California Court of Appeal Upholds Wrongful Discharge Claim Over Polygraph Testing

Quick Hits

• The California Court of Appeal, Fourth Appellate District, held that an employer’s violation of Labor Code section 432.2—prohibiting mandatory polygraph tests as a condition of employment—can support a wrongful discharge claim in violation of public policy.
• The court affirmed a $100,000 noneconomic damages award to the employee but reversed the $212,000 attorney fee award, finding that Labor Code section 432.6 did not apply retroactively to the employment at issue.
• The court declined to award attorneys’ fees under the private attorney general fee statute or the Private Attorneys General Act.

Background

The case originated when Steven McDoniel, an employee at a licensed marijuana-growing facility, was discharged following a theft incident. The employer mandated that several employees, including the plaintiff, undergo a polygraph examination, without receiving the mandatory written notice when the test was administered. McDoniel was subsequently dismissed after purportedly failing the test. He then filed claims for wrongful termination in violation of public policy, among other allegations.

Key Issues and Holdings

Wrongful Discharge Based on Polygraph Testing

The central issue was whether requiring an employee to take a polygraph test in violation of Labor Code section 432.2 could support a tort claim for wrongful discharge in violation of public policy.

Section 432.2 prohibits private employers from requiring employees or applicants to submit to a polygraph test or similar tests as a condition of employment or continued employment, and requires written notice of the right to refuse such tests.

The court held that section 432.2 embodies a “fundamental” and “substantial” public policy protecting employee privacy. The court found substantial evidence that the employer required the test as a condition of continued employment and failed to provide the required written notice. The jury’s $100,000 noneconomic damages award for wrongful discharge was affirmed.

Attorneys’ Fees

The trial court had awarded McDoniel approximately $212,000 in attorneys’ fees under Labor Code section 432.6, which allows fee awards for prevailing plaintiffs in certain employment disputes. However, section 432.6 applies only to employment contracts entered into, modified, or extended on or after January 1, 2020. Because  McDoniel’s employment ended in 2018, the appellate court reversed the attorneys’ fee award, holding that section 432.6 did not apply retroactively.

The court also rejected alternative bases for attorneys’ fees under the private attorney general fee statute (Code Civ. Proc. § 1021.5). The court determined that the litigation primarily benefited McDoniel rather than the general public or a large class of persons, noting that McDoniel’s financial incentive to pursue the case was sufficient. Additionally, regarding the Private Attorneys General Act (PAGA) (Labor Code §§ 2698, 2699), the court found that McDoniel forfeited his claim for PAGA fees by failing to properly raise and brief the issue on appeal.

Key Takeaways

The appellate court’s opinion offers several reminders and tips for employers in California, including the following:

• Requiring employees to take a polygraph test, or similar examination, as a condition of employment or continued employment can support a wrongful discharge claim in California.
• Employers must provide written notice of the right to refuse such tests.
• Attorneys’ fee awards under Labor Code section 432.6 apply only to contracts entered into, modified, or extended on or after January 1, 2020.

Ogletree Deakins will continue to monitor developments and will provide updates on the California and Cybersecurity and Privacy blogs as additional information becomes available.

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