Employees who stand up to illegal conduct in their workplace are known as “whistleblowers.”

Federal laws and California whistleblower laws protect public and private employees alike. These laws prohibit employers from retaliating against employees who disclose information that the employee believes involves a violation of state or federal law or refuse to participate in an activity that would violate a state, federal, or local law.

Two laws that apply to California whistleblower claims are California Labor Code section 1102.5 and the Sarbanes-Oxley Act of 2002.

The California Whistleblower Protection Act

California Labor Code section 1102.5, also known as the “Whistleblower Protection Act,” is a very powerful law that reflects the state’s broad public policy interest in encouraging workplace whistleblowers to report unlawful acts without fearing retaliation.

The Whistleblower Protection Act protects employees who report violations internally or to any external public body. Importantly, the Whistleblower Protection Act covers both public and private employers.

Sections (a) - (h) of the Whistleblower Protection Act are summarized as follows:

(a) provides that employers are not allowed to prevent employees from providing information to the government (including law enforcement), a supervisor, or any other employee who has the authority to investigate the claim.  To be protected, an employee must reasonably believe that he or she is disclosing a violation of local, state, or federal law.  Importantly, unlike federal law, it does not matter whether the disclosure is part of the employee’s job duties. 

(b) protects employees who disclose information to law enforcement or the government.  It also protects employees who disclose information to a supervisor or someone who can investigate the disclosure, if the employee reasonably believes that the information discloses a violation of state or federal statute, or local rules or regulations.  Like section (a), it does not matter whether the disclosure is part of the employee’s job duties. 

(c) protects employees who refuse to participate in something that would violate the law.   

(d) states that employers cannot retaliate against employees who engaged in conduct protected under sections (a)-(c) in their prior places of employment.

(e) provides that reports by government employees are covered by sections (a) and (b).

(f) applies a $10,000 penalty to every violation of section 1102.5.

(h) states that employers cannot retaliate against employees who are family members of a person who engages in activity protected by section 1102.5.

An employee meets their burden of proof under section 1102.5 if they prove that their protected activity was a contributing factor to the retaliation that they suffered. At that point, an employer may avoid liability only by proving by clear and convincing evidence that the employee would have been discharged anyway at that time for legitimate and independent reasons.  See Lab. Code § 1102.6.

SOX Whistleblowers — Under the Sarbanes-Oxley Act

The Sarbanes-Oxley Act of 2002, or SOX, 18 U.S.C. section 1514A, prohibits any publicly traded company or any officer, employee or agent of such a company from retaliating against an employee who provides information regarding conduct which the employee reasonably believes constitutes a violation of federal law relating to fraud against shareholders.  In order to be protected, the employee must provide that information to a supervisor or similar person. 

In order to prevail, a SOX whistleblower must prove each of the following by a preponderance of the evidence:

• that they engaged in protected activity;

• that the employer knew that they engaged in the protected activity;

• that they suffered an unfavorable personnel action; and

• that the protected activity was a contributing factor in the unfavorable action.

SOX whistleblowers do not need to demonstrate the disclosure of an actual violation of securities law, rather, it is enough to show that they reasonably believed that their employer was either defrauding shareholders or violating an SEC rule. Furthermore, SOX protects complaints about potential securities law.

Whistleblowers are not required to disclose, allege, prove, or approximate the elements of fraud. All that SOX requires an employee to do is prove that they “reasonably believed” that their employer violated, or is about to, violate federal law.

If you believe you have been retaliated against for being a whistleblower, it is important that you speak with an attorney as soon as you can. Contact us or Call us at (626) 432-5422 for a free consultation.