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October 2015

The California Court of Appeal Broadens Anti-Retaliation Rules for Employers

In Cardenas v. M. Fanaian, D.D.S., Inc., the 5th District of the California Court of Appeal held that Labor Code § 1102.5 prohibits an employer from retaliating against an employee who discloses information to a law enforcement agency where the employee has reasonable cause to believe that the information discloses a violation of state or federal law. The Court clarified that section 1102.5 protects employees even where the report to law enforcement concerns a violation of law committed by a fellow employee or contractor, and not by the employer.

The plaintiff in this case was a dental hygienist who reported to her employer, and subsequently, to the police, that a coworker stole her wedding ring in the workplace. Shortly after the police began to investigate the matter, she was terminated by her employer because the situation was causing great tension and discomfort among the staff.

Plaintiff sued her employer for damages based on two causes of action: (1) violation of California Labor Code § 1102.5, which forbids employers from retaliating against employees who report violations of law to a law enforcement agency and (2) wrongful termination in violation of public policy. Plaintiff was awarded $117,768 in damages.

The Court agreed with Plaintiff that section 1102.5 is a stand-alone theory of recovery distinct from a claim based on termination in violation of public policy. In other words, a section 1102.5 retaliation claim is based on the statute itself and not on the basis that a fundamental public policy was violated by the employment termination. The Court explained that a plaintiff in a section 1102.5 case must show that (1) she engaged in a protected activity, (2) her employer subjected her to an adverse employment action, and (3) there is a causal link between the two. The Court’s decision emphasizes that the plaintiff‘s motives or whether the reported crime is ‘public’ enough are not relevant issues in a section 1102.5 claim.

Implications for California Employers

Cardenas serves as an important reminder of the broad scope of section 1102.5 retaliation claims. Employers who become aware of employee reports to law enforcement agencies should consult an attorney before terminating or taking any other disciplinary action against the employee.

Please note, the decision is not yet final. It could be changed upon petition for rehearing, or it could be ordered de-published, or the California Supreme Court could grant review.

Employment Law

Brandon D. Saxon

Employment Law