In a recent decision, the California Court of Appeal recognized that an employee’s prior participation in suspicious activity under the direction of their employer does not necessarily preclude that employee from maintaining a cause of action for their discharge resulting from their later opposition and refusal to engage in the activity. InYau v. Santa Margarita Ford, Inc. (2014) 229 Cal.App.4th 144, whistleblowing employee was terminated for complaining to his superiors that his supervisor and coworkers were submitting fraudulent warranty claims. The employee alleged he first complied with his immediate supervisor’s instructions to sign warranty claims he believed were suspicious because he feared losing his job. The employee, however, frequently raised concerns to the general manager about the suspicious nature of the warranty claims. Eventually the employee demanded to meet with owner and refused to sign any additional suspicious warranty claims, and was fired thereafter. The court held that although he employee may be unable to prove that his termination resulted from his complaints about alleged warranty fraud and refusing to participate, as opposed to being fired because of his participation, he sufficiently alleged a wrongful termination cause of action that was tethered to statutes prohibiting theft and fraud.
This case demonstrates that just because an employee who is acting under their employer’s direction had previously engaged in conduct the employee perceived to be unlawful or suspicious, that employee is not automatically precluded from maintaining a cause of action for wrongfully termination based on their discharge resulting from their later opposition and refusal to engage in the same activity, especially when the employee’s prior participation was due to their fear of losing their job.