Employers face penalties for whistleblower claims

In October of 2013, California Governor Jerry Brown signed into law SB 496, which expanded protections for whistleblowers in California by significantly altering California Labor Code Section 1102.5, California’s general whistleblower statute. These amendments became effective on January 1, 2014.


SB 496 expands protections for California whistleblowers by extending the reach of California Labor Code Section 1102.5, to employees who report suspected illegal behavior: (1) internally to “a person with authority over the employee” or to another employee with the authority to “investigate discover, or correct” the reported violation; or (2) externally to any “public body conducting an investigation, hearing, or inquiry.” SB 496 also amends 1102.5 and declares unlawful any employer’s rule, regulation, or policy that prevents the disclosure of reasonably-believed violations of local (in addition to state and federal) laws, rules, or regulations.


SB 496 imposes liability where any person acting on the employer’s behalf retaliates against an employee who engages in protected whistleblowing activity. In addition, employers and persons acting on their behalf may not retaliate against an employee for disclosing such information or because the employer believes the employee has disclosed or may disclose the information externally or internally.


The changes in California‚Äôs whistleblower statute and the corresponding adjustments in the Labor Code pursuant to SB 496 can open up employers to serious liability and civil penalties. Employers should be concerned about the fact that they can now be found liable for “anticipatory retaliation” if they, or any person acting on their behalf, take adverse action against an employee based on the mere belief that the employee has disclosed or might disclose information about a reasonably-believed violation of federal, state, or local law. Thus, training of management and supervisorial staff regarding these new retaliation provisions is imperative.