New Supreme Court Ruling Further Protects California Whistleblowers

Posted by Kent F. LowryMay 24, 2023

California Labor Code § 1102.5 prohibits employers from retaliating against employees who disclose information concerning suspected violations of the law, whether such a disclosure is made to the employer itself or to a government or law enforcement agency.

In a recently-decided case, the California Supreme Court held that an employee had engaged in protected whistleblower activity when she complained to her employer about unpaid wages. The employee, a bartender at a night club, complained to the club's owner that she had not been paid for three shifts recently worked. In response, the club's owner fired her, threatened to report her to immigration authorities, and told her never to come back to the club. The terminated employee complained to the Labor Commissioner, which filed suit against the employer after a failed mediation.

The issue in the case was not whether the club owner's response to his employee's complaint violated the Labor Code—it was clearly retaliatory. Rather, the issue was whether the employee's complaint was a “disclosure” that constituted protected whistleblower activity. Before this case, two decisions of the Court of Appeal had arrived at different definitions of what kind of information was sufficient to be considered a “disclosure.” One court said that to be a disclosure, the information disclosed must have been previously hidden or unknown to the employer. The other court said that the protections of the whistleblower law were not limited to the person who “first reported” a suspected violation. In other words, protection could still be afforded in cases where the employer already knew of a suspected violation by virtue of a previous report from another employee. To hold otherwise would discourage employees from reporting suspected violations for fear that someone else had already done so.  

In this case, the trial court ruled in favor of the employer. The Court of Appeal upheld the decision, reasoning that the club's owner knew of his own wrongdoing in not paying his own employee, so the complaining employee had not revealed hidden or unknown information to her employer. Thus, there had been no disclosure, an element of a claim under § 1102.5(b).  

The Supreme Court often takes cases involving issues that have been decided differently by different Courts of Appeal. Such was the case here. After a lengthy analysis of the statute, including its legislative history; of other California statutes dealing with disclosures; and also of some federal case and statutory law, the Supreme Court resolved the split in authority by deciding that its interpretation of the law best comported with the law's purpose, holding that “a protected disclosure under section 1102.5(b) encompasses reports or complaints of a violation made to an employer or agency even if the recipient already knows of the violation.”

California employers will no doubt disagree with and dislike the decision. But while the decision was an employee-friendly result, a decision in favor of the employer would have enabled the employer to not only get away with egregious conduct (firing the employee and threatening to report her to immigration authorities) but would also have permitted the employer to avoid paying the employee altogether for wages legally earned, a completely unfair result. Employers must follow the law, too, and must be held accountable when they break it.

The case is The People ex rel. Lilia Garcia-Brower, as Labor Commissioner, etc. v. Kolla's, Inc., decided on May 22, 2023. The full opinion can be found here.