Workplace investigations can have serious consequences for employees, especially when they result in wrongful termination and defamation (damage to an employee’s professional reputation.) The case of Hearn v. Pacific Gas & Electric (PG&E) highlights the legal challenges employees face when internal investigations lead to termination and allegations that tarnish their reputation.
This case is significant because it clarifies how defamation in the workplace intersects with wrongful termination claims. It also sheds light on how retaliation claims work under California law and when employees can seek damages for false statements made by their employer.
If you’ve ever been investigated at work, fired under questionable circumstances, or felt that false statements about you were used against you, this case provides valuable insights. Below, we’ll break down the case in simple terms and discuss what it means for California employees.
Defamation and Wrongful Termination Case Summary: Hearn v. PG&E
Background
Todd Hearn was an experienced lineman working for PG&E when the company launched an internal investigation into misconduct at its Napa yard. PG&E suspected that certain employees were misreporting work hours and improperly claiming overtime pay.
As part of this investigation, Hearn was placed on “crisis leave” (suspension) while PG&E reviewed allegations against him. PG&E’s internal review included analyzing GPS data from work vehicles, timecards, and security badge records. Initially, PG&E struggled to prove serious misconduct, and some within the company expressed concerns that Hearn was being unfairly targeted.
To strengthen its case, PG&E brought in an outside investigator, Tony Mar, to review the allegations. Mar’s report concluded that Hearn had violated PG&E’s Code of Conduct by misstating work activities, falsifying timecards, and misusing company time. Shortly after this report was completed, PG&E fired Hearn.
The Legal Claims
Hearn sued PG&E on two key legal grounds:
- Retaliation under California Labor Code § 1102.5 – Hearn argued that PG&E fired him not because of misconduct, but because he had raised concerns about unsafe electrical equipment known as “Tripsavers.” California law protects employees from retaliation for reporting workplace safety concerns.
- Defamation – Hearn claimed that PG&E made false and damaging statements in its internal investigation reports, specifically the Mar Report, which accused him of dishonest conduct. He argued that these statements harmed his professional reputation and made it harder for him to find new employment.
The Jury’s Decision
- The jury ruled against Hearn on the retaliation claim, meaning they did not believe PG&E fired him because of his safety complaints.
- However, the jury did find that PG&E defamed Hearn through the Mar Report and awarded him over $2 million in damages.
Appeal and Final Decision
PG&E appealed, arguing that the defamation claim should not have been allowed because the allegedly false statements in the Mar Report were directly tied to Hearn’s termination. Under California law, an employee cannot turn a wrongful termination claim into a defamation claim unless the false statements caused harm beyond just job loss.
The appellate court agreed with PG&E and reversed the defamation verdict, ruling that Hearn could not recover damages for defamation when the harm was indistinguishable from his termination.
Key Takeaways for California Employees
Defamation in the Workplace: Limited Scope
Defamation occurs when an employer makes false statements that harm an employee’s professional reputation. However, if defamatory statements are tied directly to an employee’s termination, they may not be separately actionable as defamation.
For example, if your employer falsely tells clients or industry peers that you stole company funds, you may have a strong defamation claim since the harm goes beyond termination. On the other hand, if your employer states in internal documents that you were fired for dishonesty, this may not be defamation under the reasoning in Hearn v. PG&E.
Retaliation and Whistleblower Protections
California law (Labor Code § 1102.5) prohibits employers from firing employees for reporting illegal or unsafe workplace practices. However, proving a retaliation claim requires showing a direct connection between the safety complaint and the termination.
If an employee reports serious safety issues and is fired the next day despite having no performance issues, they may have a strong retaliation case. But if an employee is part of a broader misconduct investigation and their employer documents policy violations, proving retaliation becomes more difficult.
The Importance of Separate Harm in Defamation Claims
Employees seeking defamation claims must show damages unrelated to termination, such as lost future job opportunities or damage to their professional reputation beyond being fired. If the only harm suffered is losing the job, the claim may be treated as wrongful termination rather than defamation.
