Information about California Laws Regarding Employee Performance Evaluations

Introduction to California Laws on Performance Evaluations

Employee performance evaluations provide a framework within which employers can support growth and improvement, communicate organizational vision and objectives, and define expectations. As this information filters down through all levels of an organization, employees will have the opportunity to perform at a higher level and contribute more effectively to the mission of their employers. This article describes historical and recent developments in California performance evaluation laws.
In California, public sector employers are required to hold regular performance evaluations for employees holding regular positions. The relevant statute governing the performance evaluation process for the public sector is Education Code Section 44050. This Code Section requires governing bodies to conduct a performance evaluation for school district employees holding regular positions at least one time each year. The performance evaluation must be in writing and include a rating by the evaluator. Education Code Section 44050 further provides that a copy of the performance evaluation shall be placed in the personnel file of the employee. The Education Code does not set forth specific minimum requirements for the content of performance evaluations. Rather, the governing body is allowed discretion to evaluate the performance of its employees and the performance evaluations must contain one of three evaluation statements: (a) Meets or Exceeds Standards; (b) Meets Standards; or (c) Improvement Necessary.
The County Civil Service Commission has adopted Civil Service Rules which govern a uniform system for the merit supervision of County employees. Among other things, these Rules have established requirements with respect to performance evaluations. Pursuant to Civil Service Rule 9.14, County appointing authorities and department heads shall establish written standards of performance for positions in their respective departments. These standards are designed to form the basis for effective performance evaluations conducted by those appointing authorities and departments. Civil Service Rule 9.17 requires the County Human Resources Director or designee to instruct department heads on the procedures for evaluating the performance of employees who hold regular positions. Further , Civil Service Rule 9.19 directs appointing authorities and department heads to develop written performance ratings for County employees who hold regular positions at least annually. Civil Service Rule 9.20 sets forth the minimum performance ratings that should be given to each category of employees. These ratings are: (a) Does Not Meet Standards for Unsatisfactory Performance; (b) Meets or Exceeds Standards for Commendable Performance; (c) Meets Standards for Acceptable Performance; and (d) Does Not Meet Standards for Standard Performance. Further requirements include that a record of service for each employee who holds a regular position must be retained in the personnel record of the employee.
For employees of counties with a charter form of government, Charter Rule 27 provides that performance evaluations are required for "new employees" and "regular employees" who have less than six months of continuous service as of the date of the performance evaluation. Charter Rule 27 further requires sunshine of performance evaluation standards, rating factors and methods used to rate employees to union leadership.
If an employee is dissatisfied with a written performance evaluation, the employee may appeal to the City Controller within thirty (30) days of receiving performance evaluation. This provision codifies the appeal process set forth in policies approved pursuant to City Charter Section 195.
Public Safety Officers Bill of Rights ("POBRA")
When applicable, POBRA sets forth various rights afforded to public safety officers during internal investigations. Among other things, POBRA extends various rights to peace officers who are the subject of complaints, including the right to representation during an interrogation or interview. While this right is not typically extended in the context of performance evaluations, POBRA provides that if the "interview" of the public safety officer is regarding an internal investigation, then the public safety officer has the right to representation. Because public safety personnel may also be subject to internal investigations, employers should be aware of potential POBRA implications when granting requests to meet for a performance evaluation.

