On October 8, 2023, Governor Gavin Newsom signed Senate Bill (SB) No. 497 into law. SB No. 497, also referred to as the Equal Pay and Anti-Retaliation Protection Act, amends California Labor Code Sections 98.6, 1102.5, and 1197.5 to lessen the burden for employees attempting to establish a prima facie case of retaliation. This new law, effective on January 1, 2024, also comes with a civil penalty for each violation.
Existing Law
Retaliation claims in California follow a three-step burden shifting analysis:
- First, the plaintiff bears the burden of establishing a prima facie case of retaliation;
- Second, if the plaintiff establishes a prima facie case, the employer may rebut that presumption by demonstrating a legitimate, non-retaliatory reason for the allegedly adverse employment action, thereby shifting the burden of proof back onto the plaintiff; and
- Third, if the employer establishes a legitimate, non-retaliatory motive, then the employee must prove that the employer’s non-retaliatory reason was a pretext for unlawful retaliation.
Under existing law, an employee can establish a prima facie case of retaliation by demonstrating that (1) the employee engaged in protected activity; (2) the employer engaged in adverse action against the employee; and (3) a causal nexus exists between the protected activity and the alleged adverse action.
Amendments
SB No. 497 will allow a plaintiff to establish a rebuttable presumption that an employer has retaliated against an employee if the employer engages in an adverse employment action within 90 days of the employee engaging in activity protected under any of the specified Labor Code provisions.
The introduction of the rebuttable presumption of retaliation will make it easier for employees to establish a prima facie claim of retaliation, thereby shifting the burden onto the employer to prove the existence of a legitimate, non-retaliatory reason for the allegedly adverse employment action. In practice, some courts already found that the timing of an allegedly adverse employment action following the employee’s engagement in protected activity was sufficient to establish a prima facie case, so SB No. 497 in some respects codifies this practice and gives clarity about how close in time the adverse employment action must be to the allegedly protected activity for a prima facie case to be established automatically.
SB 497 further provides that, among other remedies, an employer is liable for a civil penalty not exceeding $10,000 per employee for each violation. The civil penalty will be awarded to the employee or employees who suffered the violation.
Employer Takeaways
Employers should review, and if needed, enhance, their policies regarding retaliation and the intake of employee complaints, to ensure that the risk of retaliation is minimized in light of SB No. 497. The law goes into effect on January 1, 2024.
For further information, please contact:
Christopher J. Banks, Partner, Crowell & Moring
cbanks@crowell.com
