Court of Appeal Determines that Blowing the Whistle on Unlawful Activity of Other Employees is Protected

Most of us in California are familiar with California Redemption Value, or CRV, that we pay when we purchase a beverage from a retailer. If you take your empty bottles and cans to a recycling center, you can get a CRV refund, which is normally determined by the weight of the recyclables you bring in. Although one or two cans does not add up to much, Recology employee Brian McVeigh uncovered substantial fraud with respect to these refunds and was fired after reporting his suspicions.

Brian McVeigh worked as an operations supervisor at Pier 96 for Recology San Francisco, the company that provides waste recycling and disposal in the County of San Francisco. During his employment, Mr. McVeigh discovered that employees were engaging in “tag inflation” meaning that the Recology attendants were weighing customers’ recyclables but inflating the weight on the tag. As a result, customers received inflated payments from the California Department of Conservation and attendants were potentially receiving kickbacks from this practice. He reported the fraud to both Recology and the San Francisco police.

Later, Mr. McVeigh was transferred to the company’s buy-back center in Brisbane. Mr. McVeigh began suspecting tag inflation and a management cover up at the Brisbane location and reported his suspicions to local police. After finding out about his reports, Recology threatened Mr. McVeigh by telling him that he would be fired if he continued to pursue the CRV fraud, which he reported to HR. Thereafter, Mr. McVeigh was terminated and Mr. McVeigh sued under a number of legal theories.

In 2011, the San Francisco Superior Court said the whistle-blower laws did not apply to Mr. McVeigh because it was his job to look into recycling irregularities. The judge also found that because three years had passed since Mr. McVeigh first reported the irregularities and his termination, that there was no connection between the two events. However, the Court of Appeal disagreed. Significantly, the Court determined that Mr. McVeigh’s claim under California Labor Code section 1102.5 could proceed because the statute “protects employee reports of unlawful activity by third parties such as contractors and employees, as well [as] unlawful activity by an employer.”

Whether or not Mr. McVeigh will prevail on the merits of his case remains to be seen but this decision potentially expands protections for whistle-blowers who report the unlawful activity of other employees, not just the employer. You can read the full Court of Appeal opinion here.

June 26, 2013 Siegel, LeWitter & Malkani