BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SB 1336 HEARING: 4/18/12
AUTHOR: Yee FISCAL: Yes
VERSION: 2/24/12 TAX LEVY: No
CONSULTANT: Ewing
WHISTLEBLOWER PROTECTIONS
Makes public, information on audit investigations,
including the identity of the subjects of substantiated
investigations of improper governmental activities.
Background and Existing Law
Numerous public agencies have provisions in place to
receive information from the public, public employees, or
others concerned about a violation of the law or to report
waste, fraud or abuse. 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; SB 951, Hayden, 1999). 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 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).
Numerous local agencies also have established hotlines and
related reporting systems to encourage public reporting of
improper activities. Confidentiality provisions protect
the identities of persons reporting improper activities
through those hotlines (AB 1666, Swanson, 2010).
An employer cannot retaliate against an employee for
disclosing, to a government or law enforcement agency,
information that the employee believes discloses violations
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of state or federal statutes or regulations (SB 777,
Escutia, 2003). By shielding employees from negative
consequences, whistleblower protection is an incentive to
report wrongdoing.
An "improper governmental activity" is any action that
violates the law, is economically wasteful, or involves
gross misconduct, incompetency, or inefficiency.
Complaints received by the State Auditor, or local auditors
through local "Whistleblower hotlines," are confidential,
and a complainant's identity may not be revealed without
the complainant's permission, except to an appropriate law
enforcement agency conducting a criminal investigation.
If there is reasonable cause to believe that improper
governmental activity has occurred, public audit
authorities are required to report on their findings to
relevant officials, which may include the head of the
employing agency, personnel officials, or the appropriate
appointing authority. Generally, when reports of
substantiated investigations are filed, public audit
authorities must keep confidential the identity of
individuals involved unless those individuals grant
permission for the release of their identities.
In general, audit authorities have discretion over whether
and how to issue reports on their investigations. For
substantiated investigations, reports are generally
released. Auditors also have the authority to issue
reports on other investigations when doing so is in the
public's interest. Whether or not an investigation
substantiates an allegation of improper activity, the
identity of individuals involved must remain confidential.
Proposed Law
Senate Bill 1336 directs the State Auditor, the California
State University, and local agencies' auditors that operate
a Whistleblower Hotline, to do the following:
Release findings from a substantiated audit,
including information on any action taken by any
agency that has received the results of the audit.
Issue a report on any investigative audit that has
not been substantiated.
SB 1336 -- 2/24/12 -- Page 3
SB 1336 also removes statutory requirements that public
audit authorities keep confidential the identity of the
targets of substantiated audit investigations, or witnesses
who have been publicly identified.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . SB 1336 will make audit results
public when they substantiate a violation of the public
trust, including the identities of people who have violated
that trust. The bill will further dissuade improper
governmental activities by making it easier for the public
to become aware when they occur. Audit authorities alone
determine whether the release of information on
unsubstantiated audits is in the public's interest. SB
1336 would preserve the confidentiality protections in
place when audits do not substantiate an allegation, but
permit the public to better understand the nature of those
allegations.
2. A chilling response . Auditors who respond to
whistleblower complaints must find a way to thoroughly
investigate an allegation of improper activities while
protecting the identities of people involved. Their
ability to do their job hinges on the public's trust in
their ability to keep identities confidential. SB 1336
undermines that trust. Revealing the identities of people
involved in improper activities, even when they are
substantiated, will make it easier to determine who
contributed information and chill the public's willingness
to come forward.
3. Reporting vs. investigating . Local officials are
concerned that the reporting requirements in the bill for
unsubstantiated allegations will shift limited resources
away from pursuing allegations with merit, toward tracking
and reporting every allegation of a misdeed, no matter how
credible. The Committee may want to consider amending SB
1336 to permit auditors to annually summarize information
SB 1336 -- 2/24/12 -- Page 4
on unsubstantiated claims.
4. Clarity . SB 1336 requires auditors to protect the
identities of people who are witnesses interviewed during
an investigation, unless their identities have been
publicly disclosed. To ensure that auditors can protect
the identities of witnesses when others publicly disclose
their identities, the Committee may want to consider
amending SB 1336 to clarify that the identities of
witnesses, other than the subject of an investigation who
has served as a witness, can only be disclosed upon written
permission from the witnesses themselves.
5. Related legislation . SB 1336 is not the first bill to
address the California Witness Protection Act or related
statutes. AB 1102 (Lara, 2011) clarified the authority of
the State Auditor to conduct audits of the judiciary.
AB 187 (Lara, 2011) authorized the State Auditor to
establish a high-risk local government agency audit program
to identify, audit, and issue reports on any local
government agency, including any city, county, or special
district, or any publicly created entity that the State
Auditor identifies as being at high risk for the potential
of waste, fraud, abuse, or mismanagement, or has major
challenges associated with its economy, efficiency, or
effectiveness.
AB 567 (Villines) revised the California Whistleblower
Protection Act to broaden the class of employees covered,
expanded the definition of "improper governmental activity"
that could be reported by a whistleblower, and permits the
State Auditor to publicly report on recommendations made to
heads of state agencies that have not been fully
implemented after one year, among others.
AB 706 (Parra, 2005) enacted the California State
University (CSU) Employee Reporting of Improper
Governmental Activities Act. It established a procedure
for the investigation of written complaints submitted to a
designated administrator of CSU by employees of, or
applicants for employment at, CSU.
Support and Opposition (4/12/12)
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Support : American Federation of State, County and Municipal
Employees, AFL-CIO; California Correctional Supervisors
Organization; California Newspaper and Publishers
Association.
Opposition : League of California Cities; Ann-Marie Hogan,
City Auditor, City of Berkeley; Courtney Ruby, City
Auditor, City of Oakland.