Posted on November 12th, 2017
Understanding California At Will Employment:
What It Really Means For Employers
California is an at-will employment state, one of the few good things in Labor Laws for us employers, but what does that really mean?
By default, employment at will means that you and your employee can end the employment relationship between you at anytime without fear of liability.
Based on just this wording it may lead you to believe that you can fire one of your employees for any reason or no reason at all. In reality, you do have some limitations when it comes to firing an employee.
Under Labor Code section 2922, you’re able to fire employees at any time, for any legal reason. However, there are some defined “illegal” reasons and those are what you have to be aware of.
So in other words, you can pretty much fire your employees for whatever reason you deem fit as long as its not an something that has been deemed an illegal, for example one of the “protected reasons”.
For example, firing someone because you don’t like them, are in a horrible mood or feel they talk too much. These are all legitimate reasons that you can get away with it.
So what’s to stop employers from acting arbitrarily, inconsistently and without good cause? Nothing really. As long as the reason for firing isn’t an unlawful one, then you are in the clear.
We’ll get into that, but first, let’s delve deeper into the California at will employment law.
What Limitations Are there in the At Will Employment California Law?
There are various limitations associated with the at will employment California law. For instance, you have to be under certain contracts to have a shield against this law.
There are two types of contracts that fall within this category: ‘express’ contracts and ‘implied-in-fact’ contracts.
What Is an Express Contract?
An express contract consists of one party that makes an explicit offer to the other party. And once the other party accepts this offer with a valid promise, then it is legally binding. This can either be a written or oral contract.
It’s common for a contract to explicitly include provisions that hinder an employer from terminating the employee. In order to fire an employee, you have to show good cause before termination can occur.
And as for “good cause,” this means a fair and honest reason. The decision to fire the employee has to be in good faith. Also, the employer can’t come up with a good faith reason after making a bad faith decision to fire the employee.
For example, the decision is in bad faith if it’s:
- Trivial
- Capricious
- Unrelated to meeting business needs or goals
- Pretextual
All this means is that the employer can’t fire the employee simply because they don’t like them or the way they conduct themselves. A legit reason is required.
So in determining whether the decision is good cause, the courts will look for a balance between:
- The employer’s desire to operate a profitable and efficient business
- The employee’s desire to continue their employment
This seems a bit abstract, so it’s up to the courts to take on these situations case by case. And a lot of the time, courts allow employers plenty of space to exercise their power to hire and fire employees.
What Is an Implied-in-Fact Contract?
Now, for an implied-in-fact contract, surrounding circumstances can show whether a contract is in place. This is so even if there’s no oral or written agreement. For example, the conduct of the parties shows a mutual agreement that work is being done in exchange for money or other benefits.
Under the Supreme Court of California, “good cause” for termination is implied even when it’s not included in a contract explicitly stating so.
In other words, if the terms of employment seem to be at-will, the court can review the relationship as something else entirely. And what this also means is that the court can still require the employer to show good cause for firing the employee.
There’s no need for a contract to state the good cause requirement, either.
So what the court looks at is the employer’s and employee’s conduct to see if there are any unspoken agreements. And if the two acted in a way that shows an implied contract exists, then only good cause will justify the employee’s termination.
In determining this, the court will look at the following factors:
- The policies or practices created for personnel by the employer
- The length of time of the employee’s service
- Communications or actions by the employer that show assurances of continued employment
- The practices of the employee’s industry
Now, if there so happens to be an implied contract with a good cause termination requirement, then the employer has to have an honest, fair and good faith reason for employee termination. And in most cases, you need legitimate business reasons.
Employees within this contract are further protected by preventing employers from firing them as an attempt to cheat the worker for money or other benefits owed.
For All the Other Employees
There are certain scenarios where protections are provided to workers that don’t fall into the implied-in-fact and express contracts.
For example, if it’s found that you fired an employee for a reason that goes against the anti-discrimination statutes, you can get into serious trouble.
FEHA, or the California Fair Employment and Housing Act, prohibits employers from firing at-will employees for various reasons.
These are called the protected reasons.
They include the following:
- Race
- Color
- Religious creed
- National origin
- Mental disability
- Ancestry
- Physical disability
- Medical condition
- Genetic information
- Sex
- Gender
- Gender identity
- Gender expression
- Age
- Sexual orientation
What About the Union Workers?
It’s also prohibited for employers to fire employees simply because they choose to unionize. Employees have the right to collective bargaining and any employer that interferes with this is breaking the law.
Nor are employers allowed to threaten to terminate an employee for trying to join a labor organization or unionize.
There are also statutes that protect whistleblowers and employees taking a leave of absence.
Learn More About At Will Employment California Law
There’s a lot to learn when it comes to California employment laws. If you find yourself in a lawsuit against an employee regarding your termination of their position, then it’s best to seek legal guidance.
At Defend My Biz, we have a team of attorneys who specialize in employment law and specifically in employer defense. Don’t allow a disgruntled former employee take down your business and its reputation. Get the help you need to legally stand your ground.
Contact us today for your free case evaluation!
We want you to protect your business, and that is why in this article we are giving you all the real information you need to know about at will employment in California.
Please know that California protects employees very generously, the California Supreme Court said: “Even where employment is at will, numerous federal and state statutes already impose express limitations on the right of an employer to discharge at will.”
California employment laws has some exceptions that apply to at will employment, remembering these exceptions can save your business from a wrongful termination issue or a claim against you.
Here is a list of the exceptions you need to know.
Public Policy
If the termination of your employee is against the public policy of the state, this will be considered a wrongful termination. The public policy determines that you can not fire an employee for reasons related to gender, race, disability or religious discrimination.
Under the same exception, you can’t fire an employee for filing a workers compensation after being injured on the job, or for refusing to break the law to obey an employer.
Retaliatory Termination
California employment laws protects your employees from being fired due to retaliatory reasons, including employees reporting illegal activities, harassment, unsafe working conditions and/or wage and hour violations.
It is also against the law to fire an employee for reasons involving maternity leave or family leave.
Implied Contract
When a contract was formed between you and your employee, and it indicates or promises employment as long as the job is being done satisfactorily. In this case your employee’s status is not longer at will, it is now an implied employment contract, this subjects your employee to only be fired due to very poor job performance.
Covenant of Good Faith and Fair Dealing
Further more, California employment law implies a covenant of good faith in every contract. This law makes sure that the promises made in an employment contract are honor and the reasonable expectations of the beneficiary party are received based on the agreements made.
Contact our experienced attorneys today to answer any of your questions.
We are committed to help only California employers and to help your business succeed.