On May 22, 2023, the California Supreme Court decided People ex rel. Garcia Brower v. Kolla’s, Inc. (SC S269456 5/22/23). The question presented was whether a report of unlawful activities made to an employer or agency that already knew about the violation is a protected “disclosure” within the meaning of California Labor Code section 1102.5(b). The Court held that it was.
On April 5, 2014, a bartender employee complained to her nightclub employer about unpaid wages owed. In response, the employer fired her, threatened to report her to immigration authorities, and told her to never to return to the nightclub. In June 2014, the employee filed a complaint with the Division of Labor Standards Enforcement, also known as the Labor Commissioner.
The Labor Commissioner determined that the immigration-based threats and termination violated California law and notified the employer and owner of proposed remedies, including payment of lost wages and payment of civil penalties. After the employer and owner declined to accept the proposed remedies, the Labor Commissioner sued them for violations of the Labor Code, including retaliation in violation of section 1102.5(b).
The trial court ruled against the Labor Commissioner on the 1102.5(b) claim, holding that the Labor Commissioner did not state a valid cause of action under 1102.5(b), and the Labor Commissioner appealed.
The Court of Appeal held Labor Code section 1102.5 subdivision (b) does not protect an employee from retaliation for disclosing unlawful activity to a person or agency that already knows about the unlawful activity. People v. Kolla’s Inc. (May 10, 2021, G057831).
The California Supreme Court granted review and appointed a pro bono amicus curiae. It liberally construed the Labor Code to favor employees. It determined that the term “disclose” can also mean “make openly known” and decided that “disclose” need not mean the information was previously unknown to the recipient.
Employers’ Takeaways:
1.) Check in with the Labor Commissioner. Neither the Orange County nightclub nor its owner participated in the litigation. Even with no involvement, this matter escalated to the California Supreme Court.
2.) Keep updated on Labor Code section 1102.5’s revisions. A few updates have been made through the years; the California Supreme Court pointed out that the Court of Appeal used an outdated version of section 1102.5.
3.) A protected disclosure encompasses reports of a violation made to an employer or agency even if the recipient already knows of the violation. It may not sound logical, but this is the new law disapproving Mize-Kurzman v. Marin Community College Dist., 2020 Cal.App.4th 832 to the extent it is inconsistent with the new opinion.
4.) Employers should revisit their policies and handbooks to ensure that they have an effective non-retaliation policy, that employees are aware of the policy, and that their managers and supervisors are trained to implement the policy.
Questions? We’re here to help! Contact Bicvan Brown at bbrown@tresslerllp.com for more information.
Bicvan Brown is a partner and Chair of Tressler’s Employment Group as well as Chair of the firm’s national Diversity, Equity and Inclusion Committee. Bicvan focuses her practice in all aspects of employment matters, including employment trials, arbitrations and mediations. She defends employers while providing advice and counsel against claims such as wage and hour (individual and class actions), PAGA, wrongful termination, sexual harassment, discrimination, retaliation and whistleblowing. She defends employers before state and federal agencies such as the EEOC, NLRB, California Labor Commission and California Department of Fair Employment and Housing. She is fluent in Vietnamese and Spanish and she provides advice about as well as translates workplace policies, employee handbooks and agreements. She regularly speaks at seminars with the purpose of helping employers and their insurers regarding best practices to minimize risk in California.