of discrimination with the California Department of Fair Employment and Housing (DFEH) has been extended from its previous one year to three years. This law was intended to give sexual harassment litigants more time to process their incidents of harassment. As a result, lawsuits may now be filed up to four years after an incident as employees have one year to file a lawsuit after being issued a right-to-sue letter from the DFEH.

A new law precludes “no-rehire” clauses in agreements resolving employment issues. Employers often include these clauses in settlement agreements when resolving claims with former employees. With this clause, if the employee applies for employment, the employee agrees that his or her application will not be considered and if the employee is hired, the employer may terminate the employment. This new law does not apply where the employer has made a good faith determination that person who signed the release engaged in sexual harassment or if there is a legitimate non-discriminatory reason for not hiring the person.