Sacramento State Capitol building on Capitol Way. Credit: Jason Doiy / The Recorder

Plaintiffs lawyers on Tuesday urged California lawmakers to bar arbitration and secret settlements in the workplace, arguing that closed-door dispositions to sexual misconduct complaints are thwarting the “#MeToo” movement.

The attorneys, testifying before a Senate committee reviewing harassment laws in the wake of recent Capitol scandals, said companies have adopted an array of policies to keep bad behavior under wraps even as the nation undergoes a reckoning over how women are treated at work.

“One good public verdict will do more to deter sexual harassment than 100 arbitrations,” said Cliff Palefsky, an employment law specialist at McGuinn, Hillsman & Palefsky in San Francisco.

“Even though Ellen Pao lost her case, the debate that it created changed so much in Silicon Valley,” Palefsky said of the former junior partner at venture firm Kleiner Perkins Caufield & Byers who sued her employer for gender discrimination. Fox News host “Gretchen Carlson had an arbitration clause that said everything about the case is private and they decided that they were going to file in court. It changed the world.”

Palefsky and the other lawyers criticized practices including confidential settlements, non-disparagement agreements, liability releases and threats of immigration enforcement.

Toni Jaramilla, a Los Angeles employment attorney who represented five women in a sexual harassment case against American Apparel, told the committee she had a client who was forced to sign new-hire paperwork agreeing to pay a $1 million penalty for disparaging the company or management.

“It makes it really difficult for us to find witnesses,” Jaramilla said. “Simply put, #MeToo witnesses are afraid.”

Legislative efforts to limit secret settlements or place new restrictions on mandatory arbitration have not fared well in recent years amid intense opposition from business groups. Last month a bill that would have barred confidential settlements from blocking the release of information about public health or safety hazards died in the Assembly. The California Chamber of Commerce cheered the bill's demise, saying in a February newsletter that it would have “leveraged … companies into costly settlements to avoid having to publicly disclose trade secret information.”

State lawmakers who want restrictions on workplace settlements and arbitration are trying again, citing the attention on their own Legislature, which has seen two Assembly members resign and two other legislators take a leave of absence amid sexual harassment allegations. Sen. Connie Leyva's bill, SB 820, would ban confidentiality of facts in a harassment settlement case unless the victim requests secrecy.

Sen. Hannah-Beth Jackson, D-Santa Barbara, said Tuesday she is preparing to introduce legislation related to sexual harassment complaints, although she did not offer specifics at the committee hearing.

 

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