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February 1, 2013

Participation In An Internal Investigation Into FEHA Claims Will Not Shield Employees From Discipline If They Are Uncooperative Or Deceptive In Their Responses


On January 24, 2013, the Sixth Appellate District for the Court of Appeal of the State of California affirmed the granting of summary judgment in a matter and confirmed that being uncooperative or deceptive in an employer’s internal investigation is not a protected activity under state or federal law. In McGrory v. Applied Signal Technology, Inc., the Sixth Appellate District concluded that Government Code Section 12940(h), which addresses retaliation claims in connection with the Fair Employment and Housing Act, “does not shield an employee from termination or lesser discipline for either lying or withholding information during an employer’s internal investigation of a discrimination claim.” The Sixth Appellate District asserted that the public policy underlying this portion of the FEHA does not protect deceptive activity during an internal investigation; therefore, such conduct qualifies as a legitimate reason to terminate an at-will employee.

Factual Background

Applied Signal Technology, Inc. hired Plaintiff John McGrory as a section manager on July 6, 2005. He was then promoted to department manager and reported direct to the CFO. As department manager, a dozen employees reported directly to McGrory. In May 2009, McGrory presented a written Performance Improvement Plan to a female subordinate. Instead of signing the PIP, the employee submitted a complaint alleging that McGrory discriminated and harassed her because of her gender and sexual orientation. She also alleged that he made off-colored jokes in the presence of groups, which demonstrated his lack of good judgment and sensitivity. An internal investigation was launched in response to this complaint.  After interviewing several individuals, including McGrory, the outside investigator concluded that McGrory had not discriminated against the employee because of gender or sexual orientation.  However, she also concluded that he had violated policies on sexual harassment and business/personal ethics by making jokes or remarks based on race or sex.  She also determined that McGrory had been uncooperative during the investigation and appeared to have intentionally misrepresented some facts. Following the investigation, the Vice-President of Human Resources, the CEO and the CFO decided to terminate Mr. McGrory for 1) violating the sexual harassment and business/personal ethics policies; 2) being untruthful during the investigation and failing to participate in good faith; and 3) exposing the company to the risk of future legal liability.

In response to his termination, McGrory filed a lawsuit against Applied Signal Technology, Inc. alleging that he was terminated for 1) being male, 2) participating in the internal investigation, or 3) trying to protect the confidentiality and privacy of coworkers. McGrory also alleged that he was improperly terminated because it was not preceded by a notice, hearing and honest findings of misconduct.  Finally, he alleged that he was defamed when the Vice-President of Human Resources informed another employee why he was terminated.  Applied Signal Technology filed a motion for summary judgment, which was granted. As it pertains to this discussion, the trial court determined that Applied Signal Technology had a legitimate non-discriminatory reason for McGrory’s termination.

McGrory appealed this determination.  McGrory’s appeal was premised, in part, on the argument that California’s public policy is to shield anyone participating in an investigation of discrimination from the possibility of retaliation, even if the participant is seemingly uncooperative and untruthful.

Analysis

As explained above, one of the expressed reasons for McGrory’s termination was his failure to cooperate in good faith and to respond truthfully during the internal investigation.  However, McGrory asserted that this reason violated California public policy, which according to him shields anyone participating in an investigation of discrimination from the possibility of retaliation. In support of this asserted public policy, McGrory cited to Government Code Section 12940(h), which is the portion of the FEHA that addresses retaliation. That provision makes it unlawful “(h) [f]or an employer . . . to discharge, expel, or otherwise discriminate against any person because the person has opposed any practices forbidden under this part or because the person has filed a complaint, testified, or assisted in any proceeding under this part.” (Emphasis added.)  McGrory contended that the internal investigation was a “proceeding under this part” and argued that his participation in the investigation was a protected activity for which he could not be terminated.

In considering McGrory’s argument, the Sixth Appellate District expressed that it was unable to find any California state decisions to have identified the limits of “any proceeding under this part” in Government Code Section 12940(h) or its intended reach. As a result, it turned to cases interpreting Title VII of the Civil Rights Act of 1964 for guidance. In considering that authority, the Sixth Appellate District identified several federal court holdings requiring sincere participation in order for the immunity sought by McGrory to apply. Based on the reasoning of these federal authorities, the Sixth Appellate District concluded that Government Code Section 12940(h) does not shield an employee against termination or lesser discipline for either lying or withholding information during an internal investigation of a discrimination or harassment claim.  Alternatively stated, it held that the policy underlying the statute does not protect deceptive activity that takes place during an internal investigation.  Instead, such conduct may properly serve as a legitimate reason for termination of an at-will employee.

Significance

This case is significant because it clarifies that an at-will employee will not be protected from discipline if he refuses to participate in or cooperate with an investigation into a discrimination or harassment claim or engages in misbehavior during an internal investigation, such as trying to deceive the investigator. This type of conduct is not “protected activity” as required by Government Code Section 12940(h).  Under such circumstances, an employer will be permitted to make a business decision regarding appropriate discipline, which will not be second-guessed by the courts.

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