Big businesses and business people threaten and file lawsuits all the time, recognizing the lawsuit for what it is — a mechanism for getting what you’re entitled to (or might be). California employees sue their employers all the time, often for wages, sometimes for discrimination, sexual harassment, etc. But usually they do it after they quit. It’s common to worry: Is it smart to you sue your employer while you still work there? You’ll be treated badly or fired, right?
Only if you’re lucky.
California law authorizes courts to award big damages for any employer retaliation following an employee asserting his or her legal rights. You can find a few quick examples of multi-million dollar verdicts at the end of this article. Even the appearance of retaliation generally can be expected to result in a nice settlement. Well advised employers know this and act accordingly. If your employer is foolish enough to retaliate against you for demanding what you’re entitled to, you could find your retirement fully funded in relatively short order.
California Gives Employees Who Get Retaliated Against The Right to Big Damages
California statutes prohibit retaliation against employees for engaging in protected activities. Protected activities include seeking remedies for mistreatment based on membership in a protected group (e.g. discrimination based race or sex, marital status, disability, sexual orientation, etc.), for seeking remedies for sexual harassment, and — last but not least — for seeking compensation owed.
You’re entitled to damages if the court finds your employer retaliated against you for filing a lawsuit — even if you lose the lawsuit.
Because a wise employer will avoid even the appearance of retaliation, when you sue your employer seeking the money you were promised (or the equity, or to be free from race discrimination, sexual harassment, etc.), you actually make it harder for your employer to fire you, deny you a promotion, or otherwise make your life miserable.
Example: Filing suit to collect promised equity
We’re representing Uber employees who received shares at Uber’s May 9, 2019 IPO, and got a terrible tax treatment because Uber delivered those shares at the IPO rather than six months later, breaching employees’ Restricted Stock Unit Agreements. As a consequence, a developer who received 40,000 RSU’s, translating to 40,000 shares at the $45 IPO price, on paper received shares worth $1.8 million but netted just $398,700 after taxes. (Our client website for this case is here. An article about what Uber did, why, and why it had these disastrous affect is here.) Because this breach of contract claim concerns rights to compensation, affected Uber employees can pursue their claims knowing they are clearly protected by California’s prohibitions on retaliation.
The Labor Code supports the collection of promised wages in many ways, including this one. The Labor Code defines the term wages broadly. “Wages” includes all compensation promised or owed to an employee for work, including promised severance pay. (California Labor Code Section 200.) A claim seeking the full value of equity compensation awarded to you, for example, is a wage claim. (Schachter v. Citigroup, Inc., 47 Cal. 4th 610, 218 P.3d 262.)
The Labor Code specifically provides that an employer may not discharge an employee or in any manner discriminate, retaliate, or take any adverse action against any employee because the employee made a written or oral complaint that he or she is owed unpaid wages. (California Labor Code Section 98.6.)
To win a retaliation claim under California law, the employee only needs to show that retaliatory intent was a substantial motivating factor in the employer’s decision to act against the employee’s interest. (Harris v. City of Santa Monica, 56 Cal. 4th 203.) Basically, if your employer was sore about you filing suit, and it then did something you reasonably found unpleasant or disadvantageous, something it wouldn’t otherwise have seemed likely to do, you can win.
What if you lose your original claim?
Even if you lose your original complaint against your employer, you are still entitled to protection from any and all retaliation for making the claim. See Sessions v. Topa Ins. Group, Inc., No. BC 600048, 2011 WL 13174681, at *5 (Cal.Super. Feb. 07, 2011) citing Stevenson v. Sup.Ct. (1997) 16 Cal.4th 880, 897.
Damages For Retaliation
Big damages are available for workplace retaliation. They include compensation for: (i) any lost wages and benefits (e.g., if you were fired and unemployed for a while); (ii) emotional distress (this could be a multiple of your other damages); (iii) harm to the your business reputation arising from adverse employment actions, and (iv) lost wages due to a retaliatory demotion or failure to promote or award a raise in pay. (Tameny v. Atlantic Richfield Co., 27 Cal.3d 167.) Punitive damages may also be available.
The Labor Code further provides that any employee who is discharged, threatened with discharge, demoted, suspended, retaliated against, subjected to an adverse action, or in any other manner discriminated against in the terms and conditions of his or her employment as the result of filing a wage claim, is entitled to reinstatement and reimbursement for lost wages and work benefits caused by those acts of the employer. In addition, the employee may be awarded a civil penalty of up to $10,000 for each violation. (California Labor Code Section 98.6(b)(1) and (3).) If your employer was verbally abusing you every day for a month — well, you can do the math. The penalties alone can really add up.
Here are some actual verdicts to illustrate the point:
1. Qiu v. Three Rivers Provider Network Inc. (San Diego Superior Court, October 15, 2019)
Plaintiff verdict: $4,072,402
Company controller refused to perform illegal transactions demanded by CEO and was fired without 30-day notice as required by employment contract.
2. Briley v. City of West Covina (Los Angeles Superior Court, October 31, 2018)
Plaintiff verdict: $4,003,000
Deputy Fire Marshall reported violations of state and federal statutes and regulations, and refused to give into pressure from City officials to overlook Fire Code violations. Plaintiff contended the City retaliated against him for making the protected disclosures by denying promotions, revoking his use of his take-home vehicle, denying opportunity for pay increase, and ultimately firing him.
3. Hernandez v. VMS Auto Body Collision Center Inc. (Los Angeles Superior Court, Nov. 19, 2019)
Plaintiff verdict: $3,065,000
Plaintiff was fired after he complained to company owners about wage and hour violations and discriminatory treatment and racist remarks made about him. Plaintiff filed a lawsuit for multiple wage and hour violations, retaliation, unlawful discrimination, workplace harassment, and wrongful discharge in violation of public policy.
4. Harris v. City of Riverside (Riverside Superior Court, Sept. 3, 2019)
Plaintiff verdict: $2,299,829
Complaints by electrical engineer supervisor of harassment by white employee underlings were ignored by superiors and plaintiff was set up for negative reviews and then demoted.
Given the clear law, substantial damages, and potential availability of civil penalties, we don’t think any employee should think twice about suing an employer who deserves it. And employers know it. There may not be a special place in hell for employers who take an employee’s time and don’t pay as promised. But California law empowers employees to protect themselves.
Ray E. Gallo
Ray Gallo is a California litigator handling high profile business and employment cases. Current and former executive clients include Todd Lachman (formerly President of Mars Chocolate NA and Mars Global Petcare), Keith Ferrazzi (formerly CMO at Starwood), and Tad Smith (currently CEO at Sotheby’s). Tracy Tormey is a corporate and securities lawyer, formerly a partner at Oppenheimer, Wolff & Donnelly LLP, and General Counsel at EMAK Worldwide, Inc.
Learn more at https://gallo.law.
Among other projects, Ray and Tracy are representing qualified clients who incurred additional tax liability due to Uber’s acceleration of their RSU settlement date. See https://uberssuclaims.gallo.law.