In People formerly Garcia-Brower v. Kolla’s, Inc., the California Supreme Court resolved a division between the Courts of Appeals for the First and Second Districts over whether a “disclosure” protected under Section 1102.5(b) of the Labor Code includes a report of illegal activity made to an employer or agency that already knew about the reported illegal activity. The Supreme Court held that yes.
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In June 2014, the Department of Labor Standards Enforcement (DLSE) filed a complaint against Kolla’s Inc., a nightclub in Orange County, California, and its owner. The DLSE alleged that after an employee complained that she was not paid for three shifts, Kolla’s landlord fired her and threatened to report her to immigration authorities. As Kolla’s and its owner refused to accept the remedies proposed by the DLSE, the Commissioner of Labor sued them in Superior Court for various violations of the Labor Code, including retaliation in violation of section 1102.5(b).
Kolla’s and its owner did not attend the proceedings. Thus, the lower court entered a default judgment against them on most of the Commissioner of Labor’s claims. But the lower court held that the Commissioner of Labor did not file a complaint under section 1102.5(b) of the Labor Code because the employee reported her complaints to her employer and not to a government agency.
The Commissioner of Labor appealed. On appeal, the Court of Appeals upheld the lower court’s judgment on the section 1102.5(b) claim. But he did it for a different reason. In a 2-to-1 opinion, the Court of Appeal held that a private official’s report of illegal activity is not a protected “disclosure” unless the official discloses new Information. According to the Court of Appeal, the employee’s report to Kolla’s owner about wrongdoing was not a protected whistleblowing activity because they already knew about their own wrongdoing.
The Court of Appeals decision crystallized a division among the intermediate courts regarding the meaning of “disclose” in section 1102.5(b). In 2012, the Court of Appeals for the First District also ruled that “disclose” under section 1102.5(b) does not include reports of known information. But in 2014, the Second District Court of Appeals ruled that section 1102.5(b) does not limit disclosures to information that is not already known. In check outthe Supreme Court would resolve this division.
California Supreme Court Retention
The Supreme Court reversed the Court of Appeals and found that “disclose,” as used in section 1102.5(b), includes claims that an employer or government agency already knows about.
To begin with, the Supreme Court explained that “disclosure” has several plausible meanings. As shown by the division between the Courts of Appeals, “disclose” can mean bringing new information into view or it can mean bringing into view information to which the discloser has special access. The Supreme Court adopted the broader definition of “disclosure,” which includes reporting illegal activities to an employer or agency that already knew of the violations.
According to the Supreme Court, legislative history supported a broad definition. When the Legislature passed section 1102.5(b) in 1984 and amended it in 2003 and 2013, it used the terms “report”, “inform” and “complain” interchangeably to describe disclosures protected by statute. Thus, the Supreme Court held that “disclose” meant “report,” inform, or “complain,” which the Supreme Court found readily to encompass the employee’s conduct in this case. Additionally, a bill amending section 1102.5(b) in 2013 stated that California public policy was to support workers “being able to report concerns without fear of retaliation or discrimination.” Additionally, in 2013, the Legislature expanded the coverage of section 1102.5(b) to prohibit retaliation by persons with authority to investigate or correct the violation. Based on this legislative history, the Supreme Court concluded that “disclosure” under section 1102.5(b) includes telling an employer information they already knew.
The Supreme Court also held that a broad definition of section 1102.5(b) supports its purpose to enhance employee protections. An employee may feel more comfortable approaching their employer regarding workplace safety risks or wage and hour violations knowing that a colleague has made a similar disclosure. The Supreme Court has suggested that an employer may be more likely to correct violations if multiple employees disclose the same wrongdoing. In addition, an employee without retaliation protection may be hesitant to discuss a violation that they know their co-worker has already disclosed. Denying protection to employees who make secondary disclosures would deny employers and government agencies proof of information. Consequently, the Supreme Court defined “disclose” more broadly to further section 1102.5(b)’s purpose of enhancing employee protections.
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With this new clarity, employers should continue to document all concerns raised by employees. The Supreme Court reiterated that an employer may rebut a whistleblower’s allegation of retaliation by presenting clear and compelling evidence that a legitimate non-retaliation interest supported the employer’s decisions. Therefore, an employer can protect itself by using best practices and documenting all instances of problematic behavior and employee complaints. Good documentation will provide contemporary evidence of legitimate non-retaliation grounds for action if an employer is sued. And employers with questions about an employee’s complaint should consult their attorney to ensure a proper response.