BILL ANALYSIS
SENATE LOCAL GOVERNMENT COMMITTEE
Senator Dave Cox, Chair
BILL NO: AB 1666 HEARING: 6/16/10
AUTHOR: Swanson FISCAL: No
VERSION: 6/9/10 CONSULTANT:
Weinberger
WHISTLEBLOWER HOTLINES
Background
An employer cannot retaliate against an employee for
disclosing, to a government or law enforcement agency,
information that the employee believes discloses violations
of state or federal statutes or regulations (AB 2452,
Maxine Waters, 1984). By shielding employees from negative
consequences, whistleblower protection is an incentive to
report wrongdoing.
The California Whistleblower Protection Act authorizes the
State Auditor to receive complaints from state employees
and members of the public who want to report improper
governmental activity (SB 37, Maddy, 1993). An "improper
governmental activity" is any action that violates the law,
is economically wasteful, or involves gross misconduct,
incompetency, or inefficiency. The complaints received by
the State Auditor are confidential, and the identity of the
complainant may not be revealed without the permission of
the complainant, except to an appropriate law enforcement
agency conducting a criminal investigation. If there is
reasonable cause to believe that a state employee or agency
has engaged in improper governmental activity, the State
Auditor must report the nature and details of the activity
to the head of the employing agency, or the appropriate
appointing authority. The State Auditor must keep
investigations confidential, but may issue reports of
substantiated investigations, keeping confidential the
identity of all individuals involved.
The Attorney General must maintain a statewide
whistleblower hotline to receive calls from the public with
information regarding possible violations of state or
federal statutes, rules, regulations, or violations of
fiduciary responsibility by a corporation or limited
liability company to the shareholders, investors, or
employees. The Attorney General must refer calls to the
AB 1666 -- 6/9/10 -- Page 2
appropriate government authority for further investigation.
During the initial review, the identities of the
whistleblower and the party being investigated are
confidential (SB 777, Escutia, 2003).
In response to city auditors' concerns that state law
insufficiently protected whistleblowers who call local
hotlines, and individuals who are investigated as the
result of those calls, the Legislature imposed
confidentiality rules on local whistleblower hotline calls
and investigations (AB 2001, Swanson, 2008). City
officials want to clarify some of the Swanson bill's
provisions.
Proposed Law
I. Fraud, waste, and abuse . Current law allows a city,
county, or city and county auditor or controller to
maintain a whistleblower hotline to receive calls from
people who have information regarding possible violations
by local government employees of state, federal, or local
statutes, rules, or regulations.
Assembly Bill 1666 instead authorizes a local whistleblower
hotline to receive calls from people who have information
regarding "fraud, waste, or abuse" by local government
employees. AB 1666 defines "fraud, waste, or abuse" as any
activity by a local agency or employee that is undertaken
in the performance of the employee's official duties,
including activity outside the scope of his or her
employment, that:
Violates any local, state, or federal law or
regulation relating to corruption, malfeasance,
bribery, theft of government property, fraudulent
claims, fraud, coercion, conversion, malicious
prosecution, misuse of government property, or willful
omission to perform duty.
Is economically wasteful.
Involves gross misconduct.
The bill specifies that the term "improper government
activity" has the same meaning as "fraud, waste, or abuse."
II. Confidentiality . Current law allows a local auditor
or controller to conduct an investigative audit after
receiving specific information that an employee or local
government has engaged in improper activity. An
investigative audit must be kept confidential, except to
AB 1666 -- 6/9/10 -- Page 3
issue any report of an investigation that has been
substantiated, or to release any findings resulting from a
conducted investigation that are necessary to serve the
public interest. The identity of the individual or
individuals involved must be kept confidential.
Assembly Bill 1666 specifies that the identity of the
individuals reporting the improper government activity, and
the subject employees, must be kept confidential except ,
that an auditor or controller can provide a copy of a
substantiated audit report that includes the identities of
the subject employees and other pertinent information
concerning the investigation to the appropriate appointing
authority for disciplinary purposes. The substantiated
audit report, and subsequent investigatory materials or
information, and the disposition of any resulting
disciplinary proceedings are subject to the confidentiality
provisions of applicable local, state, and federal
statutes, rules, and regulations.
AB 1666 also makes additional technical and conforming
amendments.
Comments
1. Fixing problems . In implementing the local
whistleblower hotline rules enacted by the 2008 Swanson
bill, San Diego city officials identified three problems
that AB 1666 fixes. First, current law broadly allows
hotlines to collect information on possible violations of
state, federal, or local statutes, rules, or regulations.
By narrowing this language to "fraud, waste, and abuse," AB
1666 ensures that the local whistleblower process focuses
on those activities and not on personnel complaints that
are more appropriately handled by human resources
departments. Second, the bill specifies that the
confidentiality rules do not prohibit an auditor or
controller from providing a substantiated audit report to
an appropriate authority for disciplinary purposes. Third,
the bill clarifies that its confidentiality provisions do
not apply to complaints submitted to other city or county
agencies or hotlines.
AB 1666 -- 6/9/10 -- Page 4
2. Almost the same . The rules that AB 1666 imposes on a
local auditors who release substantiated investigative
audit reports to appointing authorities for disciplinary
purposes are almost the same as the rules that apply to the
State Auditor. However, the State Auditor must send a
copy of an audit report to an employee's appointing
authority or employing agency whenever there is reasonable
cause to believe the employee has engaged in an improper
governmental activity. State law also requires that the
individual who receives a report from the State Auditor to
report back regularly regarding any action taken in
response to the improper governmental activity. To mirror
the rules that apply to the State Auditor, the Committee
may wish to consider amending AB 1666 to require a local
auditor, with reasonable cause, to provide a copy of an
audit report to an employee's appointing authority or
employing agency and to require reports back to the auditor
regarding any disciplinary actions taken in response to
improper government activity.
Assembly Actions
Assembly Local Government Committee: 9-0
Assembly Floor: 76-0
Support and Opposition (6/10/10)
Support : City of San Diego.
Opposition : Unknown.