A new California appellate decision clarifies just when an employer can be held liable for retaliation.

Among the myriad ways California businesses can find themselves subject to an employment lawsuit is an employee claim of retaliation. Under this legal theory, employees who are subjected to adverse employment action because of reporting illegal activity to a government agency are able to recover wage loss and other economic damages.

The theory is understood to protect employees from fear of reporting harassment, discrimination, and other illegal employment actions. However, a new ruling by a California appellate court sheds light on just how broad this legal theory can be.

Theft leads to retaliation claim

In a recent case, decided by the California 5 th District Court of Appeal, an employer was held to have retaliated against an employee for terminating her after she reported the theft of her wedding ring to police. Police came to the place of employment twice to investigate the theft and her employer felt that had disrupted the work environment.

The case rose to the appellate level based on one question: under California law, does an employer's alleged retaliation have to be directly related to the operation of the business? In other words, if the employee reports on illegal activity that isn't about employment matters, can the employee still sue for retaliation?

The court of appeals, in October, 2015, held the employee did have a cause of action and upheld her jury award of $117,768.

Legal standard for a claim of retaliation

The case provides the legal requirements for a retaliation claim. Under California Labor Code Section 1102.5, an employee can sue for retaliation if:

· The employee engaged in protected activity

· The employer subjected her to an adverse employment action, including demotion or termination; and

· The two are related.

Importantly, employees are not required to prove the employer acted against the law or public policy regarding its business enterprise, such as its operation or practices. Instead, the claimant must show merely that he or she engaged in any protected activity, which includes reporting on any illegal activity taking place at the business.

What it means for California businesses

Ultimately, the case means that businesses must add to their caution in taking adverse employment action against employees. Even if the business has a legitimate business reason for the termination or demotion of an employee, and the termination or demotion is not tied directly to a violation of public policy, a business can still be held liable for retaliation.

Also, remember that retaliation claims under the California Labor Code are not limited to reporting wrongdoing to state and federal agencies. Retaliating against an employee for bringing notification of wrongdoing to supervisors and other individuals in the business with the ability to investigate claims can also give rise to liability.

Facing a lawsuit? Contact Burkhalter Kessler Clement & George LLP

BKCG is an experienced business litigation law firm in Orange County, California, which represents businesses in litigation and alternative dispute resolution regarding employment law disputes.

Contact BKCG for questions regarding your employment law matter or to discuss your legal options when faced with an employment law claim.