A California Chamber of Commerce job killer bill that will encourage lawsuits against businesses and make hiring more burdensome will be heard in the Senate Judiciary Committee on Tuesday.
The bill, SB 1162 (Limón; D-Goleta), encourages litigation against employers based on the publication of broad, unreliable data collected by the state. The proposal also undermines employers’ ability to hire, imposes administrative and record keeping requirements that are impossible to implement, and subjects employers to a private right of action and penalties under the Private Attorneys General Act (PAGA).
In a letter submitted to Senate Judiciary members this week, the CalChamber explained why SB 1162 would harm California businesses. The CalChamber pointed out that:
Similar Bill Vetoed by Gov. Brown
Similar to what is proposed in SB 1162, a 2017 bill, AB 1209 (Lorena Gonzalez; D-San Diego), would have required the publication of data from employers on mean wage differentials between male and female employees. In a Sacramento Business Journal article that year, a member of the plaintiff’s bar stated: “By posting this on the Secretary of State’s website, the government is basically giving us (plaintiff lawyers) the data we need to go in there and hammer companies.”
Governor Edmund G. Brown Jr. vetoed AB 1209 due to this exact concern, stating in his veto letter: “…it is unclear that the bill as written, given its ambiguous wording, will provide data that will meaningfully contribute to efforts to close the gender wage gap. Indeed, I am worried that this ambiguity could be exploited to encourage more litigation than pay equity.”
Bill Provisions Unworkable
Disclosing Pay Scales: Section two of SB 1162 contains several provisions that are difficult if not impossible to implement. First, proposed section 432.3(c)(2) requires third parties to provide the pay scale to applicants that view the job posting. It then holds the employer liable under a statutory private right of action and PAGA if the third party fails to do this regardless of the fact that it is impossible to monitor the third party at all times.
Additionally, that subsection requires the third party to provide the pay scale to applicants who “view the job posting.” It is unclear at what point the third party must disclose the pay scale and how a third party can track who is viewing certain advertisements. Again, any error here by the third party will lead to liability for the employer.
Recordkeeping: Proposed section 432.3(c)(1) requires employers to maintain a job description for every single employee. While many employers have general written job descriptions for various positions, this is not presently a legal requirement. Even within the same job title, it is common for employees to perform different duties and for those duties to change over time. It would be a tremendous burden to expect employers to develop and update a unique job description for every single employee, especially for small businesses that may not have a dedicated human resources department or even for larger businesses that have tens of thousands of employees. Any failure to complete and update these job descriptions would mean that the employer is presumed to have violated the law under proposed section 432.3(d)(5), which is nonsensical.
“Opportunities for Promotion”: SB 1162 requires businesses of all sizes to post “any opportunity for promotion” and the accompanying pay scale for all current employees prior to making a promotion decision. “Opportunity for promotion” is defined to include an actual or anticipated vacancy. Not only is this a significant administrative burden, but it also would require a company to publicly expose an employee who has put in their notice or wishes to resign without other employees knowing.
Any error in the notification process, even a good faith one, subjects employers to a private right of action and penalties under PAGA.
Finally, at its core, this provision eliminates employers’ flexibility regarding hiring. A business of any size, small or large, that wants to move quickly in making a strategic hire must delay that process and opens itself to litigation for even the slightest error in how it disseminates notice of a vacancy.
Private Right of Action, PAGA
Sections two and three of SB 1162 each contain a private right of action and suffer from flaws regarding implementation. Because they amend or create new sections of the Labor Code, they also expose employers to lawsuits under PAGA. It is unfair to penalize employers for requirements that are impossible to follow.
More significantly, one of the biggest issues with the overreach of PAGA is that a plaintiff need not show harm to bring a PAGA claim. This means that any employee, even one who was not interested in the open job position, could bring a claim under PAGA for a violation of these sections.