Whistleblower Protection

Whistleblower Protection

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 basic provisions of these laws are as follows:

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 was amended in 2014, and now protects employees who report violations internally or to any external public body. Importantly, the Whistleblower Protection Act covers both public and private employers.

The basic provisions of the Whistleblower Protection Act are as follows:

Section (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. 

Section (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. 

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

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

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

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

Section (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.

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:

SOX is meant to “protect people who have the courage to stand against institutional pressures and say plainly, ‘what you are doing here is wrong’ . . . in the particular way identified in the statue at issue.” Wiest v. Lynch (3d Cir. 2013) 710 F.3d 121, 132. An employee has fulfilled that purpose if they disclose conduct that is within the “ample bounds” of the anti-fraud statutes. Such an employee is therefore protected even if their belief is “reasonable but mistaken.” Leshinsky v. Telvent GIT, S.A. (S.D.N.Y.2013) 942 F.Supp.2d 432, 444 (internal quotation marks and citations omitted).

Accordingly, SOX whistleblowers need not demonstrate the disclosure of an actual violation of securities law. Rather, it is sufficient 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. “A whistleblower complaint concerning a violation about to be committed is protected as long as the employee believes that the violation is likely to happen. Such a belief must be grounded in facts known to the employee, but the employee need not wait until a law has actually been broken to safely register his or her concern.” Sylvester v. Parexel (DOL May 25, 2011) ARB Case No. 07-123, 2011 WL 2165854 at *13; Murray v. UBS Securities, LLC (S.D.N.Y. Apr. 25, 2017) 2017 WL 1498051.

Finally, to be protected under SOX, an employee’s report “need not ‘definitively and specifically’ relate to one of the listed categories of fraud or securities violations in § 1514A.” Nielsen v. AECOM Tech. Corp. (2d Cir. 2014) 762 F.3d 214, 224. Whistleblowers are not required to disclosure, 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. Murray, 2017 WL 1498051, at *10 (quoting Guyden v. Aetna, Inc. (2d Cir. 2008) 544 F.3d 376, 384, superseded on other grounds by statute).

California Whistleblower Claims Attorneys

The attorneys at Hunter Pyle Law take great pride in representing whistleblowers.  Some examples of our clients include:

If you are brave enough to stand up for your rights at work, you deserve whistleblower attorneys who will stand up and fight for you.  Please feel free to contact us for a free and confidential initial intake.