Amid a bevy of legislation crossing the Governor’s desk directly relating to the ongoing public health crisis, Governor Newsom approved AB 1947 with little public fanfare, but significant implications for employers.  The new legislation amends the Labor Code in two substantive ways:  (1) it lengthens the period of time in which employees can file complaints with the Division of Labor Standards Enforcement (“DLSE”); and (2) authorizes a court to award reasonable attorney’s fees to a plaintiff who prevails in a “whistleblower” action under Labor Code § 1102.5.  While not expressly considered “coronavirus” legislation, it is clear the coronavirus pandemic influenced the Legislature’s decision to further expand certain rights under California’s workplace antiretaliation laws.

Lengthened Filing Period for Labor Commissioner Complaints

The DLSE, headed by the Labor Commissioner, is the state agency charged with enforcing California’s labor laws, including Labor Code provisions and the Industrial Welfare Commission Wage Orders governing the wages, hours, and working conditions of California employees.  Labor Code § 98.7 enables workers to file retaliation claims with the Labor Commissioner.  Such claims trigger an administrative investigation which can lead to penalties against the employer and reinstatement of the worker.  This process is typically much faster and more streamlined than traditional litigation in court.

Under existing law, any person who believes they have been discharged or otherwise discriminated against in violation of any law enforced by the Labor Commissioner has six months to file their claim with the Labor Commissioner.  AB 1947 amends Labor Code § 98.7 and extends the deadline to file a claim with the Labor Commissioner to one year.

Attorneys’ Fees Available for Prevailing Whistleblowers

Labor Code § 1102.5 prohibits employers from making, adopting, or enforcing any policy that prevents an employee from disclosing information to a government or law enforcement agency where the employee has reasonable cause to believe that the information discloses a violation of a state or federal law.  The statute also prohibits retaliation against any employee who discloses such information, refuses to participate in an activity that would result in a legal violation, or has exercised such a right in a former job.

Prior to AB 1947, workers who prevailed in lawsuits alleging that their employer violated these protections could obtain damages, but the statute did not allow prevailing plaintiffs the ability to recover attorneys’ fees.  AB 1947 alters that dynamic.  As amended, Labor Code § 1102.5 now expressly authorizes courts to award reasonable attorneys’ fees to a worker who prevails on a “whistleblower” claim under Labor Code § 1102.5.

Takeaways

These fairly straightforward, seemingly innocuous changes to the Labor Code have important ramifications for employers.

First, employers may notice an uptick in the number of Labor Commissioner proceedings brought by employees.  Employees now have the luxury of additional time to obtain documents and speak with potential witnesses before pursuing administrative relief.  Employees thus have the time to consider bringing an administrative action and, depending on the outcome, may still subsequently pursue a civil action.  This could result in employers being forced to defend against claims in both an administrative and a court proceeding.

Second, the availability of attorneys’ fees for prevailing plaintiffs in Section 1102.5 whistleblower suits may incentivize plaintiffs’ attorneys to bring additional whistleblower suits, regardless of the validity of the claim.  Adding in a one-way fee shifting provision only in favor of the employee will likely increase the attractiveness of this type of claim for plaintiffs’ lawyers as a tool to extract settlements.  The new law further undermines administrative resolution of these claims, as there is a financial incentive to proceed to court and engage in litigation as opposed to informal resolution.

Third, these concerns are not theoretical.  As coronavirus legislation continues to proliferate, so, too, do the opportunities for enterprising plaintiffs to assert whistleblower allegations and pursue remedies under the new framework.  As a result, it is vitally important that employers be aware of and promptly respond to new laws and regulations as they are enacted.