Equal Pay and Anti-Retaliation Act Establishes Presumption of Retaliation

Effective January 1, 2024, SB 497, known as the Equal Pay and Anti-Retaliation Act (EPARA), established a rebuttable presumption of retaliation in favor of an employee if the employer takes “adverse employment action” against an employee within 90 days of the employee engaging in a protected activity covered by Labor Code sections 98.6, 1102.5 and 1197.5. The law also entitles a prevailing plaintiff to civil penalties for each violation.

EPARA allows employers to rebut the presumption of retaliation by identifying a legitimate, non-retaliatory reason for the adverse employment action. If the employer establishes a legitimate, non-retaliatory motive, the employee must offer evidence to establish that the employer's non-retaliatory reason was pretextual.

So, what constitutes an “adverse employment action” in practical terms? California’s Civil Jury Instructions (CACI 2509) explain it this way:

Adverse employment actions are not limited to ultimate actions such as termination or demotion. There is an adverse employment action if an employer has taken an action or engaged in a course or pattern of conduct that, taken as a whole, materially and adversely affected the terms, conditions, or privileges of the employee’s employment. An adverse employment action includes conduct that is reasonably likely to impair a reasonable employee’s job performance or prospects for advancement or promotion. However, minor or trivial actions or conduct that is not reasonably likely to do more than anger or upset an employee cannot constitute an adverse employment action.

As far as a “protected activity,” the California Labor Commissioner’s Office describes it as “the engaging in or exercising of a right that is protected by law.” Some examples of "protected activity" under the Labor Code include (1) Filing or threatening to file a claim or complaint with the Labor Commissioner; (2) Taking time off from work to serve on a jury or appear as a witness in court; (3) Disclosing or discussing your wages; (4) Using or attempting to use sick leave to attend to the illness of a child, parent, spouse, domestic partner, or child of the domestic partner of the employee; (5) Engaging in political activity of your choice; and (6) For complaining about safety or health conditions or practices.

California law already has some strong provisions, including attorney’s fees, for the violation of California’s wage laws, discrimination and/or taking retaliatory actions. This law adds an additional layer of protection with the public policy rationale from the legislators who supported the bill that workers who are facing wage issues or discrimination already are under-reporting and that shifting the burden is a reasonable response to encourage workers whose employment rights are being negatively affected to speak up about it.

The risk with a presumption, however, is somewhat broader than protecting legitimate claims. A savvy underperforming employee who is aware of the new law and anticipates an upcoming adverse employment action can now try to preempt the adverse employment action. By making a baseless assertion involving a protected activity, an employee could dissuade an employer from taking needed action to deal with the employee’s employment issues. The new law will also make summary judgment harder for employers to obtain in California, because the presumption potentially creates its own material dispute of fact.

Time will tell how much the new statutory presumption will really impact employment litigation and complaints to the Labor Commissioner, but employers should consider additional measures to document employee performance issues as early as possible, as well as ensuring that supervisors and HR personnel are aware of the great importance of such documentation to be able to address legitimate performance issues.