Employee with Mistaken Legal Theory May Pursue Labor Code Section 1102.5 Whistleblower Retaliation Claim if the Employee Reasonably Believes the Employer’s Conduct was Unlawful

In Contreras v. Green Thumb Produce, Inc., Case No. D085440 (December 15, 2025), the California Court of Appeal for the Fourth Appellate District held that an employee who mistakenly believed his employer violated California’s Equal Pay Act (EPA), codified at Labor Code section 1197.5, could prevail on a cause of action for retaliation in violation of California Labor Code section 1102.5(b) because the employee reasonably believed his employer’s conduct was unlawful, shared that belief with his supervisors and human resources, and was terminated for complaining about the perceived legal violation.

California’s EPA prohibits employers from paying employees disparately for substantially similar work if the disparity is based on sex, race, or ethnicity. Differences in pay based on other factors do not violate the EPA.

In Contreras, the employee discovered that he was paid less than coworkers performing similar duties, some of whom had less seniority. His concern was not based on any disparity of pay based on sex, race, or ethnicity. Dissatisfied by his supervisors’ lack of response when he questioned the pay disparity, the employee began researching equal rights laws and contacted the Labor Commissioner’s office, which told him his employer may be in violation of the law and referred him to additional information regarding the EPA. After reviewing those resources, including an EPA fact sheet, the employee mistakenly concluded that his employer violated that law.

Armed with the fact sheet and his mistaken belief, the employee spoke with his supervisors and human resources, who looked over the fact sheet, told the employee he should not be showing it to his coworkers, and asked why he contacted the Labor Commissioner. The employee explained that he was trying to get information to prove he should be paid more and subsequently, as part of a misunderstanding, said he would not perform certain job duties, leading his employer to accuse him of insubordination. After being instructed to go home for the day, the employee returned to work the following day and was escorted off the premises and informed him that his employment had been terminated. He subsequently received written notification of the termination, which cited violation of company policies and procedures by “refusing to follow the lunch schedule, talking to coworkers instead of working, disrupting work by showing coworkers paperwork, refusing to go back to work after discussing his job performance with human resources, and refusing his manager’s instructions by stating” he would not perform certain job duties.

At trial, the employee denied violating the employer’s policies and procedures and told the jury that, based on his discussion with the Labor Commissioner’s office and his review of the EPA fact sheet, he believed his employer violated the EPA by paying him different wages than it paid his coworkers even though the difference was not based on sex, race, or ethnicity. After the jury found in favor of the employee, the trial court granted the employer’s motion for JNOV based on the fact that the employee’s complaint did not involve legal violation.

On appeal, the employee argued there was substantial evidence that he reasonably believed his employer violated the EPA, while the employer argued that the employee’s beliefs were unreasonable because the EPA fact sheet specifically stated that the EPA only applies to wage disparities based on sex, race, or ethnicity, which the employee admitted was not at issue in his situation. The appellate court agreed with the employee and reversed the JNOV ruling that had been issued by the trial court in favor of the employer.

The appellate court first explained that the purpose of Labor Code section 1102.5 is “to protect workers, to encourage disclosure, and to promote compliance with employment-related laws and regulations,” and noted that it applies when an employee “has reasonable cause to believe that the information discloses a [legal] violation.” While an employee does not have to complain about an actual violation of the law, he/she must have “reasonable cause” to believe that an actual law has a been violated. Whether an employee’s belief is reasonable is assessed on an objective basis and “does not protect employees who do not believe or who unreasonably believe that the information they are disclosing shows a violation of the law.”  Employees may be mistaken on the law, the facts, or both, if their mistaken belief is objectively reasonable. Reasonableness is typically a question of fact for the jury rather than a judge.

Reviewing the facts at issue in the case, the appellate court concluded that the employee’s mistaken belief was reasonable based on his discussion with the Labor Commissioner’s office, which indicated his employer might have violated the law, and his reading of the fact sheet, which only included limited references to protected classes and noted the EPA had expanded over time. The appellate court continued: “We acknowledge that as judges with years of legal education and experience, our reading of the entire FAQ correctly reflects that the EPA only prohibits discriminatory wage variations based on sex, race, or ethnicity. But a lay person with no formal legal training could easily misinterpret the FAQ similarly to [the employee], especially when told by a deputy labor commissioner that there was a potential violation” of law.

According to the appellate court, “[a]lthough one could reach a different conclusion” than the jury did, “the decision in this case properly belonged to a jury,” which “had the FAQ to read for themselves, and they determined that [the employee’s] mistaken legal analysis was reasonable from the perspective of a layperson. . . . Drawing all inferences in support of the judgment as we must, . . . the jury’s reasonable cause determination is sufficiently supported.”

This case is a good reminder to carefully consider adverse actions taken against employees following complaints of unlawful conduct, even if the employer knows it did not violate any laws with regard to the employee’s allegations. Even where the alleged misconduct did not violate the law, an employer may be liable for retaliation if it takes adverse action because an employee complained about conduct that the employee reasonably believed was unlawful.

This legal update and any use of its information does not create an attorney-client relationship. Nothing contained on this website should be considered legal advice for any specific employer or employment situation. Consult legal counsel before taking any action as a result of information contained herein.