Court Finds Employee’s Mistaken Belief of a Legal Violation Protected From Retaliation

California courts continue to interpret whistleblower protections broadly and extend this protection to employees even when they are wrong about the law or an alleged violation.

In a recent decision, a California Court of Appeal held that an employee may pursue a whistleblower retaliation claim under Labor Code section 1102.5 based on the employee’s mistaken, but reasonable belief that a law was violated.  (See Contreras v. Green Thumb Produce, Inc. (2025) 116 Cal. App. 5th 1251.) The decision highlights the importance of careful employer responses when employees raise concerns about potential legal violations.

Background

The plaintiff Manuel Contreras (“Contreras”) worked as a sanitation department employee for Green Thumb Produce, Inc. in Riverside County.  During his employment, he believed he was being paid less than coworkers performing similar work, including some employees with less seniority. However, he did not believe his pay disparity was based on his sex, race, or ethnicity.

Contreras spoke with a Deputy Labor Commissioner (who misinformed him that there was a “potential violation” of LC 1197.5, California’s Equal Pay Act) and reviewed an ambiguous Labor Commission FAQ guidance sheet on the subject. He then met with the company’s HR department, presented the Commissioner’s FAQ document, and requested a pay increase.  Shortly afterward, the company terminated his employment, citing policy violations and insubordination.

Contreras filed suit alleging several claims, including whistleblower retaliation under Labor Code section 1102.5(b).

Court Rulings

A jury found in Contreras’s favor on all claims and awarded damages. However, the trial court set aside the verdict on the whistleblower claim because Contraras admitted the pay difference was not based on sex, race, or ethnicity—meaning the Equal Pay Act did not apply and could not have been violated. Therefore, the court reasoned, he could not have reported an “actual” legal violation.

The Court of Appeal reversed noting that Labor Code section 1102.5 protects employees who disclose conduct they reasonably believe violates the law, even if the employee is mistaken. Thus, the question was not whether the Equal Pay Act was actually violated, but  whether Contreras had reasonable cause to believe a violation occurred. Given Contraras’s communications with the Labor Commissioner and layperson interpretation that the Equal Pay Act did not necessarily require discrimination based on a protected class in order to apply, the court found that a jury could conclude he acted reasonably and deserved whistleblower protection.

Guidance for Employers

To help avoid possible retaliation claims, employers should review their employment practices regarding workplace complaints and be certain that all complaints that involve some aspect of legal compliance be taken seriously. Even if a complaint appears legally incorrect, take appropriate steps to investigate and make findings, supported by appropriate documentation. Some complaints may require hiring an outside investigator to conduct a neutral investigation and interview employees. Finally, there is always risk in making decisions to terminate or discipline an employee immediately after a complaint is made, so consultation with employment counsel about possible implications and alternatives is highly recommended.