New Protections for Whistleblowers and Suspected Undocumented Workers Take Effect January 14, 2014

The California Legislature had a busy year in 2013 and produced a great deal of employment-related legislation which just took effect on January 1.  Because retaliation claims against employers have been on the rise for several years, two new protections added to the Labor Code deserve particular attention. 

Before the recent amendment took effect, Labor Code section 1102.5(a) prohibited actions by an employer to prevent an employee for reporting violations of law to a government agency, and also prohibited retaliation against employees who make such reports.  California courts had interpreted this section not to provide protection to an employee whose duties include disclosure of legal compliance information.  The Legislature, through Senate Bill 496, expanded the protection of Section 1102.5(a) to employees who internally report violations of the law.  In other words, to trigger the protection of this section, the whistleblower need not be reporting the alleged problem to any entity or person outside the company.  In addition, the new language prohibits an employer from adopting any rule, regulation or policy that prevents an employee from disclosing “reasonably-believed” violations of the law to a superior or to another employee who has authority to investigate or correct the violation.  Finally, the Legislature overturned the California case law that exempted employees who have legal compliance obligations from the protection of Section 1102.5(a)

It takes little imagination to envision how a disgruntled employee who is terminated, demoted or disciplined could use these new protections to construct a whistleblower retaliation claim.

In another effort to prevent retaliation, the Legislature also enacted Labor Code section 1019 to protect undocumented workers from retaliation for exercising a legal right.  Section 1019 makes it an unlawful for an employer or any other person to engage in an “unfair immigration-related” practice against a worker in retaliation for exercising a legal right.  An unfair immigration-related practice is defined as (1) requesting different or more documents than required under the law or a refusal to honor documents tendered that on their face reasonably appear to be genuine; (2) using the E-Verify system to check the status of a persons in a manner not required under federal law or not authorized; (3) threatening to file or filing a false police report; or (4) threatening to contact immigration authorities.  Notably, the law creates a rebuttable presumption that any adverse action taken within 90 days of the employee exercising a protected right is retaliatory.

As any employer who has faced a retaliation claim of any form knows, defending against such claims is particularly challenging, costly and time-consuming.  If the claim involves a current employee, it is even more vexing as every action taken with the employee needs to be scrutinized, even when the employee may be a poor performer or an otherwise difficult employee.  In order to minimize the risk of retaliation claims and liability, employers should: 

  • Make sure managers understand retaliation – Most managers are familiar with the concepts of discrimination and harassment and have received training on how to prevent and correct those problems in the workplace.  Many managers are unfamiliar with the concept of retaliation, however, and unknowingly engage in conduct that can easily be characterized or perceived as retaliatory.  In order to minimize their risk, employers should provide necessary training to managers on the concept of retaliation. 
  • Whenever possible, base adverse employment actions on poor performance or misconduct occurring after an employee’s exercise of legal rights – Cautious employers should generally avoid taking adverse action against employees who have complained of illegal behavior or exercised a legal right unless the action can be justified by some poor performance or misconduct occurring after the complaint or exercise of legal rights.  When decisions are based on an employee’s conduct before he or she exercised legal rights, a court may be suspicions of the reason for which the employer waited to take action.  If you base the decision on something the employee did after making a complaint, or after exercising some other legal right, it is less likely that juries will see a cause-and-effect relationship between the employee’s behavior and the adverse employment action. 
  • Document the basis for any decision that may be characterized as retaliatory – Documentation of the reasons for a personnel decision is always wise, but documentation is critical when an employer plans to make a decision adverse to an employee who has complained of illegal behavior.  The employee will cite his or her recent complaint as the motivation for the decision, so the employer will face a serious risk of liability unless it can present credible evidence of some other, lawful basis for the decision. 
  • Do not permit managers who are accused of illegal behavior to make unilateral decisions regarding the complaining employee – The risk of retaliation is high, in part, because managers who are wrongfully accused of illegal behavior often seek revenge, consciously or unconsciously, against those who accused them.  The desire for revenge is universally understood, if not admired, and it is often easy to believe that a manager would retaliate against an employee who has made his or her life difficult by making a complaint.  In order to minimize the risk of such a perception, employers should not permit accused managers to make unilateral decisions regarding a complaining employee.  Instead, the employer should either direct the manager to confer with others (and/or human resources representatives) and make any necessary decisions jointly, or remove the manager from the decision-making process entirely.