By: Philip A. Toomey, Esq.

On Friday, June 29, the California Legislature passed AB2770 and forwarded the bill to the Governor for signature. This bill expands the Civil Code section 47(c) provisions exempting from claims of libel or slander certain types of communications.

Under the amended language, a current or former employer is permitted to answer, without malice, whether it would refuse to rehire an employee based solely upon its determination that the employee engaged in sexual harassment. The section does not require any investigation before making such a determination, or if an investigation is done, what reasonable standards the employer must follow. As currently written, all that is required is an allegation supported by some credible evidence, followed by a determination of ineligibility for rehire. The legislation is silent as to “who” may ask the question to which the employer “answers.” Under Leech Tishman’s analysis, any communication of the ineligibility determination is protected provided it is given “without malice.”

This legislation requires California employers to now intentionally avoid situations where an accusation of sexual harassment is made, and then to save time or costs the employer makes a decision that the at-will accused is not a “good fit” now, and never will be, and separates the employee without stating any reason for separation. If the employee moves to a subsequent job and a reference request is made, and the employer decides not to disclose the prior accusation (if supported by “credible evidence”), and then the former employee engages in inappropriate activity at the new employer that causes harm, the former employer may have liability for failing to fully disclose what it knew in response to the reference request. The former employer can no longer claim an investigation wasn’t conducted, was incomplete, or that really solid conclusions could not be made. The amended legislative language clearly requires none of these. In addition, the former employer cannot claim that it did not disclose this information based upon a fear it would be sued by the former employee, since this legislation excludes any claim based upon non-malicious communication.

Due to the potential that an accused might not be given fair opportunity to defend against the accusation, a number of business groups are lobbying the Governor to veto the legislation and return it to the Legislature for some investigation and determination guidance. The Governor’s office has not officially taken a position on this legislation. Nevertheless, Leech Tishman’s Employment Practice Group has followed the amendments, debates, public policy and political discussions occurring. Our attorneys believe that it is unlikely the Governor will veto the bill or that the Legislature will provide such guidance. If the Governor signs this legislation, which our attorneys believe is likely, it will be up to the courts through litigation decisions to determine what is “credible evidence” and whether an accused has any rights to a fair investigation before the privilege attaches. Such guidance will not be forthcoming for many years.

In the meantime, an employer should carefully evaluate exposure before deciding to disclose, or not disclose, an ineligibility decision based upon a sexual-harassment determination which is not supported by a fair, objective and well-documented investigation. In addition, if an employer has a policy to permit “resignation in lieu of investigation,” and then documents separation in an agreement providing ineligibility in exchange for non-disclosure, the policy should be reviewed carefully. This is even more true in light of other pending legislation exempting such settlements from standard confidentiality obligations. Finally, since requests for references may not be made for many years, any policy to disclose ineligibility for rehire should include permanent maintenance of a copy of the allegation and credible evidence provided, whatever investigation was done (including witness statements), and the basis of the determination. That is, at least until the courts provide better guidance.

Leech Tishman’s Employment Practice Group can help clients ensure compliance with California’s complex and technical employment laws and can assist clients with defending against civil or administrative actions.

If you have any questions regarding California’s unique employment laws or these employment law updates, please contact Philip Toomey. Phil serves as Leech Tishman’s West Coast Business & Employment Client Relations Partner and practices in the firm’s Employment, Corporate, Litigation and Real Estate Practice Groups. Phil is based in the Leech Tishman’s El Segundo, CA office. He can be reached at 424.738.4400 or ptoomey@leechtishman.com.

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Leech Tishman Fuscaldo & Lampl is a full-service law firm dedicated to assisting individuals, businesses, and institutions. Leech Tishman offers legal services in alternative dispute resolution, aviation & aerospace, bankruptcy & creditors’ rights, construction, corporate, employee benefits, employment, energy, environmental, estates & trusts, family law, government relations, immigration, insurance coverage & corporate risk mitigation, intellectual property, international legal matters, litigation, real estate, and taxation. Headquartered in Pittsburgh, PA, Leech Tishman also has offices in El Segundo, CA, Chicago, Los Angeles, New York, Sarasota and Wilmington, DE.