New employer liability bill emerges

By CMTA Staff

Capitol Update, Aug. 17, 2007 Share this on FacebookTweet thisEmail this to a friend

Days before the Assembly adjourned for their summer recess, Assemblymember Dave Jones (D- Sacramento) amended his AB 437, which now effectively eliminates the statutes of limitation for lawsuits under the Fair Employment and Housing Act (FEHA) and the labor code.

The crux of AB 437 is to allow the statute of limitations for any type of employment discrimination lawsuit to run as long as an employee's pay or benefits is "affected" by the decision. The term "affected" would apply each time an employee is paid, following the employer's decision.

This is a drastic change in law.  No California statute or case law permits a catch-all rule based on the repeated issuance of paychecks. Basically, AB 437 would allow pay, compensation, or benefits to become the threshold for keeping the statute of limitations running.

Imagine if an employee is denied a promotion, pay raise, or position and, as a result, the accompanying pay and benefits – that employee's time for challenging the employer's decision under AB 437 would not expire as long as that employee remained on the payroll. Applying such a running statute of limitations to retired employees would open the doors for legal challenges from that employee as long as they were receiving retirement benefits.

It is more than likely that if AB 437 were enacted, courts and employers would see claims that were previously considered stale – claims where evidence is lost, memories faded, or witnesses are no longer available. Additionally, there is nothing in AB 437 that would limit it to prospective claims.  This change in law would invite abuse of California's employment laws and increase the frequency of frivolous lawsuits, something the state's legal climate suffers from already.

Unfortunately, due to the late "gut and amend" of this bill, it’s already awaiting a vote on the Senate Floor.

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