At Will Employment

At-Will Employment: In jurisdictions with at-will employment, employers can generally terminate employees for any reason, as long as it’s not illegal. Determining whether a termination was wrongful can be complex.

At-will employment is a cornerstone of California’s employment law, defining the basic relationship between employers and employees. This concept brings with it various legal nuances and potential issues.

At-Will Employment in the Context of Wrongful Termination and Employment Law in California

Introduction: At-will employment is a fundamental aspect of employment law in California, providing both employers and employees with flexibility in terminating the employment relationship. However, this concept is not without its legal complexities and potential pitfalls. In this comprehensive overview, we will explore the key aspects of at-will employment in California, including the legal framework, potential problems, legal consequences, and relevant examples.

Legal Framework:

At-will employment is a default employment relationship in California, meaning that, unless there is a specific contract or collective bargaining agreement stating otherwise, either the employer or the employee can terminate the employment relationship at any time, with or without cause or notice. This is governed by both state and federal laws, and it establishes the foundation for employment relationships in California.

Key legal principles related to at-will employment in California

Termination Without Cause: Employers have the right to terminate employees without providing a reason, as long as the termination does not violate other legal protections (e.g., discrimination laws or whistleblower protections).
Exceptions to At-Will Employment: Certain limitations to at-will employment exist, including employment contracts, implied contracts, public policy exceptions, and statutory protections. These exceptions can provide employees with legal grounds to challenge their termination.

Potential Problems:

At-will employment can lead to several potential problems, which may result in wrongful termination claims. Some of these problems include:

Discrimination and Retaliation: Employers may use the at-will employment doctrine as a cover to discriminate against or retaliate against employees for reasons prohibited by state and federal anti-discrimination laws.
Implied Contracts: Even in at-will employment relationships, implied contracts can arise from employer statements, policies, or actions. Employees may argue that they had a legitimate expectation of continued employment, which can lead to disputes over wrongful termination.
Public Policy Exceptions: California recognizes a public policy exception to at-will employment, meaning that employers cannot terminate employees if it violates public policy, such as terminating an employee for refusing to engage in illegal activities.
Bad Faith Termination: Employers who act in bad faith when terminating an employee may expose themselves to legal liability. For example, firing an employee to avoid paying commissions or bonuses that are due can lead to wrongful termination claims.

Examples and Reasoning:

Example 1: An employee who has been with a company for several years has consistently received positive performance evaluations. However, they are terminated abruptly with no explanation. If the employee can demonstrate that there was an implied promise of continued employment based on their performance reviews and length of service, they may have a wrongful termination claim based on breach of an implied contract.

Example 2: An employer fires an employee shortly after the employee reports safety violations to a government agency. The employee claims wrongful termination in retaliation for reporting illegal activities. In this case, the employer may face legal consequences for violating whistleblower protection laws, even in an at-will employment context.

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More Information

1. Definition of At-Will Employment

Basic Principle: In California, at-will employment means that an employer can terminate an employee at any time for any reason, except for an illegal reason, and likewise, an employee can resign for any reason.
Presumption of At-Will: Employment in California is presumed to be at-will unless there’s an explicit agreement stating otherwise.

2. Legal Framework

Statutory Exceptions: Despite the broad scope of at-will employment, there are statutory exceptions. These include the Fair Employment and Housing Act (FEHA), which prohibits discrimination, harassment, and retaliation in employment.
Public Policy Exception: An employer cannot terminate an employee for reasons that violate California’s established public policy, such as firing someone for refusing to engage in illegal activities.
Implied Contract Exception: Even in the absence of a written contract, an implied contract may be recognized based on the company’s policies, practices, or statements, limiting the employer’s ability to terminate at will.

3. Legal Consequences of At-Will Employment

Termination for Any Reason: Employers can terminate employees without providing a reason, which can lead to abrupt job loss for employees.
Limited Recourse for Employees: Employees generally have limited legal recourse against termination unless it falls under an exception.

4. Common Problems and Challenges

Misunderstanding of Rights: Both employers and employees often misunderstand the extent of at-will employment rights and exceptions.
Wrongful Termination Claims: If an employee believes their termination was due to illegal discrimination or retaliation, they may file a wrongful termination claim.
Employee Morale and Turnover: The uncertainty of at-will employment can impact employee morale and lead to higher turnover.

5. Examples

Example 1: An employer terminates an employee without notice because they found a more skilled candidate. This is generally lawful under at-will employment.
Example 2: An employee is fired after filing a sexual harassment complaint. Despite at-will employment, this could constitute illegal retaliation.
Example 3: A long-term employee is terminated without cause. They argue that the employer’s handbook created an implied contract, limiting at-will termination.

6. Preventive Measures for Employers

Clear Communication: Employers should clearly communicate the at-will nature of employment in job offers and handbooks.
Consistent Policies: Applying termination policies consistently can help avoid claims of discrimination or implied contract.
Documentation: Documenting reasons for termination can be crucial in defending against wrongful termination claims.

7. Resolution and Litigation

Settlement and Mediation: Disputes over at-will employment often get resolved through settlement or mediation.
Litigation: When resolution is not possible, the matter may proceed to court, where a judge or jury will consider whether an exception to at-will employment applies.

In summary, while at-will employment in California offers flexibility for employers to manage their workforce, it also presents challenges, particularly regarding potential wrongful termination claims and the balancing of employee rights. Both employers and employees need to understand the nuances of at-will employment to navigate it effectively and legally.

Conclusion:

At-will employment is a foundational principle in California’s employment law, providing flexibility to both employers and employees. However, it is essential to recognize that there are exceptions and potential problems that can lead to wrongful termination claims. Employers should act in good faith and in compliance with all applicable laws to minimize the risk of legal consequences. Employees should be aware of their rights and seek legal counsel if they believe their termination violated the law or their employment contract. While at-will employment grants significant flexibility, it is not absolute, and both parties must navigate it within the boundaries of applicable laws and contractual obligations.

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Breach of Employment Contract—Unspecified Term—“At- Will” Presumption

An employment relationship may be ended by either the employer or the employee, at any time, for any [lawful] reason, or for no reason at all.

This is called “at-will employment.”

An employment relationship is not “at will” if the employee proves that the parties, by words or conduct, agreed that [specify the nature of the alleged agreement, e.g., the employee would be discharged only for good cause].

New September 2003; Revised June 2006, November 2018

Directions for Use

If the plaintiff has made no claim other than the contract claim, then the word “lawful” may be omitted. If the plaintiff has made a claim for wrongful termination or violation of the Fair Employment and Housing Act, then the word “lawful” should be included in order to avoid confusing the jury.

Sources and Authority

At-Will Employment. Labor Code section 2922.
Contract of Employment. Labor Code section 2750.
“Labor Code section 2922 has been recognized as creating a presumption. The statute creates a presumption of at-will employment which may be overcome ