Reasonable—But Incorrect—Belief Can Support Whistleblower Claim in California

An employee’s objectively reasonable belief that a violation occurred—even if it wasn’t legally correct—was sufficient for him to bring a whistleblower claim under California’s Equal Pay Act (EPA), according to a California appellate court.

Manuel Contreras worked at Green Thumb Produce from 2016 to 2020, primarily in the sanitation department driving forklifts. During his employment, Contreras discovered that Green Thumb paid him less than other employees performing similar duties, even some with less seniority.

Contreras began researching his legal rights because he thought the law required equal pay for equal work. He contacted the Labor Commissioner’s Office of San Bernardino County and spoke to a deputy labor commissioner who stated that Green Thumb might be violating the law, referring Contreras to the EPA.

After visiting the Labor Commissioner’s website, Contreras printed out a “California Equal Pay Act: Frequently Asked Questions” document and read the seven-pages of 32 questions and answers.

Based on his discussion with the deputy labor commissioner and his understanding of the FAQ, Contreras believed that Green Thumb violated the state’s equal pay laws. He brought the FAQ sheet to work and spoke to coworkers about it.

His manager took him into the office of the human resources manager, at which time Conteras asked for a raise. The HR manager said he should not be showing the document to his coworkers and denied his request. Contreras was instructed to go home, and when he showed up for work the next day, a security guard escorted him off the premises, informing him that he had been terminated.

He sued Green Thumb, alleging retaliation for exercising his employment rights, whistleblower retaliation and wage discussion retaliation.

At trial, Contreras testified that he understood the EPA was originally enacted to protect women, but he believed it also applied to men based on the law’s constant updates. He pointed to question 9 of the FAQ, which stated: “Can I file a claim if the person who earns more than I do has a different job title? Yes, you may file a claim. Because the [EPA] compares jobs that are ‘substantially similar,’ the job titles that are being compared do not have to be the same. What is important is whether the work itself is ‘substantially similar.’”

He told the jury that he believed that there might be an EPA violation, but he also testified that he did not believe his unequal wages were based on his sex, race or ethnicity.

The jury found in Contreras’ favor on all three causes of action and awarded him $172,428 in damages.

Green Thumb filed for judgment notwithstanding the verdict (JNOV), arguing that there was insufficient evidence on the whistleblower cause of action because Contreras admitted his pay disparity was not based on sex, race or ethnicity. The court granted the motion and reduced the award to Contreras.

Contreras appealed. He argued that there was substantial evidence that he reasonably believed Green Thumb violated the EPA.

The appellate court agreed, reversing JNOV on the whistleblower claim.

Section 11102.5, California’s general whistleblower statute, applies “only where the disclosing employee ‘has reasonable cause to believe that the information discloses a [legal] violation,’” the court explained. The statute requires “objective reasonableness” and it “does not protect employees who do not believe or who unreasonably believe that the information they are disclosing shows a violation of the law.”

The proper focus is on the reasonableness of an employee’s beliefs, and preserving the legislative intent to encourage workers to report activity they believe is unlawful, the court added.

While Green Thumb was correct that a section 1102.5 claimant may not rely on a perceived violation of a nonexistent law, that wasn’t the case with Contreras.

“Instead, Contreras ‘point[ed] to some legal foundation for his suspicion,’” the court wrote. “Further, Contreras’ misinterpretation of the law does not necessarily undermine his section 1102.5(b) claim.  … [S]ection 1102.5(b) only requires an employee to have ‘reasonable cause’ to believe that a law has been violated. There is no requirement that the employee prove an actual violation.”

The court emphasized the purpose of section 1102.5(b), which is to encourage workplace whistleblowers to report unlawful acts without fearing retaliation. Accepting Green Thumb’s argument that employees should not be able to recover for a mistaken belief would defeat the legislature’s purpose.

“It would deprive employees of the statute’s protection simply because the workers have no legal training and lack the expertise to properly interpret a statute,” the court said. “Such employees would be reluctant to report suspected violations for fear they misunderstood the law.”

While a lay employee’s incorrect legal interpretation may be unreasonable under some circumstances, “we see no basis to find that it will always be unreasonable,” the court noted. “Rather, ‘[r]easonableness is generally a question of fact to be resolved by a jury. Accordingly, Contreras’ incorrect legal analysis does not necessarily bar his section 1102.5 claim.”

The court acknowledged that as judges with years of legal education and experience, their reading of the entire FAQ correctly reflected that the EPA only prohibits discriminatory wage variations based on sex, race or ethnicity.

“But a lay person with no formal training could easily misinterpret the FAQ similarly to Contreras, especially when told by a deputy labor commissioner that there was a potential violation,” the court wrote. “And that is why the decision in this case properly belonged to a jury of Contreras’ peers. The jurors had the FAQ to read for themselves, and they determined that Contreras’ mistaken legal analysis was reasonable from the perspective of a layperson. Although one could reach a different conclusion, that is not our standard of review.”

The court reversed the grant of Green Thumb’s JNOV motion.

To read the opinion in Contreras v. Green Thumb Produce, Inc., click .

Why it matters: Although the former employee misinterpreted the protections of the EPA, he was still entitled to bring a whistleblower claim after his termination based on his objectively reasonable belief that his former employer violated the law.