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 ****