On January 27, 2022, the California Supreme Court, in Lawson v. PPG Architectural Finishes, Inc. (Cal., Jan. 27, 2022) __ P.3d __, 2022 WL 244731, clarified the evidentiary standard for presenting and evaluating retaliation claims under California Labor Code Section 1102.5 (“section 1102.5 whistleblower retaliation claim”).   Lawson involved a workplace retaliation claim brought by a sales representative selling paint products to home improvement stores in Southern California. The plaintiff claimed his employer terminated him because he complained about being instructed to alter the tint of certain paint colors to avoid having to repurchase less popular paints from the retailer later.

In 2003, California lawmakers enacted Labor Code Section 1102.6, setting forth a framework for whistleblower retaliation claims that varied from the burden-shifting test established by the United States Supreme Court in McDonnell Douglas Corp. v. Green (1973) 411 U.S. 792 (“McDonnell Douglas”).  Despite section 1102.6’s enactment, some California courts continued to apply the McDonnell Douglas test to section 1102.5 whistleblower retaliation claims.

In Lawson, the Ninth Circuit asked the California Supreme Court to settle the correct standard for a section 1102.5 whistleblower retaliation claim.  The Court concluded that plaintiffs must only establish that their protected activity was a contributing factor in the alleged adverse action by preponderance of the evidence.  A defendant then must show by clear and convincing evidence that the alleged adverse action was taken for legitimate, independent reasons, regardless of whether the employee had engaged in protected activity.

Most notably—a plaintiff with a section 1102.5 whistleblower retaliation claim no longer needs to prove that the non-retaliatory reason proffered by the defendant for the adverse action was pretextual.

California employers should be mindful of the potential consequences of the Lawson decision, and consult counsel to ensure their workforce management practices and protocols feature preventative compliance mechanisms to manage and mitigate the risk of section 1102.5 whistleblower retaliation claims.  Given the widening net of potential exposure, employers should also strongly consider investing in training of managers to ensure that they understand the critical role they plan in recognizing when an individual engages in “protected activity” and ensuring that any “adverse action” taken subsequently is defensible, particularly in light of this recent decision.