Legal Requirements for Employee Evaluations

In terms of documenting the evaluation, California employers must ensure that they are not setting themselves up for liability. For example, although employees have no right to review an employer’s performance notes, Gurman v. Metro-Goldwyn-Mayer, Inc., 75 Cal.App.4th 1049, 1066 (1999), clarifications in existing case law stemming from the Defend Trade Secrets Act of 2016 (DTSA), Pub. L. No. 114-153, 130 Stat. 376 (2016), have created the need to revise employer policies on the handling of such records. Because the DTSA expands employers’ rights to protect trade secrets and thus may require the disclosure of such trade secrets in performance evaluations, employers must consider their potential liability for such disclosure when drafting or revising their policies. Specifically, the DTSA provides immunity for "disclosure of a trade secret that (i) is made in confidence to a federal, State, or local government official, either directly or indirectly, or to an attorney or as part of a court filing"; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if the filing is made under seal." Employers must also be careful to limit the disclosure of protected information to properly designated personnel. For example, even though California Government Code section 6254(c) has created some leeway in terms of public access to job performance evaluation records, trial courts have recognized the potential chilling effect that making employee job performance evaluations available to the public can have. Taylor v. District Attorney’s Office, 210 Cal.App.4th 228, 238 (2012). Of course, public access should also be limited to the extent allowed by state and federal regulations, such as the Family Educational Rights and Privacy Act. See, e.g., 20 U.S.C. § 1232g(b)(1) (requiring schools to give parents the opportunity to inspect educational records, which includes student-held records).
To the extent that the evaluation involves a public school teacher, both California Education Code and the federal Family Educational Rights and Privacy Act impose additional limits on the disclosure of information contained in evaluation records. Additionally, in order to ensure their own legal protections, evaluators must take certain procedural steps, such as conducting job performance evaluations during a specified period of time after evaluating the employee’s work performance, issuing an evaluation in sufficient time to allow employees to rebut any negative statements, including the employee’s comments within the evaluation, and, in certain circumstances, submitting such records to the employee’s exclusive representative, before placing them in the employee’s personnel record. Cal. Educ. Code §§ 44664, 44665.

Legal Rights and Protections for Employees

Employees are protected by a myriad of anti-discrimination and related laws. Gender, race, sexual orientation, national origin, disability, and age are among the many classes afforded these anti-discrimination protections in the workplace. These laws extend to the employee evaluation or review process as well. Employers may not allow their discrimination against an employee to influence and affect the outcome of their performance evaluations of that employee. Nor may they be allowed to take other unlawful employment actions against employees with prejudicial intent or based on other unlawful considerations.
So, it’s important to be aware of any legal protections you may have, especially if you feel that you’re being unfairly or illegally discriminated against in any way during this process. While, there are many legal protections that cover employees today, whether you are a manager, executive, or a non-exempt employee, there are also some things that you will need to consider.
Any retaliatory actions against employees that complain about their perceived unfair treatment or discrimination is itself prohibited by law. And, if those complaints are made in good faith, any employee who does take part in any of these processes and procedures is also protected. Essentially, that means that you can’t be unfairly and/or illegally punished for speaking up if you think you are being discriminated against at work.

Recommendations for Compliance

Employers have the following obligations under California law that are designed to help bring fairness and transparency to performance evaluations:

Performance goals must be critical to the performance of the entire organization.
Performance goals must be reasonable relative to the employees’ position in the organization.
Employees’ performance must be determined using adequate and reasonable measures.
The final evaluation must be based on the previously agreed-upon performance goals.
Employers must communicate any change to the employees’ performance goals as soon as possible.
Employers must give opportunities for employees to adjust to any change in performance evaluation rules before having performance evaluated.
Employers should have a management review process to ensure fair and consistent application of all performance evaluation standards.

To ensure compliance with California’s performance evaluation standards, employers should adopt the following best practices:

Train managers responsible for conducting performance reviews about the purpose behind employee performance evaluations and how to communicate performance goals to their direct reports.
Establish clear procedures for reviewing and assessing employee performance, including what constitutes an adequate and reasonable measure for purposes of assessing performance by level, grade, or classification. When determining how to effectively communicate to employees about performance assessments, businesses should also consider whether they want to institute a formal performance evaluation schedule (i.e., annual evaluations) or instead have an ongoing, "as needed" system for communicating to employees about their performance and areas to improve.
Ensure that all employees are held to the same standard when it comes to evaluating performance, regardless of their classification (e.g., exempt vs. non-exempt) or employment status (e.g., full-time vs. part-time).
Adopt regular check-ins where business leaders provide employees with constructive feedback on their work, answer questions, and provide guidance on how to improve.
Document performance evaluations consistently to reflect a fair rating for the individual being evaluated.
Create clear internal communication standards about how to track, review, and revise performance objectives before notifying employees of the same.
Establish a system for fixing performance goals for both the organization and for individual employees and departments.
Consider collecting anonymous feedback from employees on their performance evaluations and their managers’ performance evaluations, specifically asking for comments about whether they are communicated effectively and clearly to all employees within the organization.

