California Supreme Court Gives Preference to Employee-Friendly State Law Framework Rather Than Burden-Shifting Test Under Federal Law

On January 27, 2022, the California Supreme Court, the state’s highest court, penned a decision backing the use of state law when evaluating whistleblower retaliation claims brought under the state’s labor code as opposed to the burden-shifting test commonly used in federal discrimination cases.  

Under Section 1102.6 of the California Labor Code, plaintiffs must only first show by a preponderance of the evidence that an employer retaliated against them for whistleblowing by subjecting the employee to an adverse employment action such as demotion or termination.  To prevail on such a claim, an employer must then demonstrate by “clear and convincing evidence” that it would have taken the action against the employee for “legitimate, independent reasons” even if the employee did not participate in whistleblowing activity.  

Under the burden-shifting test which originated from the United States Supreme Court’s 1973 landmark decision in McDonnell Douglas Corp. v. Green, a plaintiff must first establish a prima facie case of unlawful retaliation, and the burden then shifts to an employer to prove that the adverse employment action was taken for non-retaliatory purposes.  If an employer succeeds in doing so, the burden shifts back to the employee to demonstrate that the employer’s reason was “pretext” for unlawful retaliation. 

The case before the California Supreme Court was brought by a former employee of PPG Industries, Wallen Lawson, who alleged the paint supplier terminated him after he complained that his manager directed him to engage in unethical conduct.  A lower court found in favor of PPG Industries, after applying McDonnell Douglas’s burden-shifting framework.  On appeal, Lawson claimed the Court incorrectly used this framework when it should have applied the framework under Section 1102.6 of the California Labor Code. 

Justice Leondra Kruger (rumored to be a candidate to replace Justice Stephen Breyer’s seat on the United States Supreme Court) opined that the McDonnell Douglas test isn’t well-suited in cases involving mixed motives or, “involving multiple reasons for the challenged adverse action.” Therefore, Section 1102.6, is better suited in these types of cases because it allows plaintiffs to successfully prove unlawful retaliation even where an employer can demonstrate other factors played a role in their actions.

“Unsurprisingly, we conclude courts should apply the framework prescribed by statute in Labor Code Section 1102.6,” Justice Kruger wrote. “Under the statute, employees need not satisfy the McDonnell Douglas test to make out a case of unlawful retaliation.”  The justices of the California Supreme Court mainly took issue with the final step in McDonnell Douglas’s burden-shifting framework, which requires an employee to prove pretext. 

“There is, then, no reason why whistleblower plaintiffs should be required to satisfy the three-part McDonnell Douglas inquiry—and prove that the employer’s proffered legitimate reasons were pretextual—in order to prove that retaliation was a contributing factor under Section 1102.6,” she stated.

Individuals who believe their employer has subjected them to retaliation or discrimination should seek legal counsel to analyze their potential claims.