Governor Edmund G. Brown Jr. yesterday signed a California Chamber of Commerce-sponsored job creator bill that protects sexual harassment victims and employers from being sued for defamation.
AB 2770 (Irwin; D-Thousand Oaks) codifies case law to ensure victims of sexual harassment and employers are not sued for defamation by the alleged harasser when a complaint of sexual harassment is made and the employer conducts its internal investigation. This bill also provides additional protections to employers by expressly allowing employers to inform potential employers about the sexual harassment investigation and findings. The bill has been tagged as a job creator because reducing the cost of frivolous litigation allows an employer to utilize these financial resources to grow its workforce.
AB 2770 passed the Legislature with unanimous bipartisan support.
CalChamber sponsored AB 2770 because alleged harassers are not only suing victims, but also filing suit against employers for defamation. Such lawsuits put employers in an impossible position as they have an affirmative duty to take reasonable steps to prevent and promptly correct harassment.
Even worse, if the alleged harasser’s employment is then terminated, or the alleged harasser resigns, employers are put in an even more difficult position. The company has knowledge of the harassing activity and yet its hands are tied. If the company tells a potential employer that the employee was accused of harassing conduct, the company is on the hook for a defamation claim. If the company stays silent, the harasser is then free to victimize more individuals at his/her next job without anyone at the new company ever knowing about the unacceptable behavior.
AB 2770 will protect employers and allow them to warn potential employers about an individual’s harassing conduct during a reference check without the threat of a defamation lawsuit.
The Assembly Judiciary Committee today will consider two California Chamber of Commerce-opposed job killers, one dealing with disclosing pay data and the other about the legal standard for filing certain harassment/discrimination claims.
The committee will consider:
CalChamber has identified the bill as a job killer because it could create a false impression of wage discrimination or unequal pay where none exists and, therefore, subject employers to unfair public criticism, enforcement actions, and significant litigation costs to defend against likely meritless claims.
CalChamber is leading a large coalition opposing the bill and has raised the following additional concerns:
SB 1300 is a job killer because it creates a new private right of action for failure to prevent harassment or discrimination where no harassment or discrimination actually occurred and limits the use of nondisparagement agreements and general releases. These provisions will significantly increase litigation against California employers and limit their ability to invest in their workforce.
CalChamber is also leading a large coalition opposing SB 1300 because the bill:
SB 1284 and SB 1300 will be heard in the Assembly Judiciary Committee today. CalChamber asks members to contact their Assembly representatives and members of the committee and urge them to oppose SB 1284 and SB 1300 as job killers.
Trial Attorneys Benefit from Agreement Ban
The California Chamber of Commerce and a large coalition of employer groups and local chambers of commerce are opposing a job killer bill that bans settlement and arbitration agreements.
Today the Senate Judiciary Committee will consider AB 3080 (Gonzalez Fletcher; D-San Diego), which significantly expands employment litigation and increases costs for employers and employees by banning settlement agreements for labor and employment claims as well as arbitration agreements made as a condition of employment, which is likely preempted under the Federal Arbitration Act (FAA) and will only delay the resolution of claims. Banning such agreements benefits the trial attorneys, not the employer or employee.
AB 3080 prohibits arbitration agreements made as a condition of employment for any claims arising under the Labor Code or Fair Employment and Housing Act (FEHA) and/or including class action waivers.
Arbitration is a less formal, less costly and less time-consuming forum in which to resolve a dispute. The cost savings is not in the compensation paid to the employees; it is in the fees paid to attorneys.
Although studies demonstrate that employees generally win the same percentage of cases in arbitration, if not more, the trial attorneys may not recover as much in fees. Thus, the ultimate beneficiaries of an arbitration and class action waiver ban are trial attorneys, not employers or employees.
Hurts Low-Wage Employees
Banning arbitration leaves litigation as the only option for employees to resolve many labor and employment claims. This ultimately results in low-wage employees being denied access to justice.
The California Democratic Party’s Platform on Civil Justice states that budget cuts to the judiciary have led to extended waits for civil lawsuits and legal issues that touch everyday lives, with the delays meaning only the wealthy can afford to use the civil justice system.
Several studies also support the idea that access to civil courts is not a realistic option for low-wage employees.
With the civil justice system being accessible mainly to the wealthy, many low-wage workers are left with no alternative if arbitration is not available.
Preempted by Federal Law
The scope of the FAA is broad and mandates the enforcement of any written arbitration agreement regarding the resolution of any dispute arising out of a transaction involving commerce.
