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Satyadi v. W. Contra Costa Healthcare Dist., 232 Cal. App. 4th 1022, 182 Cal. Rptr. 3d 21 (2014)

An employee asserting a wrongful discharge for retaliation under California Labor Code 1102.5 is not required to exhaust administrative remedies before doing so, especially where such claims for wrongful discharge and retaliation involve allegations of illegality, wrongdoing, and violations of public policy.

The Factual Background

Plaintiff was hired by Defendant as its board certified clinical laboratory director, where Plaintiff alleged that within a month or her hire, she informed Defendant and its executive staff about numerous operational practices she believed were violations of state and federal laws relating to laboratory operations where she refused to participate in those practices. Plaintiff also alleged that she reported the unlawful operational practices, employment after she filed a harassment complaint.

Plaintiff filed suit alleging that her termination was in retaliation for reporting and refusing to participate in Defendant’s illegal activities in violation of California Labor Code Section 1102.5, wherein Defendant filed a demurrer asserting that plaintiff had failed to exhaust her administrative remedies under Labor Code Section 98.7. The trial court sustained the demurrer without leave to amend and entered judgement, where as a result Plaintiff appealed.

The Court of Appeals

The California Court of Appeal reversed, determining that the legislative enactments merely clarified existing law and applied retroactively and as a result, Plaintiff was not required to exhaust administrative remedies before pursuing her Section 1102.5 action. The Court set forth a very broad and sweeping exception in this regard, namely that when any alleged work environment or termination in retaliation where there are findings of illegality, wrongdoing, and violations of public policy, in particular as was the case here, there was numerous operational practices involving violations of state and federal laws relating to laboratory operations, which in compliance of with, would have essentially forced the employee to be subjected to similar violations.

Specifically, the Court held that although many federal courts interpreted prior case law as requiring terminated employees suing under section 1102.5 to avail themselves of the section 98.7 remedy before going to court, the Courts were generally silent on the matter. As such, the Court held that since cases are "not authority for propositions neither considered nor discussed in the opinion'" (Hager v. County of Los Angeles (2014) 228 Cal.App.4th 1538, 1551 [176 Cal.Rptr.3d 268]), that there was no direct support for the view that seeking relief from the Labor Commissioner was a prerequisite to filing a whistleblower action in court. In short, our high court has never interpreted section 98.7 as requiring plaintiffs to exhaust that administrative remedy prior to filing suit for violations of section 1102.5.

Employment based claims involving a large employer requires a law firm that is experienced, competent, and knowledgeable concerning the complexities of employment based issues involving retaliation and employer wrongdoing. If you have any employment-related dispute and are considering suing your employer for discriminatory conduct contact the Orange County Employment Lawyers at Nassiri Law Group, practicing in Orange County, Riverside, and Los Angeles. Call (949) 375-4734.

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