BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SB 1336 HEARING: 4/25/12
AUTHOR: Yee FISCAL: Yes
VERSION: 4/18/12 TAX LEVY: No
CONSULTANT: Ewing
WHISTLEBLOWER PROTECTIONS
Requires the release of the results of substantiated audit
investigations, including the identity of the subjects of
those investigations.
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
SB 1336 -- 4/18/12 -- Page 2
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
identities 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 release findings from a
substantiated audit, including the identity of the subject
of the audit, and information on actions taken by any
agency that received the results of the audit.
SB 1336 -- 4/18/12 -- Page 3
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. SB 1336 retains all of the protections in
place to protect the identities of whistleblowers and other
witnesses who provide information during an audit
investigation. The bill requires that the results of
substantiated audits, including the identity of people who
violate the public's trust, be released. The bill will
further dissuade improper governmental activities by making
it easier for the public to become aware when they occur.
2. Lost authority . SB 1336 removes the existing
discretion that auditors have over when to publicly release
information on their investigations. Auditors are held to
a high national standard and are charged with protecting
the public interest. On a case-by-case basis, they need
the discretion to determine when to publicly release
information, independent of whether an investigation has
substantiated an improper governmental activity. SB 1336
would prevent an auditor from withholding information if an
audit has substantiated an allegation, even when doing so
is in the public's interest. It also would prevent an
auditor from releasing information on unsubstantiated
allegations, when that is the right thing to do.
3. 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 allegations of
those activities are substantiated - will chill the
willingness of potential whistleblowers to come forward.
The Committee may wish to consider amendments that preserve
SB 1336 -- 4/18/12 -- Page 4
the ability of auditors to release information on
unsubstantiated investigations, and provide the auditor
with discretion over whether to release the identity of the
target of a substantiated audit, when they determine that
doing so is in the public's interest or to keep that
information confidential when maintaining confidentiality
is in the public's interest.
4. 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 (4/19/12)
Support : American Federation of State, County and Municipal
Employees, AFL-CIO; California Correctional Supervisors
Organization; California Newspaper and Publishers
Association; Californians Aware.
SB 1336 -- 4/18/12 -- Page 5
Opposition : League of California Cities; Ann-Marie Hogan,
City Auditor, City of Berkeley; Courtney A. Ruby, City
Auditor, City of Oakland.