On September 30, 2020, the governor signed Assembly Bill 1947 (text here) into law, adding attorney’s fees to the remedies allowed in actions brought under Labor Code section 1102.5.
Labor Code section 1102.5 protects employees from retaliation (including termination of employment) for disclosing information to a government or law-enforcement agency or to “another employee who has authority to investigate, discover, or correct the violation or noncompliance,” or for testifying before a public body, “if the employee has reasonable cause to believe that the information discloses a violation of state or federal statute, or a violation of or noncompliance with a local, state, or federal rule or regulation, regardless of whether disclosing the information is part of the employee’s job duties.”
This is very broad wording. Anytime an employee “discloses information” (e.g., makes a complaint, protests conduct, tells an executive that something can’t be done because it breaks the law, etc.) to the right people in the workplace and that the employee has “reasonable cause to believe” (i.e., the employee doesn’t have to actually be correct, the belief could be wrong, etc.) the information “discloses a violation state or federal statute, or a violation of or noncompliance with a local, state, or federal rule or regulation,” the employee may be able to make an argument that the employee engaged in protected activity for which the employer cannot retaliate.
Add to this Labor Code section 1102.6, which requires the employer to defend its case with the higher burden of proof of clear and convincing evidence (as opposed to a mere preponderance of the evidence (i.e., the more-likely-than-not standard)), and you’ve got a very powerful statute:
In a civil action or administrative proceeding brought pursuant to Section 1102.5, once it has been demonstrated by a preponderance of the evidence that an activity proscribed by Section 1102.5 was a contributing factor in the alleged prohibited action against the employee, the employer shall have the burden of proof to demonstrate by clear and convincing evidence that the alleged action would have occurred for legitimate, independent reasons even if the employee had not engaged in activities protected by Section 1102.5.
Labor Code § 1102.6.
The main tool or pressure point missing from this statute was the remedy of attorney’s fees. Without that remedy, alleged retaliatory wrongful terminations were in many cases were not economically worth pursuing because, even if proven, the damages were minimal (e.g., employee got a new job in a very short period of time so there’s little or no wage loss and, depending on the circumstances, not enough provable emotional harm to warrant a civil action), meaning a plaintiff-side attorney operating on a contingent-fee basis would never be able to receive a fee that would make the endeavor financially viable.
That all changed when the governor signed Assembly Bill 1947, or, more accurately, will change effective January 1, 2021, when the new law goes into effect.
Among other things, the new law adds subdivision (j) to Labor Code section 1102.5, providing: “The court is authorized to award reasonable attorney’s fees to a plaintiff who brings a successful action for a violation of these provisions.” Note that this fee provision expressly applies “to a plaintiff.”
This is a huge change in the law that will bring vastly increased leverage to plaintiffs and their attorneys in whistleblower-retaliation cases in California. Now plaintiffs and their attorneys have the potential to seek fee awards of hundreds of thousands of dollars or more even in lower-damage cases brought under section 1102.5.
Some comments from the Senate Floor Analyses of August 21, 2020 (linked here):
Workplace anti-retaliation laws are the bedrock upon which all other workplace rights rest. As a practical matter, employees have no real right to minimum wage, overtime, rest breaks, worksite safety, or to be free from harassment if, upon attempting to exercise those rights, they can be fired immediately.
…
Labor Code Section 1102.5 is a whistleblower law, providing protection to workers who, in good faith, come forward to disclose legal violations taking place in the workplace. Under existing law, workers who prevail in lawsuits alleging that their employer violated these protections may obtain damages, but they will still be stuck paying their own attorneys’ fees, unless they can find another way to convince the judge to make the employer pay those fees. This bill would alter that dynamic by authorizing courts to award reasonable attorneys’ fees to a worker than prevails on a claim of retaliation for blowing the whistle on legal misconduct at their workplace.
Senate Rules Committee, AB 1947 Senate Floor Analyses (Aug. 21, 2020). (See here regarding Senate Floor Analyses.)
As many in this field know, the new law will have benefits and drawbacks. The benefits are clear: victim employees with righteous but lower-damage retaliation cases that otherwise wouldn’t have been pursued may now be able to find legal representation. The drawbacks are also clear: the new law can be used to extract much larger settlements even in low-merits, especially where the possibility of a large adverse fee award is too much risk for a defendant to defend against (even small claims have the possibility of bankrupting small businesses in the event of a large fee award).
Whether this new state of the law is good or bad is a policy question that will be argued both ways by lawyers on both sides of the bar (and the argument will certainly be shaped by the particular case in front of and the experiences of the arguer). But one thing is for sure: this is a massive change in the law.