WhistleIn Satyadi v. West Contra Costa Healthcare District, ___ Cal.App.4th ___  (December 31, 2014), the California Court of Appeal (First Appellate District, Division Five) reversed the order of the Contra Costa County Superior Court (Judge Austin) sustaining defendant’s demurrer to plaintiff’s whistleblower claim.

Plaintiff was Clinical Laboratory Director for defendant employer who informed defendant’s executive staff about numerous operational practices — such as disposing of dangerous chemicals in an unsafe manner — that she believed were violations of state and federal laws. Plaintiff also refused to participate in these activities.  Subsequently, plaintiff was placed on administrative leave pending an investigation into allegations against her by other employees and then, ultimately, terminated.  Almost seven months later, plaintiff filed an amended civil Complaint against the employer and other defendants for retaliation in violation of California’s whistleblower statute, Labor Code Section 1102.5. Defendants demurred to the complaint, arguing that Plaintiff failed to exhaust her administrative remedies prior to filing the lawsuit.  Specifically, they contended that Plaintiff failed to file a complaint with the California Labor Commissioner within six months of her termination, pursuant to Labor Code Section 98.7(a).  Although, at the time, there was an ostensible split among California courts about whether such exhaustion was required, the trial court concluded that it was and, accordingly, sustained the demurrer without leave to amend.  Plaintiff appealed.

The appellate court disagreed.  Subsequent to the trial court’s ruling, the California Legislature enacted two amendments to the Labor Code. First, it added Section 244, which states that an individual “is not required to exhaust administrative remedies or procedures in order to bring a civil action under any provision of this code, unless that section under which the action is brought expressly requires exhaustion of an administrative remedy.” (emphasis added).  Second, it amended Section 98.7 to state: “In the enforcement of this section, there is no requirement that an individual exhaust administrative remedies or procedures.” Further, the appellate court determined that these amendments did not constitute a change in the law but, rather, a clarification in existing law – which already provided that exhaustion of administrative remedies was not required – and, therefore, the application of the amendments to Plaintiff’s case “poses no problem of retroactivity.”