On January 27, 2022, the Supreme Court of California held that the employee-friendly California Labor Code Section 1102.6 standard applies to whistleblower retaliation claims under Labor Code section 1102.5.  (Lawson v. PPG Architectural Finishes, Inc. (Cal. 2022) 12 Cal.5th 703, 718.) Prior to Lawson, some courts applied a standard developed by the U.S. Supreme Court for adjudicating Title VII claims—commonly known as the McDonnell Douglas standard—to adjudicate section 1102.5 claims, while others applied the section 1102.6 standard.  This month, the Third District Court of California applied Lawson to a section 1102.5 claim in Vatalaro v. County of Sacramento and affirmed summary judgment in favor of the county employer despite Lawson’s lower evidentiary burden for employees.  (Case No. C090896, 2022 WL 1775708, — Cal.Rptr.3d —.)

In Lawson, PPG terminated Lawson’s employment after he received poor performance reviews.  (Id. at 708.) He filed suit against PPG in federal court and brought a whistleblower retaliation claim under California Labor Code section 1102.5, alleging that PPG retaliated against him for complaining about purported fraudulent practices by his supervisor.  (Id.)  The district court granted summary judgment for PPG by applying the McDonnell Douglas standard.  (Id. at 708-709.) On appeal, Lawson argued that the district court should have applied the Labor Code 1102.6 standard instead.  (Id. at 709.)  The Ninth Circuit certified the case to the Supreme Court of California to decide which standard applies to California whistleblower retaliation claims.  (Id.)

The Labor Code section 1102.6 standard is as follows:

  1. The employee has the burden to show by preponderance of the evidence that the employee’s protected activity was a contributing factor to the employer’s adverse employment action.
  2. If the employee meets that burden, the burden shifts to the employer to show by clear and convincing evidence that it would have taken the same action for legitimate, independent reasons, even if the employee had not engaged in protected activity. (Cal. Labor Code § 1102.6 (emphasis added).)

By contrast, the McDonnell Douglas standard, which comes from federal Title VII caselaw, is as follows:

  1. The employee must establish a prima facie case, by less than preponderance of the evidence, that she engaged in protected activity, she was subject to adverse employment action, and that there is a causal link between the two.
  2. If the employee meets that burden, the burden shifts to the employer to show by substantial evidence that it had a legitimate, nondiscriminatory reason for the adverse employment action.
  3. If the employer meets that burden, the burden shifts back to the employee to show by substantial evidence that the reason was pretext for discrimination. (McDonnell Douglas Corp. v. Green (1973) 411 U.S. 792 (emphasis added).)

The key difference between these standards is that under Labor Code 1102.6, plaintiffs can prove that retaliation was a “contributing factor” by a lower evidentiary standard while defendants must prove that they would have taken the same action for independent reasons by a higher evidentiary standard.  Under the McDonnell Douglas standard, defendants have a lower burden to succeed by showing a legitimate reason for taking the adverse action and plaintiffs failing to show that the reason was pretextual for retaliation.

Lawson relied on the legislature’s intent in enacting Labor Code Section 1102.6 in determining which standard applies.  (Lawson at 710-711.) The Court found that the legislature intended to “encourage earlier and more frequent reporting of wrongdoing by employees and corporate managers when they have knowledge of specified illegal acts” by “expanding employee protection against retaliation.” (Id. at 711). Thus, the Court held that the legislature intended for Labor Code Section 1102.6 to lower the burden for employees to succeed on section 1102.5 claims.  (Id. at 716.)

As a result, employers may now see more state whistleblower retaliation claims proceed to trial.  However, in just the 5 months since Lawson, at least nine decisions on section 1102.5 claims have entered or affirmed summary judgments in favor of employers. (Vatalaro v. County of Sacramento (Cal. App. Case No. C090896, 2022) 2022 WL 1775708, — Cal.Rptr.3d —; Joseph v. California Department of Corrections (Cal. App. Case No. E074481) 2022 WL 1817753 (unpublished); Abernathy v. Duncan Enterprises (Cal. App. Case No. F081502) 2022 WL 1789908 (unpublished); Robinson v. Compton Unified School District (Cal. App. Case No. B310764) 2022 WL 1617247 (unpublished); Wade v. Starbucks Corporation (Cal. App. Case No. F079838) 2022 WL 389923 (unpublished); Tandon v. GN Audio USA, Inc. (9th Cir. Apr. 25, 2022) 2022 WL 1210945 (unpublished); Khan v. SAP Labs, LLC (N.D. Cal. May 20, 2022) 2022 WL 1606296 (unpublished); Wiele v. Delaware North Companies, Inc. (C.D. Cal. Mar. 4, 2022) 2022 WL 714392 (unpublished); Foshee v. MasTec Network Solutions, Inc. (E.D. Cal. Feb. 14, 2022) 2022 WL 446675 (unpublished).)

Vatalaro v. County of Sacramento is one of the few published decisions applying Lawson. There, the Third District Court of California affirmed summary judgment in favor of the county.  Vatalaro had alleged that the county released her from probation because she engaged in protected whistleblower activity under section 1102.5.  (Slip Opn. at p. 1; 2022 WL 446675 at *1.)  Prior to reaching its decision, this Court requested supplemental briefing to account for Lawson, which was decided after the parties had submitted their initial appellate briefs.  (Slip Opn. at pp. 2, 19; 2022 WL 446675 at *1, *9.)  After evaluating the supplemental briefing and the record, the court concluded that the county “supplied sufficient evidence to satisfy the more demanding standard under section 1102.6” because it “demonstrated by clear and convincing evidence that it would have released Vatalaro from probation for legitimate, independent reasons even if Vatalaro had not engaged in the allegedly protected conduct.”  (Slip Opn. at p. 19; WL 446675 at *9; see also Slip Opn. at pp. 19-24; 2022 WL 446675 at *9-*11.)

In addition to providing critical guidance to future litigants and courts on how to apply section 1102.6’s burden-shifting framework after Lawson, Vatalaro provides guidance on section 1102.5’s prima facie requirements by clarifying how California courts should interpret the “reasonable cause to believe” element of the section 1102.5 claim.  Other courts have treated the requirement that plaintiffs have a “reasonable cause to believe” that the information they disclosed concerned a violation of law as equivalent to plaintiffs merely having a “reasonable belief” of such.  (Slip Opn. at pp. 16-18; 2022 WL 446675 at *7-*8.)  But as Vatalaro explains, “reasonable cause to believe” and actually having a “reasonable belief” are “not equivalent.”  (Slip Opn. at p. 17; 2022 WL 446675 at *8.)

These cases may provide reason for cautious optimism for employers navigating retaliation claims under section 1102.5, but they also underscore the importance of clearly documenting reasons for their employment decisions. At the same time, however, employers should be aware that the McDonnell Douglas standard still applies to federal retaliation claims and some other state law retaliation claims, including Labor Code section 6310(b).  (Ward v. California Department of Corrections & Rehabilitation (Cal. App. Case No. E073567) 2022 WL 533828, *4 (unpublished).)