An employee makes a claim to his or her employer of discrimination. The employer as rule of thumb needs to investigate the claim in order to address the claim and take appropriate action. However, what happens during the employer’s investigation when other employees do not want to participate or refuse to cooperate. This question was recently addressed by the California Court of Appeal in McGrory v. Applied Signal Technology, Inc. (2013) 212 Cal. App. 4th 1510.

The plaintiff, John McGrory, sued his employer for wrongful termination following an investigation into whether he had sexual harassed another employee who he supervised and was openly gay. The employee made a claim to human resources that her supervisor, Mr. McGory, criticized her work performance because she was gay, told off color jokes, and demonstrated an overall lack of good judgment and sensitivity to those of other cultures.

The employer, Applied Signal Technology, Inc., hired a third-party attorney to do an investigation into claims made by the employee against Mr. McGory alleging discrimination and harassment. At the completion of the investigation, the findings exonerated Mr. McGory of discrimination, but provided Mr. McGory had certain performance issues, which included making jokes based on race and sex in the workplace. Further, the attorney who did the investigation provided Mr. McGory had been uncooperative and untruthful during the investigation. The attorney made a recommendation to the employer that Mr. McGory should be terminated because his conduct was unacceptable for a manager, and he appeared unwilling to acknowledge or reform his behavior.

The employer subsequently fired Mr. McGory. He turned around and sued his employer for wrongful termination and defamation. He alleged his termination violated public policy because he was fired because of participating in an employer’s internal investigation.

During the lawsuit employer (defendant) filed a motion for summary judgment. The employer provided Mr. McGory was terminated because he had violated the employer’s policies on sexual harassment, business, and personal ethics. Further, he was untruthful and uncooperative with the investigator and there was a concern his behavior might create a future legal liability for the employer.

Mr. McGory argued he was not terminated because of violating any policy, but primarily for being uncooperative during the internal investigation. Mr. McGory then cited to the Fair Employment Housing Act (FEHA), Government Code section 12940 where it provides it is unlawful employment practice “For any employer . . . to discharge, expel, or otherwise discriminate against any person because that person has opposed any practices forbidden under this part or because the person has filed a complaint, testified, or assisted in a proceeding under this part.” (California Government Code section 12940 subdivision (h))

Mr. McGory assumes the employer’s internal investigation was a “proceeding” as defined in Government Code section 12940 and therefore his participation in the investigation is a protected activity for which the employer could not take any retaliatory action, including termination against him. The trial court disagreed and granted the employer’s Motion for Summary Judgment. Mr. McGory appealed.

The Court of Appeal upheld the trial court’s ruling and further provided an employer’s internal investigation is not a “proceeding”. More specifically the Court of Appeal provided: “We conclude the Government Code section 12940, subdivision (h) does not shield an employee against termination or lesser discipline for either lying or withholding information during an employer’s internal investigation of a discrimination claim. In other words, public policy does not protect deceptive activity during an internal investigation. Such conduct is a legitimate reason to terminate an at-will employee.” (McGory v. Applied Signal Technology, Inc. at 1528)

The onus on the employer in California can be stringent when it comes to an employer’s duty to address claims of discrimination in the workplace. These matters never should be taken lightly and advice from an experienced employment law attorney is helpful to avoid pitfalls. The ruling by the Court of Appeal in McGory v. Applied Signal Technology, Inc. does not ease the duty of the employer, but does provide support, putting employees on notice they have an obligation to be truthful and cooperative with an employer’s internal investigation into discrimination claims.

For more information about this topic, please contact one of our business attorneys at 619.238.1712