BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



           ------------------------------------------------------------ 
          |SENATE RULES COMMITTEE            |                   SB 650|
          |Office of Senate Floor Analyses   |                         |
          |1020 N Street, Suite 524          |                         |
          |(916) 651-1520         Fax: (916) |                         |
          |327-4478                          |                         |
           ------------------------------------------------------------ 
           
                                         
                                 THIRD READING


          Bill No:  SB 650
          Author:   Yee (D), et al
          Amended:  1/20/10
          Vote:     21

           
           SENATE JUDICIARY COMMITTEE  :  3-2, 1/12/10
          AYES:  Corbett, Hancock, Leno
          NOES:  Harman, Walters


           SUBJECT  :    Disclosure of improper governmental activities:  
           California
                        Whistleblower Protection Act:  University of  
          California 

           SOURCE  :     American Federation of State, County and  
          Municipal
                        Employees, AFL-CIO


           DIGEST  :    This bill overturns the California Supreme  
          Courts decision in  Miklosy v. The Regents of the University  
          of California  (2008) 44 Cal.4th 876, which held that an  
          employee of the University of California (UC) who is a  
          whistleblower cannot sue for damages for retaliation where  
          the University timely decided a retaliation complaint.   
          This bill authorizes an action for recovery of damages only  
          if the injured party first filed a complaint and the  
          University either reached a decision or failed to reach a  
          decision within the time limit specified by the University,  
          which time limit cannot exceed 18 months.  The bill applies  
          the same test for recovery of damages to an employee or  
                                                           CONTINUED





                                                                SB 650
                                                                Page  
          2

          applicant for employment of the California State  
          University.  This bill provides that this act shall only  
          affect an action for damages or other legal remedies  
          arising on or after January 1, 2011.

           ANALYSIS  :    Existing law, the California Whistleblower  
          Protection Act (CWPA), was enacted so that "state employees  
          should be free to report waste, fraud, abuse of authority,  
          violation of law, or threat to public health without fear  
          of retribution." (Gov. Code Sec. 8547 et seq.)

          Existing law protects state employees against whistleblower  
          retaliation by providing for the filing of a complaint with  
          the State Personnel Board (SPB) and, after the SPB has  
          issued or failed to issue a decision or findings on the  
          complaint, by providing for the filing of an action for  
          damages in superior court.  (Gov. Code Sec. 8547.8.)  The  
          SPB is required to initiate a hearing or investigation  
          within 10 working days of receipt of the complaint and  
          complete the findings of the hearing or investigation  
          within 60 working days thereafter.  (Gov. Code Sec. 19683.)

          Existing law, under the CWPA, provides the same protection  
          and procedure to employees of the UC as that given to state  
          employees, requiring however that a whistleblower  
          retaliation complaint be filed first with the University,  
          and providing that an action for damages may not be brought  
          unless the University failed to reach a decision within the  
          time limits established by the regents for this purpose.   
          (Gov. Code Sec. 8547.10.)  This statute was construed by  
          the California Supreme Court to mean that where the  
          University reached a decision within the time limits set by  
          the UC Regents pursuant to Section 8547.10, a plaintiff  
          cannot file an action for damages in superior court.   
          (  Miklosy v. The Regents of the University of California   
          (2008) 44 Cal.4th 876.)

          Existing law, under the CWPA, provides the same protection  
          and procedure to employees of the California State  
          University (CSU) as that given to state employees,  
          requiring however that a whistleblower retaliation  
          complaint be filed first with the CSU, and providing that  
          an action for damages may not be brought unless the CSU  
          failed to reach a decision within the time limits  







                                                                SB 650
                                                                Page  
          3

          established by the trustees for this purpose.  Under these  
          provisions, however, an injured party (plaintiff in a  
          whistleblower retaliation complaint) is not precluded from  
          seeking a remedy if the CSU has not satisfactorily  
          addressed the complaint within 18 months.  (Gov. Code Sec.  
          8547.12.)

          This bill provides that an action for damages may be  
          brought only if the injured party has filed a complaint and  
          the university has reached or failed to reach a decision  
          within the time limits established by the regents for this  
          purpose.  This bill overturns  Miklosy v. The Regents of the  
          University of California  (2008) 44 Cal.4th 876. 

          This bill would not preclude an employee or applicant of  
          the UC from filing an action to recover damages if the  
          university has not satisfactorily addressed the complaint  
          filed by the employee or applicant within 18 months.

          This bill provides that it shall only affect an action for  
          damages or other legal remedies arising on or after January  
          1, 2011.

           Background
           
          Plaintiffs Miklosy and Messina are computer scientists who  
          were employed by the University of California at the  
          Lawrence Livermore National Laboratory (Laboratory).  In  
          the course of their work, the scientists identified  
          problems with the project, which they expressed to  
          management orally and in writing.  On February 28, 2003,  
          three supervisors fired Miklosy, who then overheard the  
          same three supervisors declare that Messina would be next.   
          Messina then submitted a letter of resignation and was  
          asked to reconsider over the weekend.  However, when she  
          returned to her office after the meeting, she found that  
          her computer had been disconnected.  After another meeting,  
          and overhearing another conversation where the supervisor  
          indicated an intent to fire Messina, Messina resigned.

