Retaliation for Reporting Unlawful Activity Including Fraud

Retaliation for Reporting Unlawful Activity & Fraud in California

Introduction: Your Right to Report Wrongdoing Without Fear of Reprisal

Employees are often in the best position to observe and report unlawful activities or fraudulent practices within their workplace. Speaking out against such misconduct is a courageous act that serves the public interest and upholds ethical standards. California law recognizes the importance of this by providing strong protections against employer retaliation for employees who report suspected illegal conduct, including various forms of fraud.

If you have faced adverse employment actions after reporting unlawful activity or fraud by your employer, Brightwood Law Group, PC is here to defend your rights. It is illegal for your employer to punish you for being a responsible employee. This page explains your protections when you report such serious issues.

What Constitutes “Reporting Unlawful Activity Including Fraud”? (Protected Activity)

“Protected activity” in this context refers to an employee, in good faith, disclosing information they reasonably believe evidences a violation of local, state, or federal laws or regulations, or non-compliance with such rules. This can include a wide range of conduct, with a particular emphasis on fraudulent activities:

Unlawful Activities (General): This can encompass violations of labor laws, health and safety codes, environmental regulations, patient safety standards, consumer protection laws, and more.
Fraudulent Activities: Specific focus is often on various types of fraud, such as:

- Financial Fraud: Misrepresenting financial information, accounting irregularities, embezzlement.
- Securities Fraud: Violations of SEC rules, insider trading, misleading investors.
- Healthcare Fraud: Including Medicare/Medicaid fraud, fraudulent billing by healthcare providers.
- Government Contract Fraud: Overbilling, providing substandard goods/services, or other fraudulent acts related to government contracts.
- Consumer Fraud: Deceptive practices harming consumers.

Reporting Channels: Protections generally apply whether you report the suspected unlawful activity or fraud:

- Internally: To a supervisor, manager, Human Resources department, compliance officer, or through an internal company hotline.
- Externally: To a relevant government agency (e.g., SEC, Department of Justice, EPA, OSHA, Labor Commissioner) or law enforcement.
Reasonable Belief Standard: You typically do not need to prove that the activity was, in fact, illegal. Protections usually apply if you had a reasonable, good-faith belief that you were reporting a violation of law or regulation.

Understanding Retaliation for Reporting Employer Misconduct

Retaliation occurs when an employer takes an “adverse employment action” against an employee because they engaged in the protected activity of reporting unlawful conduct or fraud. An adverse action is any action that negatively and materially affects your employment or would likely deter a reasonable employee from making such reports.

Examples of retaliation include:

Termination or wrongful discharge
Demotion or denial of a promotion
Unfavorable job transfers or reassignments
Reduction in pay, hours, or benefits
Harassment, intimidation, or creation of a hostile work environment
Unwarranted negative performance evaluations or disciplinary actions
Being ostracized or excluded from important projects or communications

The employer’s motive is key. If the adverse action was taken because you reported unlawful activity or fraud, it is illegal retaliation.

Key Laws Protecting You from Retaliation

Several California and federal laws provide robust protection against retaliation for reporting unlawful activities and fraud:

California Labor Code § 1102.5: This is California’s primary whistleblower protection law, broadly prohibiting employers from retaliating against employees who disclose information (internally or externally) that they reasonably believe shows a violation of law or regulation, or who refuse to participate in illegal activities.
California False Claims Act: Protects employees who report or attempt to stop their employer from defrauding the state or local governments, and provides for damages if they are retaliated against.
Federal False Claims Act: Protects whistleblowers who report fraud against the federal government and prohibits retaliation.
Sarbanes-Oxley Act (SOX): Provides protections for employees of publicly traded companies (and their contractors) who report various types of financial, securities, or shareholder fraud.
Dodd-Frank Wall Street Reform and Consumer Protection Act: Offers protections and potential rewards for whistleblowers who report violations of securities laws to the Securities and Exchange Commission (SEC).

Examples of Retaliation for Reporting Unlawful Activity or Fraud

An employee reports to their supervisor that the company is improperly disposing of hazardous waste. Shortly after, the employee is transferred to a less desirable department with fewer opportunities for advancement.
A financial controller discovers and reports evidence of deliberate misstatement of company earnings to the audit committee. They are subsequently excluded from key financial meetings and then terminated during a “restructuring.”
An employee provides information to a government agency investigating potential fraud in government contracting by their employer. Upon the employer learning of this cooperation, the employee faces increased scrutiny, micromanagement, and ultimately, dismissal for minor, previously unaddressed issues.
After internally reporting that sales staff are making false promises to customers (a potential consumer fraud issue), a salesperson is denied a promotion they were otherwise in line for.

What to Do If You Face Retaliation for Reporting Unlawful Activity or Fraud

If you believe you are being retaliated against for reporting misconduct, consider the following:

Thoroughly Document Your Report(s): Keep copies of any reports you made, detailed notes of verbal reports (who, what, when, where), and any evidence you have supporting your reasonable belief that unlawful activity or fraud was occurring.
Document All Retaliatory Actions: Maintain a detailed log of all adverse actions taken against you, including dates, specific incidents, individuals involved, and any statements made that suggest a retaliatory motive. Preserve emails, performance reviews, disciplinary notices, etc.
Understand Specific Reporting Requirements (If Applicable): Be aware that some whistleblower laws (like SOX or the False Claims Act) have specific procedures or timeframes for reporting and pursuing claims.
Contact Brightwood Law Group, PC Immediately: Retaliation and whistleblower cases are highly complex and fact-specific. An experienced employment attorney can advise you on the applicable laws, help protect your rights, assess the strength of your claim, and guide you through the necessary legal processes and deadlines.

How Brightwood Law Group, PC Can Help Protect You

Brightwood Law Group, PC is dedicated to defending employees who have the courage to expose illegal conduct and fraud. We understand the serious risks whistleblowers face and provide robust legal support by:

Conducting a Confidential Case Evaluation: We will carefully review the nature of your report, the evidence of unlawful activity, and the retaliatory actions you have experienced.
Advising on Your Rights Under Whistleblower Statutes: We will explain your protections under relevant California and federal laws.
Investigating the Employer’s Actions: We gather evidence to establish the link between your protected reporting and the employer’s retaliation.
Negotiating Resolutions: We will advocate on your behalf to negotiate fair settlements, which may include reinstatement, compensation for lost wages and benefits, emotional distress damages, and other appropriate relief.
Filing Claims and Litigating Vigorously: We are prepared to file claims with appropriate government agencies and pursue litigation in court to hold employers accountable for unlawful retaliation and secure the maximum remedies available. This includes seeking statutory penalties and potential whistleblower rewards where applicable.

Retaliation for reporting misconduct may be illegal. Learn more on our general Retaliation Overview Page.

If the retaliation resulted in termination, see our page on Wrongful Termination Overview.

For more on the specific status of whistleblowers, visit Whistleblowing and Whistleblower Protection.

If You Have Experienced Retaliation for Reporting Unlawful Activity, We Can Help.

If you believe you’ve been a victim of retaliation for reporting unlawful activity at work, we are here to help. Contact Brightwood Law Group, PC today for a free and confidential consultation to discuss your situation. Our experienced employment attorneys are here to protect your legal rights and fight for the justice and compensation you deserve. Call us at (310) 895-9075 or fill out our online contact form.