Employee Whistleblowing Claims under the California Labor Code just got Harder to Defeat 

Written by Jeremy Mittman

Last week, the California Supreme Court clarified the evidentiary standard for whistleblower retaliation claims brought under California Labor Code section 1102.5. In its decision, the high court clarified that such claims should not be evaluated under the McDonnell Douglas test, but that the standard set forth in the more employee-friendly California Labor Code section 1102.6 should apply instead.

Background

In Lawson v. PPG Architectural Finishes Inc., a former territory manager sued his former employer under California Labor Code section 1102.5 for firing him after he reported allegedly fraudulent practices. The federal trial court granted the employer’s motion for summary judgement by applying the McDonnell Douglas test. Under this three-part burden-shifting test: (1) First the employee must make a prima facie case showing that an adverse employment action was causally linked to a protected activity in which the employee engaged. (2) Next, the employer must provide a legitimate, nondiscriminatory reason for the employment action. (3) The burden then shifts back to the employee to show that the employer’s reason was pretextual.

The plaintiff appealed to the Ninth Circuit, arguing that the trial court should have applied the standard set forth in California Labor Code section 1102.6 instead of the McDonnell Douglas test. Under the two-part section 1102.6 framework, (1) First the employee must demonstrate that retaliation was a contributing factor in the adverse employment action, then (2) the employer must provide a legitimate, nondiscriminatory reason for the employment action. The Ninth Circuit observed inconsistencies in which framework is applied by state appellate courts and certified the question to the California Supreme Court.

Decision

The California Supreme Court held that whistleblower retaliation claims brought under California Labor Code Section 1102.5 should only be evaluated under the framework established in section 1102.6. Notably, this framework is more employee-friendly than the McDonnell Douglas test as the employee no longer has to prove pretext, and the burden of proof falls on the employer to show that the “alleged action would have occurred for legitimate, independent reasons even if the employee had not engaged in activities protected by Section 1102.5.”

Takeaways for California Employers

As a result of this decision, it will be more difficult for employers to dispose of whistleblower retaliation claims before trial under the section 1102.6 framework. Employers should ensure that they carefully document all adverse actions considered against an employee who has engaged in a protected activity and consult with counsel prior to taking action.

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