California Supreme Court Confirms Employee-Friendly Test For Whistleblower Retaliation Suits, Rejecting McDonnell Douglas Standard

• Published date: 18 February 2022
• Subject Matter: Employment and HR, Discrimination, Disability & Sexual Harassment, Employment Litigation/ Tribunals, Whistleblowing
• Law Firm: Lewis Brisbois Bisgaard & Smith LLP
• Author: Ms Tiffany Luu

Los Angeles, Calif. (February 17, 2022) - The California Supreme Court's recent unanimous decision in Lawson v. PPG Architectural Finishes, Inc., __ P.3d __, 2022 WL 244731 (Cal., Jan. 27, 2022) clarified the burden for employers that are defending against whistleblower retaliation claims brought by employees. The state high court confirmed that the employee-friendly standard articulated in Labor Code section 1102.6 applies to claims for whistleblower retaliation brought under Labor Code section 1102.5, and that the burden-shifting framework borrowed from the United States Supreme Court's decision in McDonnell Douglas Corp. v. Green (1973) 411 U.S. 792 (McDonnell Douglas) ? which is applicable to employment discrimination cases ? is not the appropriate standard to use.

Lawson Highlighted Widespread Confusion Among California Courts as to Which of Two Evidentiary Standards Applied to Section 1102.5 Retaliation Claims

In Lawson, a paint merchandiser employee claimed that his employer had fired him because he blew the whistle on his supervisor's fraudulent paint mis-tinting practices, in violation of Labor Code section 1102.5. PPG moved for summary judgment.

Labor Code section 1102.5 provides whistleblower protections to employees who disclose wrongdoing to authorities. As relevant here, section 1102.5 prohibits an employer from retaliating against an employee for sharing information the employee has reasonable cause to believe violates a local, state, or federal rule or regulation with a government agency, with a person with authority over the employee, or with another employee who has authority to investigate or correct the violation.

The district court granted summary judgment in favor of PPG on the retaliation claim because it found that the employee could not satisfy the third step of the McDonnell Douglas test that PPG's termination reason was pretextual. The district court applied the three-part McDonnell Douglas burden-shifting framework: (1) the employee establishes a prima facie case of retaliation; (2) the burden of production shifts to the employer to articulate a legitimate reason for its decision; and (3) the burden shifts back to the employee to show that that the employer's reason is pretextual.

On appeal to the United States Court of Appeals for the Ninth Circuit, the employee argued that the district court should have instead applied the framework set out in Labor Code section 1102.6: (1) the employee demonstrates "by a preponderance of the...