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Dec 27

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Use an independent service to help protect against California’s new $10,000 penalty for whistleblowers

STX1897.TIFEmployees have protection as whistleblowers from a wide variety of federal and state laws. Effective January 1, 2014, California added SB 486 to this list of legal protections. The new California law broadens an employee’s right to pursue legal action if retaliated against for reporting suspected wrongdoing. Perhaps most importantly, the law creates a civil fine is up to $10,000 per violation, in addition to job reinstatement, past wages and other potential sanctions.

The scope of the new whistleblower law is quite broad. Regardless of jurisdiction, employee complaints regarding any law or regulation is covered, and generates employee protection. All California employers are covered. Additionally, the employee need not actually be correct about the assertion, but need only have a “reasonable cause to believe” that some violation may have occurred.

The $10,000 penalty is contained in two code sections. Section 98.6 of California’s Labor Code now includes:

“98.6(b)(3) – In addition to any other remedies available, an employer who violates this section is liable for a civil penalty not exceeding ten thousand dollars ($10,000) per employee for each violation of this section.”

Section 1102.5(f) contains a matching provision, also with a $10,000 civil penalty.

To attempt to avoid these civil penalties, employers should be able to show that they have policies to protect whistleblowers. One of the easiest and cheapest ways of improving these internal policies is to use an outside vendor to implement a whistleblower reporting system. These independent programs were already a no-brainer, but are even more so now in California. Our firm currently charges only $800 a year for this outside independent service. $800 to help provide protection for the entire company vs. $10,000 penalty per employee should seem like an easy decision. In California, private employers should join publicly traded companies and larger nonprofit organizations in adopting whistleblower best practices.

 

About the author

David Nolte

I am a founding principal of Fulcrum Inquiry, an accounting and economic consulting firm that performs damage analysis for commercial litigation, forensic accountings, financial investigations, and business valuations. I am a Certified Public Accountant (CPA) and an Accredited Senior Appraiser (ASA), as well as having other professional credentials. I regularly serve as an expert witness involving damages measurement. My litigation-oriented resume is on Fulcrum's website.

Permanent link to this article: http://betweenthenumbers.net/2013/12/use-an-independent-service-to-help-protect-against-californias-new-10000-penalty-for-whistleblowers/

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