CalChamber Asks Governor to Veto Bill Creating Costly New Protected Class of Employees

The California Chamber of Commerce has asked the Governor to veto a job killer bill that will be especially costly for small businesses to implement.

The bill, AB 524 (Wicks; D-Oakland), exposes employers to costly litigation under the Fair Employment and Housing Act (FEHA) by allowing an employee to assert that any adverse employment action was in relation to a new and broadly defined “family caregiver” status, which includes any employee who provides direct care to any person of their choosing, and creates a de facto accommodation requirement that will burden small businesses.

This new employment protection would encompass essentially every worker and create an automatic basis for an individual in that new classification to challenge any adverse employment action, opening up a floodgate of litigation.

Further, this new classification could be used to require employers, including small businesses, to accommodate all caregiving needs beyond what is already required under existing law or else they may face a discrimination claim, depending on how courts interpret the term “special” accommodation. Between litigation exposure and forced accommodations, AB 524 will increase the cost of doing business in California and the costs of goods and services.

Establishes a Broad Protected Class

AB 524 proposes to add any individual with “family caregiver status” as a new protected class under FEHA.  That term is extremely broad. It is defined to include any worker who “provides direct care” to a spouse, parent, sibling, grandparent, grandchild, domestic partner or designated person. An employee would be able to claim this status to care for a list of “family members” but also any person who is designated by the employee. This could include a neighbor or an employee’s child’s friend. Every employee could arguably fall into the category of a family caregiver. Proponents of AB 524 claim that adding family caregiver status to FEHA is a simply a “clarification” of existing laws, but that is not true. AB 524 is a significant expansion of FEHA and has been rejected by this Legislature for the last two years.

Because whether an employee provides direct care to another is a subjective determination, the employer has no ability to dispute an employee designating themselves as having family caregiver status. Any dispute would open the employer up to costly litigation. Further, adding this broad, new classification to the list under FEHA would limit an employer’s ability to enforce employment policies, including attendance policies. Any action taken by the employer could be challenged as discrimination based on “family caregiver status.” For example, even if the employee did not request time off as an accommodation and simply took time off, whenever they wanted, scheduled or unscheduled, the employer could not discipline or terminate the employee for the time off without risking potential litigation under FEHA for discrimination based on family caregiver status. This will significantly limit an employer’s ability to address discipline issues in the workplace, maintain stability, and eradicate any issues without costly litigation.

Exposes Employers to Costly Litigation

FEHA includes a private right of action for any alleged discrimination against a protected classification. Liability includes compensatory damages, injunctive relief, declaratory relief, punitive damages, and attorney’s fees.

A 2017 study by insurance provider Hiscox regarding the cost of employee lawsuits estimated that the cost for a small to mid-size employer to defend and settle a single plaintiff discrimination claim was approximately $160,000, which was a $35,000 increase from Hiscox’s study just two years earlier.

This amount, especially for a small employer, reflects the financial risk associated with defending a lawsuit under FEHA. In 2016, Hiscox found that U.S. companies had a 10.5% chance of having an employment charge filed against them. For California, that percentage was 56.5%.

Creates a De Facto Accommodation Requirement

Due to the threat of litigation and lack of clarity in the bill regarding “special” accommodation, employers will be forced to treat AB 524 as effectively requiring broad accommodation. This is especially true for small employers who do not have access to legal counsel or cannot afford to fight litigation and will end up paying a costly settlement.

There are many existing laws with parameters that provide employees time to act as a caregiver. Labor Code Section 230.8 provides 40 hours of leave for situations were a school or childcare center is unavailable. The California Family Rights Act (CFRA) provides up to 12 weeks of leave to care for a family member or other designated person of their choice. CFRA was broadened just this year to include “designated persons” (non-family members) in the list of people for whom the employee can take time off.

The Healthy Workplace Healthy Family Act and related “kin care” statutes also allow sick time to be used to care for someone else. Any employer who retaliates against an employee for using these leaves is liable for unlawful retaliation.

The CalChamber has pointed out that if the Legislature finds these leaves insufficient, rather than imposing new burdens on employers it should provide more flexible work options to workers by revising California’s overly rigid wage and hour laws that prohibit workplace flexibility.

The California Chamber of Commerce is the largest, broad-based business advocate to government in California, working at the state and federal levels to influence government actions affecting all California business. As a not-for-profit, we leverage our front-line knowledge of laws and regulations to provide affordable and easy-to-use compliance products and services.