For instance, if an employer falsely accuses you of fraud and that statement prevents you from getting hired elsewhere, you may have a strong defamation case. However, if the false statement only contributed to your termination, courts may reject a defamation claim.
Workplace Investigations Can Be Biased
Employers often conduct internal investigations before firing an employee, but these investigations are not always fair. PG&E initially found that Hearn’s conduct was not serious enough to warrant termination. However, after hiring an outside investigator, they received a report that justified firing him. This highlights how workplace investigations can be used to support a predetermined decision rather than uncover the truth.
If an employer only investigates certain employees for misconduct while ignoring others engaged in the same behavior, it may indicate unfair treatment. Employees should document any inconsistencies in workplace investigations.
At-Will Employment and Employer Discretion
California is an at-will employment state, meaning employers can fire employees for nearly any reason except illegal discrimination or retaliation. However, proving wrongful termination requires showing that the real reason for termination was unlawful.
If your employer fires you for poor performance but never documented any past issues, you may be able to argue that the stated reason was a pretext (false excuse).
Conclusion
The Hearn v. PG&E case serves as an important lesson for California employees about workplace investigations, defamation, and retaliation claims. It reinforces that:
- Defamation claims must involve harm beyond termination.
- Retaliation claims require strong evidence linking termination to whistleblowing.
- Workplace investigations may not always be fair or neutral.
If you believe you have been wrongfully terminated or defamed by your employer, consulting an experienced employment lawyer is essential. Understanding your rights can help you navigate workplace disputes and protect your career.
FAQs About Defamation and Wrongful Termination in California
Can I sue my employer for defamation if they made false statements about me?
Yes, you may be able to sue your employer for defamation if they make false statements about you that harm your professional reputation. However, if those statements are made as part of your termination, courts may treat the case as wrongful termination rather than defamation. To succeed in a defamation case, you must prove that the statements were false, made with negligence or malice, and caused harm beyond job loss.
What qualifies as wrongful termination in California?
Wrongful termination occurs when an employer fires an employee for illegal reasons, such as retaliation, discrimination, or violation of public policy. Since California is an at-will employment state, employers can terminate employees for almost any reason—unless it violates state or federal employment laws.
What should I do if my employer spreads false information about me after I’m fired?
If your employer makes false and damaging statements about you after your termination, document everything and consult with an employment attorney. If those statements prevent you from getting another job or harm your reputation in your industry, you may have a strong defamation case.
Can I sue my employer for wrongful termination and defamation at the same time?
Yes, but it depends on the specifics of your case. If the false statements were made outside of the termination process and caused additional harm, a separate defamation claim may be valid. However, if the only harm suffered is losing your job, the case may be treated solely as wrongful termination rather than defamation.
How do I prove retaliation if I was fired after reporting workplace violations?
To prove retaliation, you need to show:
- You engaged in protected activity (such as reporting illegal conduct or safety violations).
- Your employer took adverse action against you (such as termination or demotion).
- There is a direct link between your complaint and your employer’s decision to fire you.
If you were terminated shortly after raising concerns, or if there is evidence your employer treated you differently than others, these may help support a retaliation claim.
What should I do if I’m under investigation at work?
If you are under a workplace investigation, take the following steps:
- Stay professional and avoid discussing the case with coworkers.
- Request documentation of the investigation process.
- Keep records of emails, meetings, and any statements made.
- Consult an employment lawyer if you believe the investigation is unfair or being used as a pretext for termination.
Contact the Ruggles Law Firm at 916-758-8058 to Evaluate Your Potential Lawsuit
Matt Ruggles has a thorough understanding of California employment laws and decades of practical experience litigating employment law claims in California state and federal courts. Using all of his knowledge and experience, Matt and his team can quickly evaluate your potential claim and give you realistic advice on what you can expect if you sue your former employer.
Contact the Ruggles Law Firm at 916-758-8058 for a free, no obligation consultation.
Blog posts are not legal advice and are for information purposes only. Contact the Ruggles Law Firm for consideration of your individual circumstances.
