BILL NUMBER: SB 777 CHAPTERED
BILL TEXT
CHAPTER 484
FILED WITH SECRETARY OF STATE SEPTEMBER 22, 2003
APPROVED BY GOVERNOR SEPTEMBER 22, 2003
PASSED THE SENATE SEPTEMBER 4, 2003
PASSED THE ASSEMBLY AUGUST 21, 2003
AMENDED IN ASSEMBLY AUGUST 18, 2003
AMENDED IN ASSEMBLY MAY 29, 2003
INTRODUCED BY Senator Escutia
FEBRUARY 21, 2003
An act to amend Sections 1102.5 and 1106 of, and to add Sections
1102.6, 1102.7, 1102.8, and 1102.9 to, the Labor Code, relating to
whistleblowers.
LEGISLATIVE COUNSEL'S DIGEST
SB 777, Escutia. Whistleblowers.
Existing law prohibits employers from making, adopting, or
enforcing a policy that prevents an employee from disclosing
violations of a state or federal statute, or a violation or
noncompliance with a state or federal regulation to a government or
law enforcement agency, or from retaliating against an employee who
makes a disclosure. It makes a violation punishable as a
misdemeanor.
This bill would extend these protections to employees who report a
violation of a state or federal rule, who refuse to participate in
an activity that would result in a violation of state or federal
statute, or a violation or noncompliance with a state or federal rule
or regulation, or who exercised these rights in former employment.
This bill would prohibit an employer from retaliating against an
employee for exercising any of these rights, including those provided
under existing law, would add an additional civil penalty for
violations, and would establish the evidentiary burdens of the
parties participating in a civil action or administrative hearing
involving an alleged violation of the bill's provisions. This bill
would establish a "whistleblower hotline" within the office of the
Attorney General to receive telephone reports of violations of state
or federal statutes, rules, or regulations, or fiduciary
responsibilities, by an employer. The bill would require the
Attorney General to refer calls received on this hotline to the
appropriate government authority, as specified.
This bill would also require an employer to display, as specified,
a list of an employee's rights under whistleblower laws, including
the telephone number of the hotline created by the bill.
Because a violation of the provisions added by this bill would
constitute a misdemeanor, this bill would create a state-mandated
local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares that unlawful
activities of private corporations may result in damages not only to
the corporation and its shareholders and investors, but also to
employees of the corporation and the public at large. The damages
caused by unlawful activities may be prevented by the early detection
of corporate wrongdoing. The employees of a corporation are in a
unique position to report corporate wrongdoing to an appropriate
government or law enforcement agency.
The Legislature finds and declares that it is the public policy of
the State of California to encourage employees to notify an
appropriate government or law enforcement agency when they have
reason to believe their employer is violating laws enacted for the
protection of corporate shareholders, investors, employees, and the
general public.
It is the intent of the Legislature to protect employees who
refuse to act at the direction of their employer or refuse to
participate in activities of an employer that would result in a
violation of law.
SEC. 2. Section 1102.5 of the Labor Code is amended to read:
1102.5. (a) An employer may not make, adopt, or enforce any rule,
regulation, or policy preventing an employee from disclosing
information to a government or law enforcement agency, where the
employee has reasonable cause to believe that the information
discloses a violation of state or federal statute, or a violation or
noncompliance with a state or federal rule or regulation.
(b) An employer may not retaliate against an employee for
disclosing information to a government or law enforcement agency,
where the employee has reasonable cause to believe that the
information discloses a violation of state or federal statute, or a
violation or noncompliance with a state or federal rule or
regulation.
(c) An employer may not retaliate against an employee for refusing
to participate in an activity that would result in a violation of
state or federal statute, or a violation or noncompliance with a
state or federal rule or regulation.
(d) An employer may not retaliate against an employee for having
exercised his or her rights under subdivision (a), (b), or (c) in any
former employment.
(e) A report made by an employee of a government agency to his or
her employer is a disclosure of information to a government or law
enforcement agency pursuant to subdivisions (a) and (b).
(f) In addition to other penalties, an employer that is a
corporation or limited liability company is liable for a civil
penalty not exceeding ten thousand dollars ($10,000) for each
violation of this section.
(g) This section does not apply to rules, regulations, or policies
which implement, or to actions by employers against employees who
violate, the confidentiality of the lawyer-client privilege of
Article 3 (commencing with Section 950), the physician-patient
privilege of Article 6 (commencing with Section 990) of Chapter 4 of
Division 8 of the Evidence Code, or trade secret information.
SEC. 3. Section 1102.6 is added to the Labor Code, to read:
1102.6. 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.
SEC. 4. Section 1102.7 is added to the Labor Code, to read:
1102.7. (a) The office of the Attorney General shall maintain a
whistleblower hotline to receive calls from persons who have
information regarding possible violations of state or federal
statutes, rules, or regulations, or violations of fiduciary
responsibility by a corporation or limited liability company to its
shareholders, investors, or employees.
(b) The Attorney General shall refer calls received on the
whistleblower hotline to the appropriate government authority for
review and possible investigation.
(c) During the initial review of a call received pursuant to
subdivision (a), the Attorney General or appropriate government
agency shall hold in confidence information disclosed through the
whistleblower hotline, including the identity of the caller
disclosing the information and the employer identified by the caller.
(d) A call made to the whistleblower hotline pursuant to
subdivision (a) or its referral to an appropriate agency under
subdivision (b) may not be the sole basis for a time period under a
statute of limitation to commence. This section does not change
existing law relating to statutes of limitation.
SEC. 5. Section 1102.8 is added to the Labor Code, to read:
1102.8. (a) An employer shall prominently display in lettering
larger than size 14 pica type a list of employees' rights and
responsibilities under the whistleblower laws, including the
telephone number of the whistleblower hotline described in Section
1102.7.
(b) Any state agency required to post a notice pursuant to Section
8548.2 of the Government Code or subdivision (b) of Section 6128 of
the Penal Code shall be deemed in compliance with the posting
requirement set forth in subdivision (a) if the notice posted
pursuant to Section 8548.2 of the Government Code or subdivision (b)
of Section 6128 of the Penal Code also contains the whistleblower
hotline number described in Section 1102.7.
SEC. 7. Section 1106 of the Labor Code is amended to read:
1106. For purposes of Sections 1102.5, 1102.6, 1102.7, 1102.8,
1104, and 1105, "employee" includes, but is not limited to, any
individual employed by the state or any subdivision thereof, any
county, city, city and county, including any charter city or county,
and any school district, community college district, municipal or
public corporation, political subdivision, or the University of
California.
SEC. 8. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.