Cal-Peculiarities: How California Employment Law is Different 2022 Edition

©2022 Seyfarth Shaw LLP  www.seyfarth.com 2022 Cal-Peculiarities | 61 3.5.1 Labor Code § 1102.5—general whistleblower statute For many years, Section 1102.5 was a straightforward whistleblower protection statute. It provided that California employers must not discipline an employee for disclosing information to a governmental or law enforcement agency with a good-faith belief that the information evidenced noncompliance with state or federal law . 27 B ut judicial interpretation and statutory amendments have expanded the scope of this prohibition in various directions. Protected activity now includes reports (1) about violations of local as well as state and federal law, (2) that involve only co-worker or third-party wrongdoing , 28 ( 3) regardless of whether disclosing the information is simply part of the employee’s job , 29 a nd (4) that went to the employer rather than to the government . 30 The Court of Appeal has held that a sheriff’s deputy was protected by Section 1102.5 even though he was not the first employee who had reported the alleged unlawful conduct and thus was not really the one who “disclosed” i t. 31 Section 1102.5 also prevents employers from taking retaliatory action based upon a belief that “the employee disclosed or may disclose” protected information 32 The Court of Appeal has clarified that Section 1102.5 forbids employers to terminate “perceived whistleblowers,” even if in fact the employee never reported a violatio n. 33 And plaintiffs need not exhaust administrative remedies before suing under this statute . 34 S ection 1102.5 also prohibits retaliation against employees for being a family member of an employee who has, or who is perceived to have, engaged in protected activities under these provisions . 35 U pon proof that the employee’s protected activity was “a contributing factor in the alleged prohibited action,” the employer must prove by “clear and convincing evidence that the alleged action would have occurred for legitimate, independent reasons even if the employee had not engaged in [protected] activities. ” 36 The Ninth Circuit held that a state administrative agency’s ruling against an employee did not preclude the employee’s Section 1102.5 retaliation claim in court. A county civil service commission had upheld the plaintiff’s firing, but the Ninth Circuit concluded that although administrative decisions typically have preclusive effect if they have a sufficiently “judicial character” and the elements of claim or issue preclusion are satisfied, the California Legislature intended to create “distinct fora and procedures” for retaliation claims, separate and apart from administrative procedures. The administrative decision thus did not preclude the Section 1102.5 claim, even though the administrative procedure’s “sufficiently judicial character” and the plaintiff’s “adequate opportunity to litigate” meant that the administrative decision did preclude the employee’s Section 1983 claim for denial of federal constitutional rights . 37 Violation of Section 1102.5 makes the employer liable not only for damages but for a civil penalty of $10,000 . 38 In 2020, the Legislature made Section 1102.5 more potent yet by empowering successful plaintiffs to recover their attorney fees . 39 T he Legislature was not convinced by the criticism that authorizing attorney fees for retaliation claims would incentivize employees to choose litigation over resolution. In January 2022, in Lawson v. PPG Architectural Finishes, Inc ., the California Supreme Court clarified that Section 1102.5 claims are evaluated under the framework delineated in Labor Code section 1102.6, rather than under the U.S. Supreme Court’s 1973 burden-shifting framework outlined in McDonnell Douglas Corp. v. Green . 40 Lawson makes it more difficult for employers to defend Section 1102.5 claims. Lawson holds that the plaintiff makes out a prima facie case of liability simply by producing evidence that retaliation was a contributing factor in the employee’s termination, demotion, or other adverse action, per Labor Code section 1102.6 . 41 O nce the plaintiff meets this burden, the burden shifts to the employer defendant to establish, by clear and convincing evidence, that it would have taken the same action “for legitimate, independent reasons. ” 42 Under the previously applicable McDonnell Douglas test, the ultimate burden would have been on the plaintiff “to demonstrate that the employer’s proffered legitimate reason is a pretext for discrimination or retaliation. ” 43 Without this final burden-shifting back to the plaintiff, the new Lawson standard puts additional pressure on the employer defendant to establish, by clear