California Supreme Court Ruling Makes it Easier for Employees to Prove Retaliation Claims
On January 27, 2022, the California Supreme Court held that an employee who sues their employer for retaliation under the California Labor Code Section 1102.5 whistleblowing statute may prove their claim using the burden of proof framework described in California Labor Code Section 1102.6. Before this ruling, some courts applied the McDonnell Douglas framework, which was more favorable to employers. This recent opinion from the Supreme Court will make it easier for employees to prevail against their employers in lawsuits alleging retaliation for whistleblowing.
In Lawson v PPG Architectural Finishes, Inc., plaintiff Wallen Lawson was a territory manager for PPG, a paint and coatings manufacturer. He alleged he was fired after reporting that his manager allegedly engaged in unlawful activity. He sued his employer for violating the California Labor Code Section 1102.5 whistleblowing statute.
California Labor Code Section 1102.5 prohibits an employer from retaliating against an employee who complains about employer practices the employee reasonably believes violate the law. The statute did not include a framework for proving retaliation when it was originally enacted. As such, many courts applied the McDonnell Douglas burden-shifting standard to claims made under Section 1102.5. Under the McDonnell Douglas standard, an employee must establish a prima facie case of retaliation first, before the burden shifts to the employer to show that the adverse employment action was taken for legitimate, nondiscriminatory reasons. The plaintiff must then show the reasons given by the employer for the adverse employment action were merely pretext for unlawful retaliation.
In 2003, the California legislature added Labor Code Section 1102.6, which included a framework for proving whistleblowing claims. This framework requires an employee to show, by a preponderance of the evidence, that their whistleblowing activity was a contributing factor in the employer’s decision to take adverse action against them. The burden then shifts to the employer, who must show by clear and convincing evidence, that it would have taken the same action for legitimate, independent reasons. Section 1102.6 allows an employee to prove retaliation even when the employer had a non-retaliatory reason for the adverse action, so long as the employee has at least one retaliatory reason that contributed to the adverse action.
The district court in Lawson granted PPG’s summary judgment motion, applying the McDonnell Douglas burden shifting standard. In doing so, it held that although Lawson made an initial showing that he was fired for opposing his manager’s alleged unlawful conduct, he did not produce sufficient evidence to prove his employer’s stated reason for the termination, i.e., his poor performance, was a pretext for unlawful retaliation. Lawson appealed, arguing that the court should have applied the California Labor Code Section 1102.6 standard instead of the McDonnell Douglas standard.
The California Supreme Court sided with Lawson, holding that the district court erred in applying the McDonnell Douglas framework to Lawson’s whistleblowing claim. In doing so, the Supreme Court ruled that the framework in California Labor Code Section 1102.6 is the correct standard for determining a claim for retaliation under the whistleblowing statute.
The Lawson case undoubtedly will impact future retaliation claims because the ruling makes it easier for employees to prove a whistleblowing claim against their employer. The ruling will also make it more difficult for employers to win summary judgment motions on claims alleging retaliation in violation of California Labor Code Section 1102.5. This will be true even when legitimate reasons played a part in the employer’s decision to take adverse action against the employee. Consequently, we anticipate that from now on, plaintiffs’ attorneys will find every opportunity to assert a California Labor Code Section 1102.5 retaliation claim in lawsuits brought against employers.
For additional information on this case or how the Supreme Court’s ruling may impact your business, please contact Mary Watson Fisher or Shahirah Ruddell.