California Court Extends Whistleblower Protection To Third Party Violations

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A California Appeals Court recently held that the Labor Code which protects employees from retaliation for reporting illegal conduct to law enforcement agencies applies to an employee’s report of illegal conduct of a private or individual nature unrelated to the employer’s operations or enterprise.

In Cardenas v. M. Fanaian, D.D.S., the plaintiff was a dental hygienist who alleged her wedding ring had been stolen at work by a fellow co-worker. She informed her employer (the defendant) that she planned to file a police report and testified that her employer attempted to dissuade her from making such a report. He husband subsequently filed a report and plaintiff filed a formal statement a few days later. Officers went to the company on two occasions and questioned personnel. The defendant company told plaintiff that the situation was causing tension and discomfort among the staff and, therefore, her employment was being terminated.

Plaintiff sued the company in California state court alleging retaliation in violation of California Labor Code Section 1102.5(b) and wrongful termination in violation of public policy. A jury found in favor of Cardenas. On appeal, the employer argued that Cardenas’ claim did not fall with the scope of Section 1102.5(b) because she did not file the police report to address any violation of law by her employer or corporate wrongdoing.

The Court of Appeal rejected the employer’s argument, and held that the situation plainly fit the scope of the section which prohibits employers from retaliation against an employee for reporting a violation of a state or federal statues to a government or law enforcement. The Court noted that the section made no mention that its protections were limited to reports of unlawfulness concerning an employer’s enterprise, operations or practices.

Note that this is a limited decision for our employer members. You may continue to reasonably expect that your employee cannot prevail on a whistleblower claim without alleging that he or she complained that the employer was engaged in unlawful conduct — except in California, where employers are exposed to potential liability when an employee makes a complaint to law enforcement, regardless of whether the complaint relates to the employer’s conduct or not. California employers should not take adverse action against an employee who has filed a complaint with a government or law enforcement agency before considering the potential liability for a retaliation claim.

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Posted In: Legal