On October 8, 2023, California Governor Gavin Newsom signed into law Senate Bill (SB) 497, which makes it easier for employees to establish retaliation claims in California.

SB 497 (the Equal Pay and Anti-Retaliation Act) goes into effect on January 1, 2024. The new law amends California Labor Code Sections 98.6, 1102.5, and 1197.5 to create a rebuttable presumption of retaliation if an employer takes an adverse action against an employee within 90 days of the employee engaging in certain protected activity.

An employee must first establish a prima facie case of retaliation by demonstrating that: (1) the employee engaged in a protected activity; (2) the employer engaged in an adverse action against the employee (such as a discharge, demotion, threat of discharge or demotion, suspension, pay cut, or reduced hours); and (3) a causal nexus between the protected activity and adverse action. The burden then shifts to the employer to identify a legitimate, non-retaliatory reason for the action. Thereafter, the burden shifts back to the employee to show that the employer’s non-retaliatory reason was merely a pretext for retaliation.

Now, SB 497 makes it easier for employees to satisfy their initial burden if the adverse action occurs within 90 days of the employee engaging in protected activity. As an example, if an employee lodges a complaint against his supervisor, and within 90 days of lodging the complaint, is suspended, the employee will likely satisfy his initial burden of establishing a prima facie case of retaliation.

SB 497 further provides that, in addition to other remedies, all employers are liable for a civil penalty of $10,000 per employee per violation, to be awarded to the employee who was retaliated against. In assessing this penalty, the Labor Commissioner will consider the seriousness of the violation based on the evidence obtained during the course of the investigation.

With the passing of SB 497, California’s everchanging employment landscape shifts once again. Because SB 497 makes it easier for employees to allege that they have been retaliated against, employers should carefully review their policies and procedures on managing workplace complaints and disciplinary actions.