California Supreme Court: Section 1102.5(b) of the California Labor Code Prohibits Whistleblower Retaliation

The Supreme Court of California issue an opinion on May 22nd, 2023, stating plainly at the start of the opinion that:

The Labor Code prohibits employers from retaliating against employees for “disclosing information” concerning suspected violations of the law either internally or to government or law enforcement agencies.  (Lab. Code, § 1102.5, subd. (b) (section 1102.5(b)); all undesignated statutory references are to the Labor Code.)  Violators are subject to various sanctions, including civil penalties remitted to the Division of Labor Standards Enforcement (DLSE) of the Department of Industrial Relations.

The facts of the case centered around an employee reporting wrongdoing to their employer, not the government or a government agency. The Court of Appeal in a split-decision previously held that wrongdoing reported to an employer participating in the wrongdoing was not a protected activity. The Supreme Court of California’s opinion instead holds that reporting a wrongdoing to an employer who is already aware of the violation is still a protected action prohibiting retaliation.

The Whistleblower Case Facts at Issue

The Supreme Court opinion summarized the alleged actions as such:

In this case, employee A.C.R. complained to the owner of the nightclub where she worked about unpaid wages she was owed.  In response, her employer fired her, threatened to report her to immigration authorities, and told her never to return to the nightclub.

It is undisputed that the employer’s conduct was prohibited by the Labor Code.  The question here is whether a report of unlawful activities made to an employer or agency that already knew about the violation is a protected “disclosure” within the meaning of section 1102.5(b).

Once the California Division of Labor Standards Enforcement (DLSE) had determined that threats and termination violated the law, the DLSE proposed remedies including lost wages to the worker. Once the defendant’s declined to accept the proposed remedies, the Labor Commissioner sued over the violations.

Retaliation Against Whistleblowers is Illegal Activity

Section 1102.5 was revised in 1984 to add protection for employees reporting wrongdoing. From the Section, as quoted in the Supreme Court opinion:

“The intent of this measure is to afford employees some minimum protection against retribution by an employer when the employee reports crimes or violations of the law occurring at his or her place of employment.”

Section 1102.5(b) was amended in 2003 after Enron and WorldCom scandals, adding $10,000 civil penalties for violations by corporations and LLCs.

Section 1102.5(e) was added in 2003 to include language that disclosures to public employers by public employees is protected disclosure.

Section 1102.5(b) was again amended in 2013 to include protections when disclosures are made to “a person with authority over the employee”, such as the employer of a disclosing employee.  The Sections currently includes this language:

An employer, or any person acting on behalf of the employer, shall not retaliate against an employee for disclosing information, or because the employer believes that the employee disclosed or may disclose information, to a government or law enforcement agency, to a person with authority over the employee or another employee who has the authority to investigate, discover, or correct the violation or noncompliance

A PDF version of the current California Whistleblower Notice can be viewed online here.

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Learn more about whistleblower claims. Consult with a Schneider Wallace employment lawyer at our Northern California, Southern California, Texas, North Carolina or Puerto Rico offices. Our lawyers regularly appear before state and federal administrative agencies and courts to litigate issues concerning whistleblowers and represent whistleblowers in active litigations.

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