Court of Appeal: Exhaust Administrative Remedies Before Filing Whistleblower Claims under Labor Code Section 1102.5

Everyone's suing for retaliation lately.  Labor Code Section 1102.5 provides an expansive vehicle for doing so.  You don't have to complain to the government; internal complaints are covered. And you don't have to be correct in your assessment that there's a legal violation; you merely have to have a reasonable / good faith belief in what you're saying.   Here's a new wrinkle that will affect these claims (if this decision remains on the books and is not depublished or taken up for review by the California Supreme Court.)

So, Aaron MacDonald worked for the California State Assembly.  He complained to supervisors that co-workers were smoking in violation of statutes regulating smoking in the workplace (or within 20 feet of the entrance to a public building).  Not sure where the employee was smoking.

Anyway, two weeks after complaining, MacDonald was fired. He sued, claiming retaliation under Section 1102.5 and Section 6310 of the Labor Code, both of which prohibit retaliation against employees who make complaints about workplace safety.

The Assembly demurred and won, claiming MacDonald did not exhaust administrative remedies by filing with the Labor Commissioner.  The employee appealed, arguing he did not have to exhaust.

So, per the Court of Appeal, Labor Code Section 98.7 says:

“Any person who believes that he or she has been discharged or otherwise discriminated against in violation of any law under the jurisdiction of the Labor Commissioner may file a complaint with the division within six months after the occurrence of the violation.”3 Section 98.7 outlines a process of investigation and decision by the Labor Commissioner. (Id., subds. (b)-(e).) Subdivision (f) of that section states: “The rights and remedies provided by this section do not preclude an employee from pursuing any other rights and remedies under any other law.” (Id., subd. (f).) Moreover, section 6312 provides: “Any employee who believes that he or she has been discharged or otherwise discriminated against by any person in violation of Section 6310 or 6311 may file a complaint with the Labor Commissioner pursuant to Section 98.7.”

Because Sections 1102.5 and 6310 are "laws under the jurisdiction of the Labor Commissioner," the Court of Appeal held that Section 98.7 was applicable.  The Court then held:

Although sections 1102.5 and 6310 are silent regarding administrative remedies, section 98.7, subdivision (a), provides in pertinent part: “Any person who believes that he or she has been discharged or otherwise discriminated against in violation of any law under the jurisdiction of the Labor Commissioner may file a complaint with the division within six months after the occurrence of the violation.”3 Section 98.7 outlines a process of investigation and decision by the Labor Commissioner. (Id., subds. (b)-(e).) Subdivision (f) of that section states: “The rights and remedies provided by this section do not preclude an employee from pursuing any other rights and remedies under any other law.” (Id., subd. (f).) Moreover, section 6312 provides: “Any employee who believes that he or she has been discharged or otherwise discriminated against by any person in violation of Section 6310 or 6311 may file a complaint with the Labor Commissioner pursuant to Section 98.7.”

The Court relied on Campbell v. Regents of University of California (2005) 35 Cal.4th 311, in which the California Supreme Court reaffirmed (albeit in another context) that when the Legislature provides an administrative remedy, an employee must exhaust it.

A few notes of caution:

1. This decision creates a split with Lloyd v. County of Los Angeles (2009) 172 Cal.App.4th 320.  There, the Court held a plaintiff was not required to exhaust.  The Court here disagreed with Lloyd. So, the California Supreme Court may get involved and nullify this decision pending review.
2. The statute of limitations for filing a charge with the Labor Commissioner is 6 months.  So, if this case stays on the books, it could kill a bunch of statutory causes of action.  
3. The Legislature may overrule this case, although that would be supremely ironic, given the Assembly (acting as an employer) won this case.    
4. This case does not affect common law claims for "wrongful termination in violation of public policy."  This was a public-sector case and no such claim was available to the plaintiff here. 

This decision is MacDonald v.  California and the opinion is here.