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January 8, 2013

Court of Appeal Narrows Scope of Whistleblower Protection Statute

On December 12, 2012 the California Court of Appeal First District, ruled that violations of a charter city’s municipal law are not deemed violations of state law for the purposes of the statewide whistleblower statute set forth in Labor Code section 1102.5(c).  Edgerly v. City of Oakland 2012 WL 6194390, 5 (Cal.App. 1 Dist.) (Cal.App. 1 Dist. 2012).

The Legislature added the “Whistleblower Protection Statute” to the Labor Code by adopting section 1102.5. This section prohibits employers from retaliating against an employee “for refusing to participate in an activity that would result in a violation of state or federal statute, or a violation or noncompliance with a state or federal rule or regulation. (§1102.5(c).) The purpose of section 1102.5(c) is to encourage workplace whistle-blowers to report unlawful acts without fearing retaliation. In contrast to an employee of a private employer, a plaintiff employed by a governmental agency does not need to inform another government agency of the unlawful acts in order to qualify for whistleblower protection. 

To establish a case for whistleblower liability, a plaintiff must show that she or she was subjected to adverse employment action after engaging in protected activity and that there was a causal connection between the two. Protected activity is the disclosure of or opposition to a violation of a state or federal statute, or a violation or noncompliance with a state or federal rule or regulation.

In the case at issue, Edgerly, a former city administrator, sued her public employer alleging that the Mayor at the time wrongfully discharged her in retaliation for her refusal to violate the city’s charter, municipal code, and civil service rules and resolutions.  In the course of carrying out her duties as city administrator, Edgerly questioned several expense reimbursements requests. These included requests regarding the Mayor’s personal expenditures, including payment of a cellular phone bill for the Mayor’s wife, overtime pay for the Mayor’s driver, and increased utility costs associated with security upgrades at the Mayor’s residence.
The trial court dismissed the first two causes of action that were based on her refusal to agree to the Mayor’s violations of the City charter.  The trial court ruled that Edgerly did not show that the misconduct “would result in a violation of a state statute, rule or regulation.” The trial court overruled the demurrer as to the third cause of action, that Edgerly alleged a violation of state statute – Government Code Section 87100.  While the third whistleblower cause of action survived demurrer, the trial court later granted the City’s motion for summary adjudication of the that cause of action because Edgerly failed to produce evidence showing that a state statute was violated. 

On appeal, the court was faced with determining whether the scope of section 1102.5 encompassed local laws enacted by charter cities.  The Court of Appeal held that Edgerly’s perceived violations of the City’s charter and local rules and ordinances are not within the scope of section 1102.5, and her whistleblower claims fail as a matter of law because state law has provided that a charter city is not required to comply with state wage law and because there is no reason to micromanage the employment practices of a charter city.  The Court of Appeal also held that because Edgerly did not show that a single activity fell outside of her general work involvement, Edgerly failed to raise a triable issue of material fact supporting her claim that she engaged in protected activity.
Impact on Public Employers
The Edgerly decision is favorable to public employers, because it reaffirms that a court will not interfere in matters that largely involve internal personnel matters. The Court of Appeal signaled clearly in this case that it does not intend to “micromanag[e] employment practices and create a legion of undeserving protected ‘whistleblowers’ arising from the routine workings and communications of the job site.”

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