          Plaintiffs then filed complaints with the University under  
          the CWPA.  The Laboratory followed the procedure outlined  
          in the statute, and reached a decision adverse to the  
          plaintiffs within the time limits specified in its internal  







                                                                SB 650
                                                                Page  
          4

          policies.  This decision became final.  Plaintiffs then  
          filed a damages action in superior court against the  
          University and three supervisory employees alleging several  
          causes of action, among them unlawful retaliation in  
          violation of the CWPA.  The trial court sustained a  
          demurrer, and the Court of Appeal affirmed, holding that  
          plaintiffs had no viable claim under the CWPA because the  
          University timely resolved their complaints and further  
          that the other common law claims were statutorily barred.
          The California Supreme Court affirmed, holding that the  
          statutory language in the CWPA, particularly those  
          provisions pertinent to the UC, "means what it says,  
          precluding a damages action when, as here, the University  
          of California has timely decided a retaliation complaint."

          This bill overturns the  Miklosy  decision by providing that  
          an injured UC whistleblower employee may bring an action  
          for damages if the University reached or failed to reach a  
          decision regarding a retaliation complaint filed by the  
          injured employee within established time limits for  
          reaching that decision.  The bill also would place a time  
          limit of 18 months from the filing of the complaint for the  
          university to reach a decision.

           Prior Legislation  

          AB 2988 (Feuer, 2008) would have overturned the  Miklosy   
          decision; and would have declared the intent of the  
          Legislature to enact legislation to ensure that employees  
          of the UC are given the same protection under the CWPA as  
          the protection provided to employees of the CSU system.   
          The bill would have been an urgency measure so that the  
          protections for employees of the UC may be preserved  
          immediately.  This bill was later gutted and amended.

          SB 219 (Yee) was vetoed.  The Governor's veto message  
          states:

               I strongly support correcting the current problem with  
               existing law concerning the availability of judicial  
               review for employees of the University of California  
               that file claims of retaliation against the University  
               of California for violations of the Whistleblower  
               Protection Act.  Unfortunately, rather than extending  







                                                                SB 650
                                                                Page  
          5

               the same protections as provided for California  
               University employees and other state employees to  
               employees of the University of California, this  
               measure, as drafted, could discourage employees of the  
               University of California from exhausting their  
               administrative remedies before filing claims in  
               superior court.

          Heeding the Governor's veto message, this bill redrafts the  
          pertinent language in the CWPA applicable to the UC to  
          clarify that an action for damages would be available to UC  
          employees as it is to CSU employees, so long as a complaint  
          was timely filed as required by the CWPA.  It also applies  
          the 18-month time limit, applicable to the CSU to process a  
          whistleblower employee's complaint of retaliation, to UC  
          employees or employment applicants' complaint of  
          retaliation.  It is not clear whether this language in SB  
          650 is sufficient to address the Governor's concerns with  
          the language in SB 219. 

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  No    
          Local:  No

           SUPPORT  :   (Verified  1/20/10)

          American Federation of State, County and Municipal  
          Employees,
            AFL-CIO (source) 
          American Federation of State, County and Municipal  
          Employees,
            Local 3299
          Californians Aware
          California Employment Lawyers Association
          California Faculty Association
          California Labor Federation, AFL-CIO
          California Newspaper Publishers Association
          California Nurses Association
          Council of UC Faculty Associations
          San Francisco Labor Council
          Law Office of Mary-Alice Coleman
          The Greenlining Institute

           OPPOSITION  :    (Verified  1/20/10)








                                                                SB 650
                                                                Page  
          6

          California State University

           ARGUMENTS IN SUPPORT  :    According to the author's office: 

               There exists ambiguity in Government Code Section 8547  
               with regard to who is protected under the State's  
               Whistleblower Protection Act, how they are protected  
               and what their rights are.

               In July 2008, the California Supreme Court ruled  
               unanimously that University of California employees  
               who are retaliated against because they reported  
               wrongdoing cannot sue for damages under the state's  
               Whistleblower Protection Act, so long as the  
               University itself reviews the complaints and reaches  
               decisions in a timely fashion.  The ruling uncovered  
               an oversight made by the Legislature when the Act was  
               amended in 2001, which provided legal standing for all  
               other state employees, including employees of the  
               California State University, to seek damages.

               While the Court was unanimous in their ruling, three  
               of the seven justices (Chief Justice George and  
               Justices Werdegar and Moreno) urged the Legislature to  
               consider changes to the law as the current statute  
               undermines the Act.

               Thus, unlike all other state employees, UC and CSU  
               employees can only seek damages in court if the  
               university fails to reach a decision regarding the  
               complaint.  It is necessary to give all CSU and UC  
               employees, who exercise the good practice of reporting  
               waste, fraud, and abuse, the same protections against  
               retaliation from the administration.  Otherwise, the  
               university is both judge and jury of its own defense.   
               Giving whistleblowers the right to go to court will  
               also provide a strong incentive to the universities to  
               adequately address the whistleblower complaints  
               administratively.

           ARGUMENTS IN OPPOSITION  :    California State University  
          writes:

               Having an administrative review in place that is  







                                                                SB 650
                                                                Page  
          7

               clearly defined for all parties is in the best  
               interest of all and only if a claim has not been  
               resolved should it be appropriate to use the court  
               system.  This proposed change in law, allowing an  
               employee to file for a civil action at anytime, makes  
               the internal investigation process useless and will no  
               doubt lead to increased costs for the system.  
               Additionally, internal reviews allow the CSU to  
               develop systemwide policies and procedures to ensure  
               whistle blower protections. While we do note that the  
               measure has been keyed as being non-fiscal, we believe  
               that by not using the administrative process first,  
               that the CSU will incur unnecessary costs.


          RJG:nl  1/19/10   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

                                ****  END  ****