With the end of the 2018 California legislative session in Sacramento, a number of bills were signed by Governor Jerry Brown. Many of these will impact businesses and corporations in California.
The governor was presented with 183 bills last month and of those, there were a handful that he signed that will be of immediate concern for California businesses. A number of others that were vetoed instead will likely go back to the state legislature and could be presented once again to a new governor in a year.
Net Neutrality Rules for California
Regulation of the Internet and the concept of net neutrality rules has been a subject of debate for years. The Federal Communications Commission’s (FCC) repealed federal regulations enacted during the Obama administration that prohibited internet service providers from engaging in blocking, throttling or discriminating against online traffic.
This prompted states to step in and attempt to create legislation of their own to fill what was seen as a void in protections from actions by ISPs. With the signing of SB 822, California currently has the strongest net neutrality rules in the nation.
According an article in the Mercury News,
California’s bill, written by State Sen. Scott Wiener, D-San Francisco, had been hard-fought by ISPs, which argued along the way that it would be hard for them to have to comply with state-by-state regulations. The bill had a rough road in the state Legislature, where at one point it was watered down by one committee before consumer protections were restored to the version that eventually passed.
However, the celebrating by the bill's supporters and sponsors was short-lived as the federal government filed suit a little over an hour after the signing of the bill was announced.
U.S. Attorney General Jeff Sessions issued a statement announcing the lawsuit that was filed in U.S. District Court in the Eastern District of California on September 9th.
“Once again the California legislature has enacted an extreme and illegal state law attempting to frustrate federal policy,”
Gender Equality on Boards of Directors
The governor signed SB 826 which will require that public companies with headquarters in California to have at least one female director by the end of 2019. In addition, the new law will require that firms include two women for five-board members and three women for boards of six or more members, by 2021.
California corporations that fail to comply can be fined.
However, the San Francisco Chronicle noted that this could be litigated against soon,
But some legal experts say the measure violates the federal and state constitutions, by in effect requiring companies to discriminate against men wanting to serve on boards. It also, they say, compels firms to prioritize gender over other aspects of diversity such as race and ethnicity.
In addition, another limiting factor for any sweeping changes with this law is the fact that many California companies are actually incorporated in other states, not in California. Many firms, in fact, are incorporated in Delaware, due to the state’s business-friendly laws.
This is significant since federal law makes it clear that corporations are subject to rules concerning their internal affairs in the state where they are incorporated, regardless of which states they are actually headquartered.
Workplace Harassment and Sexual MisconductA significant number of bills signed by Governor Brown last month are intended to prevent workplace harassment as well as helping of sexual misconduct victims obtain justice.
The Sacramento Bee reported that some of the key bills Governor Brown signed were:
▪ Senate Bill 820, by Sen. Connie Leyva, D-Chino, which prohibits secret settlements and non-disclosure agreements in sexual harassment cases. While a victim could choose to keep his or her name private, the perpetrator’s identity cannot be confidential. “For decades, secret settlements have been used by wealthy and well-connected perpetrators to offend repeatedly with no public accountability,” Leyva said in a statement. “This critical legislation will empower victims and offer them the opportunity to finally say #TimesUp to those that have hurt them.”
▪ Senate Bill 1300, by Sen. Hannah-Beth Jackson, D-Santa Barbara, which forbids companies from requiring their workers to sign releases of liability as a condition of continued employment or in exchange for a bonus. “California is stating clearly that we believe and support victims,” Jackson said in a statement.
▪ Senate Bill 1343, by Sen. Holly Mitchell, D-Los Angeles, which expands a biannual sexual harassment training mandate to nearly all California employees.
Employers and managers should already be taking steps to ensure compliance as the new labor laws that were signed will take effect on January 1, 2019.
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