Generally, to win in court, you need to have a correct understanding of the law.  But not when it comes to employee retaliation: under California Labor Code section 1102.5, if you have a reasonable belief that you’re reporting illegal activity to your employer, your employer can’t fire you for reporting it – even if you’re wrong on the law and therefore aren’t reporting anything illegal at all.

That’s the lesson of a case recently decided by the California Court of Appeal (Contreras v Green Thumb Produce).

Manuel Contreras went to work in 2016 for Green Thumb Produce, driving a forklift in the Riverside County food company’s sanitation department. He later discovered that Green Thumb was paying him less than other employees doing similar work, some of whom had less seniority.

He complained to his supervisors, who took no action. So, in 2020 he began researching his legal rights. Believing that California law required equal pay for equal work, he contacted a regional office of the State Labor Commissioner.

A deputy commissioner in that office told him Green Thumb “might” be violating the Equal Pay Act (EPA). He advised Contreras to look for information about the EPA on the Labor Commissioner’s website.

There, Contreras found a seven-page document titled “California Equal Pay Act: Frequently Asked Questions.” The FAQ included 32 questions and answers with general information about the EPA and how to file a claim.

Based on his conversation with the deputy labor commissioner and his layperson’s understanding of the FAQ, Contreras, who only had a 10th grade education, believed that Green Thumb was in fact violating the EPA by paying him less than similarly situated employees.

What Contreras didn’t understand was that the EPA doesn’t prohibit all variations in wages; it only prohibits those variations which are discriminatory – and the entire FAQ, while it had some potentially unclear language, correctly reflected that EPA only prohibited discrimination based on protected classes.  In other words, Green Thumb wasn’t doing anything illegal by paying Contreras less.

On Sept. 3, 2020, Contreras brought the Labor Commissioner’s FAQ to work, showed it to other employees, then presented it to the company’s human resources department and asked for a raise.

The human resources manager looked at the document, told him he shouldn’t be showing it to other employees, and asked why he had contacted the Labor Commissioner. Contreras explained that he was trying to prove he should be earning the same as other employees doing similar work.

The HR manager denied his request for a raise. Contreras then stated that he would no longer be driving a forklift – meaning, he later testified, that he would no longer perform additional work he had taken on during another worker’s absence, and not that he wouldn’t do his job.

The HR manager accused Contreras of insubordination, and his supervisor sent him home.

When Contreras showed up for work the next day, a security guard informed him that he had been terminated and escorted him off the premises. Green Thumb sent him a letter informing him that his employment had been terminated for violating company policies and procedures.

In 2021, Contreras sued Green Thumb, alleging three statutory claims: (1) retaliation for exercising his employment rights, under Labor Code section 98.6, (2) whistleblower retaliation under Labor Code section 1102.5, and (3) wage discussion retaliation under Labor Code section 232.

Testifying before a jury at the 2023 trial of his lawsuit, Contreras said that, based on his discussions with the deputy labor commissioner, his subjective understanding of the FAQ, and his limited education background, he believed, but was not certain, that Green Thumb had violated the EPA by paying him unequal wages, and that he was entitled to a raise as a result.

The trial judge instructed the jury that, to prevail, Contreras had to prove that he had “reasonable cause” to believe Green Thumb had violated California law. “That belief did not have to be, in fact, legally correct under the law.”

The jury found for Contreras on all three counts and awarded him damages of over $172,000. The court later added statutory penalties that raised the total to over $192,000.

Challenging only Contreras’ whistleblower claim under Section 1102.5, Green Thumb asked the court to overturn the verdict on that claim, by filing a motion for partial judgment notwithstanding the verdict (JNOV).

(If you’re wondering why Green Thumb limited its challenge to just the whistleblower claim when it lost on all three of his claims, Section 1102.5 was the only statute Contreras relied on that authorized him to recover his attorneys’ fees if he won.)

Green Tree argued that there was insufficient evidence for the jury to have reached its verdict on the whistleblower claim, since Contreras admitted the pay disparity was not based on sex, race or ethnicity – the types of discrimination the EPA was intended to correct – and thus he could not have had a reasonable belief that he was reporting illegal conduct.

The trial court agreed with Green Thumb and granted the partial JNOV motion, finding Contreras had not made any complaints of actions that the EPA was intended to cover, and he “cannot make up a non-existent law” to gain protection under the law. It reduced the award of damages to just over $182,000.

Contreras appealed, arguing that the evidence established that he reasonably believed that Green Thumb was violating the law.  Green Thumb responded that it was unreasonable for Contreras to have believed that, because Green Thumb had not in fact violated the law.

“We agree with Contreras,” the appellate justices said. The law only requires that an employee have “reasonable cause” to believe a law has been violated when filing a complaint. “There is no requirement that the employee prove an actual violation,” they noted.

Accepting the company’s argument, the justices said, “would deprive employees of the statute’s protection simply because the workers have no legal training and lack the expertise to property interpret a statute,” and might deter them from reporting activity and seeking judicial relief.

The justices ordered the trial court to reverse its JNOV ruling and give Contreras the full award of $192,000 – which means Contreras can recover legal fees for prevailing on his whistleblower retaliation claim. The justices also awarded him his costs on appeal, meaning he can recover legal fees on appeal, too.

By David Krol