What Should Employers Do When an Employee Complains About Low Pay?

As California continues to strengthen its laws on pay transparency and equal pay, employers are facing growing legal risks tied to wage complaints. A recent court decision in Contreras v. Green Thumb Produce offers a critical lesson: when employees raise concerns about pay, how an employer responds may pose even greater legal risk than whether the pay is actually legal. Below, we break down the case and what it means for employers—from legal takeaways to actionable compliance tips.

If your company needs help evaluating current pay risk, building a complaint response process, or ensuring compliance with California’s Equal Pay, Transparency, and Anti-Retaliation laws, contact the ILS legal team at: contact@consultils.com.

Case Background: A Simple Pay Complaint Becomes a Retaliation Lawsuit

An employee, Contreras, noticed his pay was lower than others doing similar work. After receiving no results from his supervisor, he contacted the California Labor Commissioner and was told there might be an equal pay issue. Acting on that advice, Contreras brought information about the Equal Pay Act to HR and requested a raise.

HR refused—and then questioned why he had contacted the Labor Department. That same day, he was sent home and fired the next morning.

Contreras sued, claiming he was fired in retaliation for asking about pay.

From a legal perspective, the case checked all the high-risk boxes:

• The employee took a legally protected action.

• The employer took an adverse action (termination).

• The timing between the two was very short.

This combination created a serious legal risk under California labor laws.

Court Ruling: “Reasonable Suspicion” Is Enough to Trigger Legal Protection

The central legal question wasn’t whether the employer actually violated the Equal Pay Act. In fact, the employee admitted he didn’t think the pay gap was based on gender, race, or ethnicity.

Still, the appeals court ruled in favor of the employee. Under California Labor Code §1102.5 (whistleblower protection), an employee:

• Doesn’t need to prove the employer broke the law.

• Doesn’t need to fully understand the law.

• Only needs to have a reasonable belief that something illegal may be happening.

This means even if the employee misunderstood the law, their complaint could still be legally protected.

The court added:

• Employees have the right to discuss their pay and working conditions.

• They also have the right to ask questions or contact labor agencies.

• If an employer responds with discipline or termination soon after, the law may presume it’s retaliation—unless the employer can clearly prove otherwise.

In short: the ruling lowers the bar for employees to claim protection, while raising the burden on employers to justify their actions.

Key Impact: Pay Complaints Now Carry Bigger Compliance Risks

This case sends a strong message: wage disputes are no longer just about money. They’re now legal compliance issues—and how companies respond is just as important as what they pay.

Protected behavior is easier to trigger.

Employees don’t need to “get the law right.” If their concerns are reasonable, whistleblower protections can apply.

The real risk isn’t always illegal pay—it’s how employers react.

Even if a pay structure is legal, retaliation risks can arise from:

• Questioning why the employee contacted labor authorities

• Discouraging employees from discussing wages

• Taking negative action soon after a complaint

California’s broader pay transparency laws raise the stakes.

With new data reporting laws in place, the government has a full view of your company’s pay structure. Employees can more easily compare wages internally, and retaliation laws offer expanding protection.

Overseas companies may face extra risks.

Chinese or international employers expanding into California often lack localized compensation systems—making them more vulnerable under these new rules.

Employer Guide: Build a “No Retaliation” Pay Complaint System

To reduce legal risk, we recommend these practical steps:

Centralize all pay complaints.

All issues about pay, fairness, or pay gaps should go through HR or Legal—never left to individual managers.

Build a “cool-down” protocol.

After an employee raises a complaint:

• Avoid taking disciplinary action too quickly.

• Any negative employment decision must go through legal review.

• Be extra cautious within 90 days of a complaint.

Conduct internal pay audits.

Don’t wait for a complaint:

• Review pay by job title, gender, and ethnicity.

• Make sure any differences are based on valid business reasons.

• Fix risk areas early.

Train your managers.

Most lawsuits start with what someone said in a meeting. For example:

• “Why did you contact the Labor Department?”

• “You shouldn’t talk about pay with others.”

Comments like these can become damaging evidence later in court.

The Contreras case reminds employers: it’s not about whether the employee is “right”—it’s about whether your company has a professional, calm, and documented response system in place. With California’s legal framework now forming a full circle—from pay transparency to whistleblower protection to data-driven enforcement—the time to act is now.

If your company needs help evaluating current pay risk, building a complaint response process, or ensuring compliance with California’s Equal Pay, Transparency, and Anti-Retaliation laws, contact the ILS legal team at: contact@consultils.com.

Disclaimer: The materials provided on this website are for general informational purposes only and do not, and are not intended to, constitute legal advice. You should not act or refrain from acting based on any information provided here. Please consult with your own legal counsel regarding your specific situation and legal questions.

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As Managing Partner at ILS, Richard Liu ranks among the leading U.S. attorneys in corporate, employment, and regulatory law. He is known for crafting legal strategies aligned with clients’ business objectives and advising Fortune 500 companies, startups, and executives on corporate transactions, financing, privacy, and employment matters across the technology, healthcare, and financial sectors.

Before founding ILS, Richard practiced at top defense firms, where he developed a reputation for anticipating risks and designing strategies that balance protection with growth. He has secured favorable outcomes in contract and intellectual property disputes, represented clients in state and federal courts, and is recognized for combining large-firm expertise with boutique-firm agility. Richard is also a frequent speaker at industry and legal conferences.

Email: contact@consultils.com | Phone: 626-344-8949