When Labor Code section 1102.5, generally referred to as the “whistleblower” statute, was enacted in 1984, the Legislature intended to encourage employees to report violations of state and federal laws by their employers without fear of retaliation. The statute endured for nearly 20 years before it was first amended in 2003. It has now been amended again by three separate legislative changes. What has changed and what do these changes mean for employers?
The former version of section 1102.5 provided that employers “may” not engage in certain conduct: such as retaliating against employees who disclose information to a government or law enforcement agency or who refuse to participate in activity that would result in violation of federal or state laws. The amended statute replaces the word “may” with “shall.” This change likely will not have much impact on whistleblower protection since no legal authority suggests employers had an option to retaliate against whistleblowers.
Whistleblowers who disclose information to a government or law enforcement agency have always been protected. The statute now additionally protects whistleblowers who disclose information to a person with authority over the employee or to a person who has authority to investigate, discover or correct the alleged violation or noncompliance. Moreover, to be a protected whistleblower, the employee need only have a “reasonable belief” that employer’s conduct is unlawful. An employee’s report of perceived or actual unlawful conduct to his supervisor, or some other person with authority, evokes section 1102.5 protections, exposing employers to a much wider scope of liability.
The statute also has been amended to protect whistleblowers who provide information to or testify before any public body which is investigating, hearing, or inquiring into an employer’s violation of or noncompliance with local, state, or federal rules or regulations. Also, the statute formerly protected whistleblowers who disclosed potential violations of state and federal rules. Since the amendment added local rules, section 1102.5 is much broader. An employee reporting a perceived violation of a municipal ordinance is now protected under the amended statute.
There is yet another significant change to the statute. Under the prior language of section 1102.5, the employee was required to actually disclose information. The amended statute prohibits employers from retaliating against an employee “because the employer believes that the employee disclosed or may disclose information.” Undoubtedly, this language will be the subject of litigation. Obvious questions arising out of this amendment include how and when an employer “believes” that an employee may disclose or has disclosed information — certainly, a quagmire for employers.
The new amendments to Labor Code section 1102.5 remarkably expand whistleblower protections. Employers will experience challenges in coping with this amended statute. However, employers could minimize unwanted consequences by reviewing and strengthening their whistleblower policies to comport with these changes in the law.