California Healthcare Employee Not Required To Exhaust Her Administrative Remedies Before Filing A Whistleblower Claim

A California appellate court recently confirmed in Satyadi v. West Contra Costa Healthcare District that employees need not exhaust administrative remedies before pursuing most state Labor Code claims, even those accruing prior to the enactment of Labor Code § 244(a), which expressly states there is no administrative exhaustion requirement. The decision brings clarity to an area of law noted for its split of authority.

The plaintiff in this case was the clinical laboratory director for a medical center. Beginning soon after she was hired in 2010, and continuing through March 2012, the plaintiff made complaints to the medical center's executive staff about numerous operations practices she believed violated federal and state laws, including the alleged disposal of dangerous chemicals in an unsafe manner, failure to timely report positive blood cultures to the emergency department, inadequate maintenance and testing of important equipment, and insufficient monitoring of methicillin-resistant staphylococcus aureus bacteria (MSRA). The plaintiff alleged she refused to engage in these practices. In March 2012, she was placed on administrative leave pending an investigation into allegations made against her by other employees. On June 26, 2012, following the investigation, the plaintiff's employment was terminated.

Two months later, the plaintiff filed a complaint against the medical center, its parent company, and two employees in the Contra Costa County Superior Court. After the defendants were initially successful in challenging her lawsuit, the plaintiff filed an amended complaint, alleging she was retaliated against for disclosing violations of federal and state law to governing agencies and for her refusal to participate in unlawful activities. Her retaliation claim was brought pursuant to Labor Code section 1102.5(b) and (c).

The defendants again challenged her lawsuit on technical grounds, arguing that the plaintiff failed to exhaust her administrative remedies under Labor Code section 98.7, which states that "[a]ny person who believes that he or she has been discharged or otherwise discriminated against in violation of any law under the jurisdiction of the Labor Commission may file a complaint with the division within six months after the occurrence of the violation." The trial court found the exhaustion requirement to be mandatory, ultimately entering judgment in favor of the defendants.

After judgment was entered, and while the...