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A recent California case demonstrates that employers might be allowed to reprimand or terminate an employee for interfering with an internal company investigation.  This decision highlights how important it is for employees to provide truthful information during internal company investigations, even if the employee’s conduct is the subject of the investigation.


In McGrory v. Applied Signal Tech., Inc., an employee (“McGrory) filed suit against his employer (“AST”) for wrongful termination.  McGrory had been accused of discriminating against another employee on the basis of her sexual orientation.  AST hired an external investigator to determine whether McGrory had indeed acted with a discriminatory bias.  While the investigator determined that McGrory did not discriminate against the other employee, AST discovered through the investigation that McGrory had been making various inappropriate sexual and racially/ethnically charged statements in the work environment.  In addition, the investigator concluded that McGrory had not been fully cooperative with the investigation, and had even made false statements during an interview. AST subsequently terminated McGrory’s employment due to these findings.  McGrory then filed suit against AST, alleging that, among other reasons, his termination violated a public precluding retaliation for statements made during an internal investigation.  AST successfully moved for and obtained summary judgment in its favor.  McGrory appealed and the California Court of Appeals Sixth District affirmed the trial court’s decision.

The Court of Appeals began its analysis by attempting to define the scope of a public policy that might protect an employee for participating in an internal company investigation.  In doing so the appellate court turned to language in the Fair Employment and Housing Act (“FEHA”), specifically, Government Code section 12940(h) which provides, in pertinent part, that it is unlawful for “any employer . . . to discharge, expel, or otherwise discriminate against any person because the person has opposed any practices forbidden under this part or because the person has filed a complaint, testified, or assisted in any proceeding under this part.”  The Court noted that while section 12940(h) does protect an employee against retaliation for participating in an internal investigation interviews, refusing to participate in or cooperate with an employer’s investigation into a discrimination claim is not “participation” or “assistance” into “any proceeding” under the FEHA statute and, hence, not FHEA “protected activity” which might form a basis of public policy protection. The McGrory court thus held that public policy does not protect deceptive activity during an internal investigation. Such conduct is a legitimate reason to terminate an at-will employee.


In McGrory the employer asserted three reasons for having terminated the employee. The employee argued in rebuttal that the employer’s justifications were factually inconsistent and/or unsupported by the evidence, and that an inference of discriminatory motive or pretext, necessary to overcome summary judgment, could be found simply by a showing of the employer’s justifications lacked factual support.  The McGrory court disagreed.   The court reasoned that an inference of intentional discrimination cannot be drawn solely from evidence, if any, that an employer lied about its reasons for terminating an at-will employee.  According to McGrory, the antidiscrimination laws do not prohibit lying, they prohibit discrimination.  Hence, consistent with the great weight of federal and California authority the McGrory court found that summary judgment in favor of the employer is proper if, after considering the employer’s explanation for its actions, the evidence as a whole fails to permit a rational inference that the employer’s actual motive was discriminatory.”  That is, a factual inconsistency in the employer’s justifications for termination might suggest, according to McGrory, that the employer terminated the employee for other reasons, but not necessarily because of a discriminatory or unlawful motive.  According to McGrory, to hold otherwise would be to require employers to show good cause for terminating an at-will employee which is simply not the law in California, as an employer does not require good cause to terminate an at-will employee.


McGrory is arguably a decision favorable to employers because it shows how difficult it can be to survive summary judgment when there is a lack of clear proof of discriminatory motive. Then again, the employee in McGrory did little to help his cause in lying during the employer’s investigation.  McGrory serves as a reminder that the ultimate issue when discriminatory discharge is alleged is whether the employer acted with a motive to discriminate illegally. The reason for termination need not be wise or correct so long as it is not grounded on a prohibited bias.  Hence, in defending a wrongful termination case employer’s can find solace by producing evidence that one or more reasons for the adverse employment action were unrelated to unlawful discrimination.

The McGrory decision, however, will protect employees who are terminated for having participated honestly in a company’s internal investigation or who opposed discrimination in giving information that the employer may not have wanted to come out.  The key is for employees to be fully compliant with any work related investigations, interviews, or proceedings.  The FEHA offers employees the safety of being able to fully participate in any work related proceedings without fearing retaliatory discipline or termination.  However, protection under the FEHA statute will not be availed to an employee who attempts to lie during a company internal investigation.

If you feel that you have been wrongly terminated opposing any practices forbidden under the FEHA statute by participating in a company internal investigation, contact the Law Office of George G. Romain for a free consultation.

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