January 28, 2023

Volume XIII, Number 28

Advertisement

January 27, 2023

Subscribe to Latest Legal News and Analysis

January 26, 2023

Subscribe to Latest Legal News and Analysis

California Supreme Court Establishes Employee-Friendly Standard for Whistleblower Retaliation Cases

On 27 January 2022, the California Supreme Court answered a question certified to it by the Ninth Circuit: whether whistleblower claims under California Labor Code section 1102.5 are governed by the burden-shifting test for proof of discrimination claims established by the U.S. Supreme Court in McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973), or the more employee-friendly standard set forth in Labor Code section 1102.6. The Court unanimously held that the Labor Code section 1102.6 standard applies.

Section 1102.5 makes it illegal for employers to retaliate against an employee for disclosing information to government agencies or “to a person with authority over the employee” where the employee has reasonable cause to believe that the information discloses a violation of a state or federal statute, or a local, state, or federal rule or regulation.

In Lawson v. PPG Architectural Finishes, Inc., plaintiff Wallen Lawson was employed by Defendant PPG Architectural Finishes, Inc. (PPG), a paint and coating manufacturer, for approximately two years as a territory manager. Although at first Lawson performed his job well, his performance declined over time, and he was placed on a performance improvement plan. During the same time, Lawson made two anonymous complaints to PPG’s central ethics hotline regarding instructions he allegedly had received from his supervisor regarding certain business practices with which he disagreed and refused to follow. Lawson’s complaints led to an investigation by PPG and the business practices at issue were discontinued. Some months later, after determining that Lawson had failed to meet the goals identified in his performance improvement plan, his supervisor recommended that Lawson’s employment be terminated.

Lawson filed a lawsuit alleging that PPG had fired him because he blew the whistle on his supervisor, in violation of section 1102.5. PPG moved for summary judgment, which the district court granted, holding that Lawson failed to produce sufficient evidence that PPG’s stated reason for firing him was a pretext for retaliation under the framework of the McDonnell Douglas test.

Under the McDonnell Douglas standard, which typically is applied to Title VII and Fair Employment and Housing Act cases, the burden of proof never shifts from the plaintiff. Once the employee-plaintiff establishes a prima facie case of retaliation, the employer is required to offer a legitimate, nondiscriminatory reason for the adverse employment action. If the employer meets that burden of production, the presumption of discrimination created by the prima facie case disappears, and the employee must prove that the employer’s proffered non-retaliatory reason for the adverse employment decision was a pretext and that the real reason for the termination was discrimination or retaliation.

The California Supreme Court answered the Ninth Circuit’s question by stating that the McDonnell Douglas standard is not the correct standard by which to analyze section 1102.5 cases. Instead, the Court held that the more employee-friendly test articulated under section 1102.6 applies.

Under Labor Code section 1102.6, the employee has the burden to establish, by a preponderance of the evidence, that retaliation for the employee’s protected activities was a contributing factor in the adverse employment action. The burden then shifts to the employer to prove, by clear and convincing evidence, that it would have taken the adverse action for a legitimate, independent reason even if the plaintiff-employee had not engaged in protected activity. Under section 1102.6, the employer has the burden of persuasion to show that the adverse employment decision was based on non-retaliatory conduct, and unlike McDonnell Douglas test, the burden does not shift back to the employee. Under section 1102.6, the employee does not have to prove that the non-retaliatory reason for termination was pretextual as required by McDonnell Douglas.

IMPLICATIONS FOR EMPLOYERS

The Lawson decision resolves widespread confusion amongst state and federal courts regarding the proper standard for evaluating whistleblower retaliation cases brought under section 1102.5. It also places a heavy burden on employers to show, by clear and convincing evidence, that they would have taken the adverse action even if the employee had not engaged in protected activities. Employers should be prepared for the fact that summary judgment in whistleblower cases will now be harder to attain, and that any retaliatory motive, even if relatively insignificant as compared to the legitimate business reason for termination, could create liability.

Copyright 2023 K & L GatesNational Law Review, Volume XII, Number 45
Advertisement
Advertisement
Advertisement

About this Author

Saman Rejali, KL Gates, restrictive covenants lawyer, employment policies attorney
Associate

Saman Rejali is a member of the firm’s labor and employment and commercial disputes practice groups. She represents management in all aspects of employment law, including employment related litigation. Ms. Rejali regularly counsels a broad spectrum of clients on issues such as terminations, employment discrimination, wage and hour, FMLA, ADA, OSHA, restrictive covenants, employment policies, and trade secrets. She has represented public and private companies in lawsuits involving claims of employment discrimination, wrongful termination, breach of contract, unfair...

310-552-5534
Vanuhi Karapetian Commercial Litigation Attorney K&L Gates
Associate

Vanuhi (Vannie) Karapetian is an associate in the firm’s Los Angeles office and is a member of the firm’s complex commercial litigation and disputes practice group. She has experience in matters involving labor and employment, intellectual property, construction litigation, and environmental disputes including Proposition 65. Vannie has participated in many components of civil litigation, such as authoring pleadings and motions, drafting and reviewing discovery, advising clients, and facilitating settlement negotiations.

Vannie is also committed to public service, and is actively...

310-552-5036
Amy Wong Commercial Litigation Lawyer K&L Gates
Associate

Amy Wong is an associate at the firm’s Orange County office. She is a member of the complex commercial litigation and disputes practice group.

Prior to joining the firm, Amy served as a senior associate at a national law firm where she counseled and litigated complex business and class action cases on behalf of large corporations, small businesses, municipalities, property owners, contractors, and business owners in all levels of civil litigation in both state and federal courts. In addition, Amy has an extensive background in personal injury claims where she has successfully...

+1.949-623-3599
Advertisement
Advertisement
Advertisement