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Last month, the California Supreme Court issued a decision that will make it considerably more difficult for employers to defend against claims under the state’s so-called “whistleblower” retaliation statute. In Lawson v. PPG Architectural Finishes, the court unanimously ruled that an employee is only required to prove that protected whistleblowing activity was a “contributing factor” in an adverse employment action, such as discharge or discipline. If the employee makes this showing, then the employer must prove by clear and convincing evidence that it would have made the same decision for legitimate, independent reasons, even if the employee had not engaged in protected activity.
The Lawson decision applies to retaliation claims brought under Section 1102.5 of the California Labor Code. The court rejected a more employer-friendly standard of proof that has been used for nearly 50 years in a variety of discrimination and retaliation claims—including those brought under California’s job bias statute, the Fair Employment and Housing Act, and under federal laws such as Title VII of the Civil Rights Act of 1964. That standard was created in a 1973 United States Supreme Court case titled McDonnell Douglas Corp. v. Green.
Under Section 1102.5, two types of employee activity are protected from retaliation. One is traditional “whistleblowing,” which is when an employee discloses information to a supervisor, manager, or the government. This type of disclosure is protected if the employee has “reasonable cause to believe” the information discloses a violation of a statute, or a failure to comply with a rule or regulation. The other type of protected activity is when an employee refuses to participate in an activity that would actually result in a violation of a statute, or a failure to comply with a rule or regulation.
A companion statute, Section 1102.6, states that when retaliation prohibited by Section 1102.5 is proven to have been “a contributing factor” in an adverse action against the employee, the employer must prove “by clear and convincing evidence” that it would have taken the same action “for legitimate, independent reasons,” even if the employee had not engaged in protected activity.
The California Supreme Court’s ruling came in a lawsuit filed by Wallen Lawson, who contacted an internal PPG ethics hotline to report his supervisor for fraudulent activity. PPG took no adverse action against the supervisor, and later agreed to the supervisor’s recommendation to terminate Lawson for failure to meet performance improvement goals.
Lawson filed a whistleblower retaliation suit in federal court. A district court judge reviewed the case under the traditional McDonnell Douglas standard. The judge concluded Lawson had evidence of a connection between his whistleblowing and his termination, but that he could not prove PPG’s reason for terminating him was false and a “pretext” for retaliation, and dismissed the lawsuit without a trial.
Lawson appealed to the employee-friendly Ninth Circuit U.S. Court of Appeals, which found California courts have been inconsistent on whether the McDonnell Douglas standard applies to Section 1102.5 whistleblower claims. The Ninth Circuit postponed its final decision on Lawson’s appeal, and asked the California Supreme Court to first decide what burdens the employee and employer have under Section 1102.5.
The California Supreme Court answered this question in favor of Lawson. It concluded an employee suing under Section 1102.5 is not required to satisfy the McDonnell Douglas standard, and particularly does not have to prove that the employer’s stated reason for its decision was false or pretextual. Instead, the employee need only show that illegal retaliation was “a contributing factor” in an adverse employment action. The employer then must prove, by clear and convincing evidence, that it would have made the same decision for legitimate, independent reasons, even if the employee had not engaged in protected activity.
You can read the California Supreme Court opinion here.
What This Means For You
Lawson will make it more difficult for employers to successfully defend against whistleblower retaliation claims under Section 1102.5. Courts have explained that “contributing factor” means a reason that contributed to the challenged action, even if it was not the only reason. An employee need only prove it was “more likely true than not true” that protected activity was at least one contributing factor to the employer’s decision.
By comparison, the employer must prove it would have made the same decision by “clear and convincing evidence.” California juries are instructed that this means the employer must prove “it is highly probable” the same decision would have been made, as opposed to the more lenient “more likely than not” standard for employees.
Going forward, employers should review their anti-retaliation policies and procedures with management, and to be particularly sensitive and careful when taking adverse action against an employee who has engaged in protected whistleblowing activity. To that end, employers should reinforce existing procedures for addressing and investigating whistleblower complaints, and be sure to keep a written record of the reasons for adverse actions in case litigation ensues.
If you have any questions about the matters discussed in this issue of Compliance Matters, please call your firm contact at (818) 508-3700, or visit us online at www.brgslaw.com.
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