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Section 1102.5 of the California Labor Code affords “whistleblowers” (those who report unlawful activity) protections from retaliation. Employers need to handle such reports with care, and train their managers to respond appropriately as well. The statute protects even those employees that the employer merely believes disclosed or might disclose such information. Further, the retaliation may be actionable even if the employee is wrong about the activity being illegal, as long as “the employee has reasonable cause to believe that the information discloses a violation of state or federal statute, or a violation of or noncompliance with a local, state, or federal rule or regulation.” See Cal. Labor Code § 1102.5(b). Protected reports include: reports to the government/law enforcement agency; reports to a person with authority over the employee; reports to another employee with authority to investigate, discover or correct the violation; and testimony before any public body conducting an investigation, hearing or inquiry. Id. Refusal to participate in the activity, and reports made at a former employer are also protected. Labor Code § 1102.5(c)-(d).
What is protected activity? Recent court of appeal cases have analyzed the scope of this protection, but questions remain. For example, under existing court precedent, reporting conduct of which the employer is already aware may be protected, and reporting activity by another employee (not the employer) is likely protected. Reporting activity not related to the employer’s business (unrelated personal conduct) was found by a California Court of Appeal to be protected, (Cardenas v. M. Fanaian D.D.S., Inc. (2015) 240 Cal. App. 4th 1167), however, this case is under review by the California Supreme Court, so we await a final decision on that issue. In addition, complaining about internal personnel decisions is likely not protected, unless the employee reasonably believes he/she is reporting a violation of law.
As the scope of protected activity is evolving, employers should exercise caution regarding any reports or complaints by employees regarding any conduct that potentially violates the law, whether or not the potential violation is committed directly by the employer or directly involves the employer’s operations.