Wrongful Termination Case Based on Labor Code Section 232.5 is Preempted by NLRA

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California has two statutes, Labor Code sections 232 and 232.5, that protect the rights of employees to disclose information about their compensation or working conditions. The first, Labor Code section 232, was enacted in 1984, provides:

No employer may do any of the following:

(a) Require, as a condition of employment, that an employee refrain from disclosing the amount of his or her wages.

(b) Require an employee to sign a waiver or other document that purports to deny the employee the right to disclose the amount of his or her wages.

(c) Discharge, formally discipline, or otherwise discriminate against an employee who discloses the amount of his or her wages.

This statute was broadly interpreted by the Court of Appeal in Grant-Burton v. Covenant Care, Inc. (2002) 99 Cal.App.4th 136. There, the court upheld a claim for wrongful termination against public policy after an employee was allegedly terminated for telling co-employees (during an exchange of information between co-employees) that she did not receive a bonus. The court held that (a) section 232 set forth the public policy of the state protecting employees from adverse employment action for disclosing information about “wages,” and (b) that the statute was intended to protect employees who wanted to discuss “some aspect of their compensation, for example, a possible increase in pay, perceived disparities in pay, or the awarding of bonuses.”

Only months after the court’s Grant Burton decision, the legislature enacted Labor Code section 232.5:

No employer may do any of the following:

(a) Require, as a condition of employment, that an employee refrain from disclosing information about the employer’s working conditions.

(b) Require an employee to sign a waiver or other document that purports to deny the employee the right to disclose information about the employer’s working conditions.

(c) Discharge, formally discipline, or otherwise discriminate against an employee who discloses information about the employer’s working conditions.

(d) This section is not intended to permit an employee to disclose proprietary information, trade secret information, or information that is otherwise subject to a legal privilege without the consent of his or her employer.

In the following six years, no California court has issued a published decision involving section 232.5. . . . . until now.

More after the jump.

In Luke v. Collotype Labels USA, Inc. (2008) ___ Cal.App.4th ___ (First Appellate District, Div. 4, A116544), the court held that the plaintiff’s section 232.5 wrongful termination claim was preempted by the National Labor Relations Act (NLRA), 29 U.S.C. section 151 et seq.

Plaintiff Luke was terminated after engaging in the following activities:

  • Soliciting signatures for a letter denouncing management;
  • Going over his supervisors’ head by sending an e-mail to a Group Managing Director proclaiming that there was “trouble brewing;”
  • Being a “sympathetic ear” for the complaints of other employees, and encouraging them to keep a record of problems they encountered and express their concerns to management; and
  • Providing support and ideas to other employees who complained about working conditions.

Collotype moved for summary judgment on the ground that all of the activity he alleged was protected concerted activity under section 7 (29 U.S.C. section 157) of the NLRA, and Luke’s claim was therefore preempted. Earlier federal and state cases have held that the NLRA impliedly preempts state regulation of activity which is “arguably” protected by section 7, e.g., Linn v. Plant Guard Workers (1966) 383 U.S. 53, 60.

The court briefly looked at a number of Ninth Circuit cases – and one California state case — holding that “wrongful discharge claims based on public policy violations are not preempted by federal labor laws (Saridakis v. United Airlines (9th Cir. 1999) 166 F.3d 1272, 1278; Garibaldi v. Lucky Food Stores, Inc. (9th Cir. 1984) 726 F.2d 1367, 1374; Paige v. Henry J. Kaiser Co. (9th Cir. 1987) 826 F.2d 857, 864; Haney v. Aramark Uniform Services, Inc. (2004) 120 Cal.App.4th 609, 633, fn. 3).

Next, it cited three California cases to the contrary: Ruscigno v. American National Can Co. (2000) 84 Cal.App.4th 112, 118; Rodriguez v. Yellow Cab Cooperative, Inc. (1988) 206 Cal.App.3d 668; Kelecheva v. Multivision Cable T.V. Corp. (1993) 18 Cal.App.4th 521, 567.

And finally, it reconciled these cases with the following distinctions:

First, if the conduct in question was protected by section 301 of the LMRA (29 U.S.C. section 185) and there is a collective bargaining agreement which governs, the wrongful termination action is preempted.

Second, where there is no collective bargaining agreement, “the preemption question turns not on the characterization of the action but the nature of the activity called into question: is it arguably protected by the NLRA?” (Quoting Rodriguez at pp. 679-680.)

Third, “not all public policy wrongful termination cases are created equal.” Where the public policy involves state occupational health and safety laws, then the interests are so “deeply rooted in local feeling and responsibility” that there is no preemption.

Finally, “Cases alleging wrongful termination in violation of other public policies of the state may be preempted, however, where the violation of state public policy also constitutes an unfair labor practice under the NLRA but is not an issue “deeply rooted in local feeling and responsibility.”

So where does this leave employers? Does Luke abolish causes of action for wrongful termination against public policy based on section 232.5 unless there are issues of work safety and health involved? I doubt the court’s decision is that broad. Section 7 of the NLRA protects employees who engage in “concerted activities” for the purpose of “mutual aid or protection. . . ” So under Luke, a wrongful termination case based on disclosure of working conditions in the course of “concerted activities” might well be preempted (assuming the health and safety exception doesn’t apply). But what about disclosure of working conditions to the media? Or to a higher-up in the company? Neither of these would “arguably” implicate concerted activities, both would likely be protected under Labor Code section 232.5, and neither would likely be preempted.

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