The only exception to the mandate is if the contract is unenforceable due to contractual defenses that exist and are applicable to any contract.
The U.S. Supreme Court and recent California decisions point to the strength of the FAA.
AB 3080 is not applicable to all contracts and is not a general contractual defense. It unfairly targets and discriminates against arbitration clauses in employment contracts, leaving all other terms of employment conditional and mandatory. Accordingly, it is preempted under the FAA.
Bans Settlement Agreements
AB 3080 prohibits an employer from requiring an applicant or employee to waive any right, forum or procedure under FEHA or the Labor Code for receipt of any “employment-related benefit.” This language precludes any settlement agreement for any claims arising under FEHA or the Labor Code.
In an employment context, the value provided in a settlement agreement generally is compensation in some form of wage replacement, be it back pay, loss of wages, or front pay. This compensation would likely be considered an “employment-related benefit” and therefore prohibited by AB 3080.
Benefits Trial Attorneys
The issue of preemption will unquestionably be litigated if AB 3080 becomes law. Approximately 5–10 years will pass for a case under the FAA to reach the Supreme Court, meaning the employee who has suffered the alleged harm will wait that long to receive any final decision on his/her case.
Extended litigation also will force employers to defend unnecessary litigation and pay significant costs and fees.
The uncertainty and litigation will benefit only trial attorneys, not the employer or employee.
The CalChamber is encouraging members to contact their senators and Senate Judiciary members to urge them to oppose AB 3080.
Let legislators know that precluding the informal resolution of civil claims would overwhelm California’s judiciary system by forcing all claims to be tried by a jury or judge, creating significant delays that would harm individuals who have suffered a wrong.
California’s merchandise export trade largely shrugged off the current turmoil over trade policies and kept growing in April, according to a Beacon Economics analysis of U.S. trade statistics newly released by the U.S. Census Bureau.
Foreign shipments by California businesses totaled $14.98 billion for the month, a nominal 6.5% gain over the $14.07 billion recorded one year earlier.
The state’s exports of manufactured goods in April were up 5.9% to $9.66 billion from $9.12 billion in April 2017. Exports of nonmanufactured goods (chiefly agricultural products and raw materials) surged 13.6% to $1.92 billion from $1.69 billion. Re-exports, meanwhile, grew by 4.3% to $3.4 billion from $3.26 billion. California accounted for 10.9% of the nation’s overall merchandise export trade in April.
California Import Growth Slows
The Census Bureau reports that California was the state-of-destination for 18.6% of all U.S. merchandise imports in April, with a value of $35.36 billion, 1.9% higher than the $34.71 billion in imported goods in April 2017. Manufactured imports totaled $31.16 billion, up 0.4% from $31.03 billion. Nonmanufactured imports were valued at $4.2 billion, 14.1% higher than the $3.68 billion recorded one year earlier.
As always, Beacon Economics cautions against reading too much into month-to-month fluctuations in state export statistics, especially when focusing on specific commodities or destinations. Significant variations can occur as the result of unusual developments or exceptional one-off trades and may not be indicative of underlying trends. For that reason, Beacon Economics compares the latest three months for which data are available (i.e., February–April) with the corresponding period in the preceding year.
Leading Export Commodities
California’s merchandise exports during the first quarter of the year totaled $45.56 billion, a nominal gain of 7.3% from the $42.46 billion during the same period in the previous year. Of the 13 categories of California exports that normally see shipments valued at more than $1 billion in the latest three-month period, all but one reported increases.
On the plus side, shipments of Computer & Electronic Products (computers and peripherals; communication, audio and video equipment; navigational controls; and electro-medical instruments) moved up by 3% to $10.88 billion from $10.56 billion. The state’s exports of Transportation Equipment (automobiles, trucks, trains, boats, airplanes, and their parts) edged up by 0.2% to $5.03 billion from $5.02 billion.
Exports of Non-Electrical Machinery (machinery for industrial, agricultural and construction uses as well as ventilation, heating, and air conditioning equipment) improved by 14.8% to $4.87 billion from $4.24 billion. Shipments of Miscellaneous Manufactured Commodities (a catchall category of merchandise ranging from medical equipment to sporting goods) increased by 13% to $3.8 billion from $3.36 billion.
Chemical exports (including pesticides and fertilizers; pharmaceutical products; paints and adhesives; soap and cleaning products; and raw plastics, resins, and rubber) gained 2% to $3.38 billion from $3.32 billion.
