In Yau v Santa Margarita Ford Inc (2014), the Appellate Court recently held that an employee of a car dealership who is terminated in retaliation for complaining to management about suspecting a submission of fraudulent warranty claims, can bring a wrongful termination claim in court. The Court held that such a conduct implicates laws against theft, including Calif. Penal Code sections 484, 487, and fraud (Civil Code sections 1572 and 1709).
The above decision reinforces an important position that the California courts have been consistently taking: when employees are fired for reporting fraudulent activity by their management, such as for overcharging or over-billing customers, submitting false insurance claims, or engaging in other fraudulent sales or billing practices, this is valid grounds for bringing a wrongful termination and retaliation claim in court. For instance, in Haney v Aramark Uniform Services (2004), an employee’s allegations that his employment was terminated after objecting to the employer’s practice of overcharging and misleading customers, and his refusal to follow the employer’s practice of defrauding customers implicated public policy tethered in Penal Code section 484, and therefore was valid basis for a wrongful termination claim.
Another case that’s quite helpful to employees who are victims of retaliation and wrongful termination for complaining about employer’s defrauding customers is Casella v SouthWest Dealer Services Inc. (2007). In that case, an employee who was a sales representative for a company that sold aftermarket car products to car dealerships was fired for reporting to his supervisors his suspicion that the company engaged in fraudulent activities with regard to its customers which resulted in overcharging. The court again held that the employee could bring a valid wrongful termination claim because the conduct he reported and for which he was terminated fell within Penal Code section 487. That section proscribes making false or fraudulent representations to defraud another of money. Overbilling or overcharging customers clearly falls within this type of misrepresentation.