California Supreme Court Holds That McDonnell Douglas Standard Should Not Be Used When Evaluating Whistleblower Retaliation Claims

• Published date: 01 February 2022
• Subject Matter: Employment and HR, Litigation, Mediation & Arbitration, Discrimination, Disability & Sexual Harassment, Trials & Appeals & Compensation, Whistleblowing
• Law Firm: Sheppard Mullin Richter & Hampton
• Author: Ms Elyssa Sternberg

In Lawson v. PPG Architectural Finishes, Inc., __ P.3d __, 2022 WL 244731 (Cal., Jan. 27, 2022), the California Supreme Court clarified that whistleblower retaliation claims brought under Labor Code section 1102.5 should not be evaluated under the McDonnell Douglas test, but instead the standard enumerated in Labor Code section 1102.6. Under the section 1102.6 standard, a plaintiff must show that a protected activity was a contributing factor in a prohibited action against the employee by a preponderance of the evidence. The employer must then demonstrate with clear and convincing evidence that the action would have occurred for legitimate, independent reasons, even if the employee had not engaged in protected action.

Courts Applied One of Two Standards When Evaluating Whistleblower Retaliation Claims

In Lawson, a paint manufacturer employee brought a claim under Labor Code section 1102.5 alleging that his employer discharged him after reporting that paints were purposefully "mistinted" so the manufacturer could avoid having to buy back unpopular colors from retail stores.

Labor Code section 1102.5 prohibits employers from "preventing an employee from disclosing information to a government or law enforcement agency, to a person with authority over the employee, or to another employee" who could investigate the non-compliance if the employee reasonably believes "a violation of state or federal statute, or a violation of or noncompliance with a local, state, or federal rule or regulation" exists. In contrast, the Fair Employment and Housing Act ("FEHA") prohibits retaliation based on an employee's protected activity, which includes resisting or objecting to discrimination or harassment. Lawson clarifies the standard for whistleblower retaliation claims only.

The district court found that the paint manufacturer set forth a legitimate, nondiscriminatory reason for Lawson's termination, namely failing to meet sales targets, and that Lawson failed to produce sufficient evidence that the termination was pretextual. On appeal to the Ninth Circuit, Lawson argued that the district court should have applied the standard set out in section 1102.6 for evaluating whistleblower retaliation claims and not the McDonnell Douglas standard. The California Supreme Court granted review to clarify the correct standard.

The United States Supreme Court established a framework for evaluating discrimination claims based on circumstantial evidence in McDonnell Douglas Corp. v. Green...