Agricultural exports rose 8.4% to $3.47 billion from $3.2 billion. Shipments abroad of Food & Kindred goods grew 11.9% to $2.37 billion from $2.12 billion. Exports of Electrical Equipment and Appliances increased 11.0% to $1.99 billion from $1.79 billion. Exports of Petroleum and Coal Products leaped 42.3% to $1.56 billion from $1.02 billion. Waste & Scrap exports roared ahead by 42.7% to $1.35 billion from $946 million. Exports of Fabricated Metal Products remained essentially unchanged at $1.07 billion. Shipments of Used or Second-hand Merchandise jumped by 30.5% to $1.04 billion from $798 million.
On the minus side, exports of Primary Metal Manufacturing products tumbled 37% to $1.06 million from $1.67 billion
Mexico stayed atop the list of California’s most important export destinations during the year’s first quarter. Shipments south of the border grew by a robust 19.8% to $7.47 billion from $6.23 billion. China took second place among the state’s largest export markets, with shipments increasing 11.8% to $4.52 billion from $4.04 billion. Canada came in third even though California’s exports north of the border grew by 10% to $4.27 billion from $3.88 billion. In fourth place was Japan, which imported $3.39 billion worth of California goods, a decline of 0.6% from $3.41 billion during the same period one year earlier. Exports to South Korea rose 16.4% to $2.87 billion from $2.46 billion. Hong Kong saw its California imports plummet by 29.3% to $2.48 billion from $3.51 billion one year ago.
Despite impressive growth in exports to China and South Korea, the state’s overall export trade with the economies of East Asia crawled ahead by just 0.8% to $16.78 billion from $16.64 billion. Meanwhile, California’s exports to the European Union were ahead by only 1.5% to $8.09 billion from $7.97 billion.
Underscoring the economic significance of the North American Free Trade Agreement, Mexico and Canada together accounted for 25.8% of California’s merchandise export trade in the latest three-month period, up from 23.7% in the same period one year ago. Exports to the two neighbors soared in value by a remarkable 16.1% in the latest three-month period over the same months last year.
Mode of Transport
The latest three-month period saw 47% of the state’s $45.56 billion merchandise export trade depart by air, while waterborne transport carried 30.6% of the outbound trade. The balance of the state’s exports moved overland.
The outlook for California in the near term is generally positive as underlying economic conditions remain disposed toward export growth. That said, major forecasting agencies have recently been revising global and national forecasts downward compared to earlier in the year. One impediment is a dollar that has rallied since mid-April, gaining less than 5% against a basket of currencies of major trading partners. The most recent indications for growth in the Eurozone are dimming, in part because of slowing output and in part because Italy’s new government includes avowed euro-skeptics. Debt issues also are re-emerging as a constraint on economic expansion across a range of developing nations.
For Beacon experts, what clouds the picture most is the unprecedented unpredictability of trade policy in the United States and abroad. President Donald Trump has opted to use tariffs on imported goods as a cudgel to compel the nation’s trading partners to abandon policies he regards as unfairly restrictive on U.S. exports. As a result, the United States is now engaged in increasingly nasty disputes with not only just about every important trading partner, but also with its most vital military allies.
In one of the latest developments, Mexico last week imposed new tariffs on U.S. products ranging from steel to pork and bourbon, retaliating against import duties on metals imposed by the Trump administration. Mexico’s retaliatory list also included 20% to 25% duties on types of cheeses and bourbon. Last year, California accounted for 27% of U.S. cheese exports to Mexico.
Staff Contact: Susanne T. Stirling
Friday was the deadline for bills to pass the house in which they were introduced. Only five job killer bills subject to the first house deadline have passed to the second house. A bill dealing with wage statement penalties was stopped on the Assembly Floor.
Job Killers in Second HouseMoving on to the second house are the following CalChamber-opposed job killer bills:
Held on Assembly Floor
AB 2613 (Reyes; D-Grand Terrace), which would have imposed another layer of Labor Code penalties for wage and hour violations in addition to the penalties already available under the Private Attorneys General Act (PAGA) and imposed personal liability onto employees who have no control over the actual payment of wages, was not brought up for a vote by the bill’s author.
CalChamber opposed this bill as a job killer because the provisions would have significantly increased litigation against California employers and limited their ability to invest in their workforce.
Policy committee hearings may resume on Monday, June 4.