California Supreme Court Expands the Reach of State Whistleblower Protection Law

On May 22, 2023, the California Supreme Court released an opinion finding that California’s whistleblower protection statute (Labor Code section 1102.5(b)) applies when an employee “blows the whistle” on activity that is already known about by the entity on the receiving end of the disclosure. Employers should be aware of this new, expansive reading of the law and ensure compliance in potential whistleblower situations.

Facts

A.C.R. was a bartender at an Orange County nightclub. In 2014, A.C.R. complained to the club’s owner that she had not been properly paid for her three prior shifts. The owner responded by threatening to report A.C.R. to immigration authorities, firing her, and telling her never to return to the club.

A.C.R. filed a complaint against the club and its owner with the Division of Labor Standards Enforcement (the “DLSE”). After the club and its owner refused to accept the DLSE’s proposed remedies, the Labor Commissioner sued them for violations of Labor Code section 1102.5(b).

The trial court ruled against the Labor Commissioner on the whistleblower claim, finding that A.C.R.’s disclosure that she wasn’t paid to her own employer did not fall under the protections of Labor Code section 1102.5(b). The Labor Commissioner appealed.

The Court of Appeal disagreed with the trial court’s reasoning but came to the same conclusion. The Court of Appeal reasoned that the term “disclose” as used in the statute “requires the revelation of something new, or at least believed by the discloser to be new,” and because the club’s owner “was at least aware of – if not responsible for – the nonpayment of wages,” A.C.R. did not “disclose” such information under the statute. Under the Court of Appeal’s reading of the statute, an employee cannot blow the whistle or “disclose” unlawful activity if the entity on the receiving end of the disclosure already knows the information.

The California Supreme Court granted review to determine whether Labor Code section 1102.5(b) does or does not protect an employee from retaliation for disclosing unlawful activity to a person or agency that already knows about the unlawful activity.

Holding

Reversing the decision of the Court of Appeal, the Supreme Court found that Labor Code 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.” The Court explained that:

Although the word “disclose” often refers to sharing of previously unknown information, the word also means bringing into view in a particular context a type of information to which the discloser tends to have special access.

The Court found this reading bolstered by an extensive review of the law’s legislative history.

Takeaways

The opinion expands the scope of whistleblower protections and brings California’s statute in line with federal law.

Specifically:

• Employees are protected under the whistleblower protection statute regardless of whether the disclosed information is already known to the recipient.
• Employees are protected under the whistleblower protection statute even if they know that another employee has previously disclosed the same information.
• An employer could rebut a charge under the whistleblower protection statute by demonstrating, with clear and convincing evidence, that the alleged retaliatory action would have occurred for legitimate, independent reasons even if the employee had not blown the whistle.
• California’s whistleblower protection statute is now interpreted in line with the federal Whistleblower Protection Act, meaning disclosure of known information is now protected under both statutes. 

Disclaimer: Please contact your Payne & Fears attorney for current guidance on the subject matter of this article.