Whistleblower Complaint Hinged on “Disclosure” Definition

Santa Clara, CAIn the lawsuit The People ex rel. Lilia Garcia-Brower v. Kolla's Inc., the California Supreme Court has held that an employee who makes a whistleblower complaint to his or her employer may bring a retaliation claim under the California labor code’s whistleblower statute, even if the subject of the complaint was already known. 

Previously, an employee whistleblower complaint regarding an alleged violation of the law that was already known to the employer who received the complaint was not protected by law. The attorney for Kolla’s, a nightclub in Orange County, argued that California’s whistleblower statutes don't shield workers from retaliation for disclosing wrongdoing when the recipient already knows of the alleged misconduct, but Supreme Court justices questioned how employees would know whether the alleged misconduct had already been reported before they complained.

Disclosure Definition

According to dictionary definitions of “disclose,” the information disclosed need not be previously unknown to the recipient. The appellate court held that "disclosure" in the statute means "the revelation of something new, or at least to whom the disclosure is made," but California Labor Commissioner Lilia Garcia-Brower argued that according to dictionary definitions — "to make openly known" and to "open up to general knowledge" — the disclosure doesn't need to be previously unknown to the recipient.

According to Law360, the statute doesn't limit its protections to a disclosure that's directed to a person with the authority to "discover" the alleged violation — someone who didn't previously know about the alleged violation — but instead protects a disclosure made to someone with the authority to "investigate … or correct" the violation, even if the disclosure doesn't cause the person to "discover" the violation, as per the opinion. Got it? Like knowing the unknowns.

A.C.R. vs Kolla’s Lawsuit

This case goes back to an enforcement action by the California labor commissioner against the nightclub on behalf of the bartender -- identified by her initials A.C.R. because of immigration concerns. According to the lawsuit, A.C.R. started working as a
a bartender at Kolla's in 2010. After working for four years, she complained to the club’s owner that she had not been paid for three shifts. But instead of correcting the unpaid wages violation, the owner threatened to report A.C.R. to immigration authorities, and then fired her.

A.C.R. filed a complaint with the Division of Labor Standards Enforcement (DLSE), which found that the termination and the immigration-based threats violated California law. DLSE proposed remedies such as lost wages, reinstatement and civil penalties. But Kolla’s refused to comply so the Labor Commissioner slapped it with a lawsuit for violating several California labor codes, including prohibiting employers from retaliating against employees for “disclosing information” concerning suspected violations of the law.

But the trial court found that A.C.R. reported her complaints to her employer instead of to a government agency and rejected the labor commissioner’s section 1102.5(b) of California’s Labor Code that prohibits employers from retaliating against employees for disclosing information about suspected violations of the law either internally or to government or law enforcement agencies.

The appellate court determined that:

• Section 1102.5(b) did not protect an employee’s disclosure of unlawful activity directly to the wrongdoing employer
• The term “disclose” meant revealing something new or believed to be new to the recipient
• An employee’s report to the supervisor about the supervisor’s wrongdoing did not amount to a “disclosure” or a protected whistleblowing activity because the employer would already know about its own wrongdoing
• Kolla’s owner knew of, or was responsible for the nonpayment of the complainant’s wages

Note to Employers: It’s not in your best interest to threaten whistleblowers. The Supreme Court’s decision confirms that employers cannot take adverse action against an employee for disclosing any known or unknown information to the employer, if the employee has a reasonable cause to believe that a legal violation exists. This decision will likely help an employee file a whistleblower lawsuit if an employer has violated California labor laws.