Court clarifies whistleblower protection law; here’s what it means for you.
The California Supreme Court has come down on the side of employees, making it easier for them to prove they have faced retaliation for reporting business practices they believe to be wrong. The ruling resolves an issue that had been a point of confusion for businesses and employees statewide.
In the ruling, the court essentially said the state Labor Code applied to whistleblower claims, rather than a more employer-friendly standard set by the U.S. Supreme Court in a very different case in 1973.
The decision has ripple effects for both employees and employers.
The question.
The case that brought the issue to a head stemmed from a dispute between PPG Architectural Finishes Inc. and employee Wallen Lawson, who worked as a territory manager for the paint and coatings manufacturer from 2015 until being fired in 2017.
Lawson, who handled stocking and merchandising at Lowe’s stores in Southern California, initially got high marks for his work. But that didn’t last. He often missed monthly sales targets; PPG put him on a performance improvement plan in the spring of 2017.
That same spring, Lawson’s boss told him to intentionally mis-tint poorly selling paint products. This meant Lowe’s had to sell the paint at a big discount — and PPG did not have to buy back its unsold product. Lawson filed two anonymous complaints about the scheme with the company’s internal ethics hotline, and he told his boss he would not participate. After an investigation, the practice was stopped, but Lawson’s boss remained in his job.
Later that year, Lawson’s boss and another supervisor determined that Lawson had not met his performance improvement goals, and they fired him.
Lawson sued. PPG saw it as a straightforward case under the U.S. Supreme Court standard, which basically relies on the most prominent reason for the firing, and it asked the district court for a summary judgment. Because Lawson couldn’t prove that his performance issues were only a pretext for firing him following his whistleblowing, the court granted the summary judgment in favor of PPG.
Lawson appealed, arguing that state labor law applied, basically meaning he needed only to show that his whistleblowing activity contributed to his dismissal. The law puts the burden on the employer to show that “the alleged action would have occurred for legitimate, independent reasons” even if the employee had not taken the protected actions.
The Ninth Circuit Court of Appeals expressed uncertainty, given the variety of rulings on the subject by different state courts, and it asked the California Supreme Court to settle the confusion. As we mentioned, the high court sided with Lawson.
What does this mean for employees?
Employees have an extra measure of confidence in their protections under California law. If they are harmed after whistleblowing, they may file private lawsuits seeking damages.
Their employers face an extra burden to prove that any adverse employment consequences following a protected action, such as whistleblowing, had nothing to do with that protected action.
Notably, California laws began moving in this direction in the early 2000s, in the wake of high-profile business scandals like Enron and WorldCom. The changes were intended to encourage employees to come forward sooner about illicit activities, hopefully mitigating the widespread damage wrought by such incidents.
What does this mean for employers?
Vigilance and clear documentation will be crucial for California businesses. Firings and other adverse employment actions against whistleblowers must come with reasoning that is well-defined and compelling. State law leaves little wiggle room for anything that isn’t completely above board.
Summary judgments to quickly get legal issues resolved — such as PPG initially sought in this case — will be more difficult to get in an employer’s favor.
PPG wanted a higher standard for such cases to get to trial, but as the California Supreme Court’s opinion read, if that were the case, “employee plaintiffs might never have the opportunity to show at trial that retaliation was a contributing factor in an adverse action, because they would have first been required to show at summary judgment that retaliation was, in effect, the only factor.”
Now, employers must be prepared to argue in court that any whistleblowing activity had no bearing on HR decisions. Even if an employee was in hot water to begin with, a company opens itself up to liability if its actions were tainted by any retaliatory motives, however secondary they may have been.
If you’re caught up in an employment conflict, contact the skilled attorneys at Berman North. We can help you understand your rights and options under the law. Through our personalized, client-focused representation, we will help find the best solution for you.