Consequences for Non-Compliance

Failure to comply with the employee performance evaluation laws can result in significant consequences for employers. First, while attorneys’ fee awards cannot turn an otherwise inconsequential claim into an allegedly large one, the threat that a plaintiff could recover his or her attorney’s fees may deter some employers from even litigating what they view as a minor claim. Second, an employer found liable under Labor Code Section 1198.5 will also have to pay the plaintiff’s lost wages that the plaintiff would have received if the employer had complied with the law. Additionally, under Labor Code section 1197.5(k) , an employer is liable for attorney’s fees and costs in bringing a suit for a violation of the unpaid wage statement statute (Labor Code section 226). Even a prevailing employer could face liability for an employee’s claim or counterclaim. (E.g., an employer is liable to a prevailing employee for attorney’s fees on his or her claim). Finally, the DLSE is empowered to enforce the statutes pertaining to employment records. (See Labor Code Section 2692.) For example, the DLSE could assess penalties for multiple violations of the employee records provisions of Labor Code section 432 for a group of employees in the same amount and for each type of violation, under Labor Code section 1175. The consequence could be an astronomical penalty for a large-employer who has violated the statute many times.

Recent and Upcoming Changes to the Law and New Cases

In Vargas v. Santa Clara County (2014), the California Court of Appeal held that a statement in a non-adverse performance evaluation "could constitute an actionable adverse employment action under FEHA" where the employer’s intent in including the challenged statements "was to discriminate or harass Vargas, could have reasonably been found by a jury to have had this effect, or Vargas could reasonably have trusted that the retention of the challenged statements could have an impact on subsequent evaluations." The Vargas court therefore reversed summary judgment for the employer, finding that the "factual context" surrounding Vargas’ employment evaluation evidence of discrimination by the employer was sufficient for a jury to conclude that the challenged statements were likely added because Vargas complained about her supervisor’s sexual advances.
In Duran v. U.S. Bank National Association, the California Supreme Court confirmed that although a district court may not require periodic performance evaluations, it may still order an employer to establish a formulaic performance appraisal process if the court determines that such practice is necessary to prevent an employer from using subjective evaluations to evaluate and terminate employees. The decision also confirmed that the trial court was justified in ordering periodic written performance appraisals that contained specific objectives for performance.
In Taylor v. Valverde, the California Court of Appeal also recently confirmed that punitive damages may not be awarded pursuant to Labor Code section 98.6 (protecting employee whistle blower rights) to the extent any such punitive damages arise from the employer’s provision of negative or unsatisfactory performance evaluations, because such damages are not expressly provided for in Labor Code section 98.6.
Finally, in Vargas v. City of Los Angeles, the California Court of Appeal held that an employee’s duty to exhaust administrative remedies includes exhausting the administrative remedies available under a multistep grievance process where the grievance procedure is formally established in the applicable collective bargaining agreement.

How Performance Evaluations Affect the Employment Relationship

The purpose of a performance evaluation is to provide the employer with a means to objectively assess an employee’s job performance – a linchpin in the employee/employer relationship. If an employee is performing well, he/she may be rewarded with a raise and a promotion. On the other hand, poor performances can be the perfect excuse for a demotion or termination.
However, as previously discussed, under California law, performance evaluations can only be used for "bona fide business reasons." In general, they can be used to demonstrate that the employer has met its burden to prove it terminated the employee for a nondiscriminatory reason, rather than for a discriminatory reason disguised as a non-discriminatory reason.
This means, employers may be inclined to provide performance evaluations to only those employees who are suffering from bad performance in order to "document" any disciplinary actions they may take. Such a strategy, however, is ill-advised. Performance evaluations can be advantageous to both the employer and the employee. For the employer, the performance evaluation is an opportunity to foster a positive work environment (e.g., by providing constructive feedback) to help the employee succeed. For the employee, it informs him/her what is expected and shows how he/she can improve. Therefore, it is in both parties’ best interests that performance evaluations are provided on a consistent basis. If provided on a sporadic basis, then as a general rule, an employer’s use of a performance evaluation is more likely to be determined as pretext for discrimination.
The timing of an employee’s performance evaluation is also important. If an employee receives a poor performance evaluation just before an adverse employment action, a reasonable trier of fact may conclude that the evaluation was "tainted" by discrimination. As such, the employer’s performance evaluation will likely be deemed inadmissible for the purpose of showing that the employer had a legitimate, nondiscriminatory reason for its adverse employment action.