Bringing and Defending Wrongful Termination Lawsuits
From our experience, many, if not most, terminated employees believe that their termination was unlawful. The truth is that very few can be characterized as "wrongful" terminations, because California is an "at-will" employment state. That means that the employment relationship can be terminated at the will of either party at any time.
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The at-will presumption can be defeated in three ways: if a statute limits the employer's right to terminate, if terminating the employment relationship would violate established public policy, or if a contract exists between the employer and employee that provides that the employee may only be terminated "for cause."
In other words, for an at-will employment relationship to be wrongfully terminated, one of these three exceptions must apply:
Statutory Limitations on At-Will Employment
California and federal laws place limits on California's presumption of at-will employment. These statutes are generally broken down into three categories: termination as part of illegal discrimination or retaliation, termination for protected whistleblowing, and termination for participating in public activities.
Termination as part of illegal discrimination or retaliation
A termination may be illegal if it is done because of the employee's:
- Race, color, national origin, or ancestry;
- Sex (including pregnancy);
- Age (over 40);
- Physical or mental disability;
- Marital status;
- Sexual orientation;
- Medical condition; or
Termination for protected whistleblowing
A termination may be illegal if it is done because the employee reported:
- Discriminatory conduct
- Regulatory violations or illegal activities
- The employer defrauded the government
- Unsafe working conditions
- Industrial/workplace industries
- Patient abuse (i.e., in a hospital)
Termination for participating in public activities
It is unlawful for an employer to terminate an employee who participates in:
- Jury duty or
- Political activity
Public Policy Limitations on At-Will Employment
Public policy limits a California employer's right to terminate an employee at will. Employment termination in violation of public policy is a tort cause of action that gives rise to tort damages (i.e., possibly punitive damages). The types of public policy that limit the at-will presumption must be "fundamental," benefit the public at large, and apply to the defendant employer. Examples are:
- Employer terminates Employee for refusing to violate a law. Examples include discharging Employee (1) for refusing to cooperate with employer in violation of health and safety rules, (2) refusing to participate in illegal scheme to fix gasoline prices, and (3) refusing to sign an arbitration agreement as a condition of continuing employment.
- Employer terminates employee because Employee was performing something he was required to do by law. An example is discharging a building inspector for enforcing a building code. Another is terminating an employee for performing jury duty.
- Employer terminates employee because Employee exercised a statutory right or privilege. Examples include discharging Employee for (1) complaining about not receiving overtime wages, (2) testifying against Employer in a deposition or court proceeding, (3) being pregnant, (4) being gay, (5) being in any other protected category, (6) exercising leave rights under the California Family Rights Act or Federal Family and Medical Leave Act, and (7) refusing to take a random drug test.
- Employer terminates employee because Employee reported an alleged violation of a statute of public importance. Examples include terminating Employee because (1) she reported her Employer for dumping toxic chemicals into the ocean and (2) she reported her Employer for conducting illegal wiretapping of its competitors.
Contractual Limitations on At-Will Employment
The two contractual limitations on at-will employment are either (1) the employer and employee have an express contract that says Employee must be terminated only for good cause (or something to that effect) or (2) acts by the employer have given rise to an implied contract that Employee can only be terminated for good cause.
To better explain these concepts, below are how courts have defined the key terms:
Express Contract: This generally means that the Employer and Employee have entered into a written contract.
Implied Contract: Acts by Employer, like telling Employee he will be working for Employer for the rest of his life or having an employment manual that provides for a progressive discipline policy (usually a big no-no for a handbook), can give rise to an implied contract between Employer and Employee whereby Employee cannot be terminated except for good cause.
Good Cause: Typically, in an express contract, the good cause required for termination is specified by the contract itself. Otherwise, and in the case of an implied contract, the courts have defined “good cause” as “fair and honest reasons, regulated by good faith on the part of the employer, that are not trivial, arbitrary, or capricious, unrelated to business needs or goals, or pretextual. A reasoned conclusion, in short, supported by substantial evidence gathered through an adequate investigation that includes notice of the claimed misconduct and a chance for the employee to respond.” (Cotran v. Rollins Hudig Hall Int'l, Inc. (1998) 17 Cal.4th 93, 108.)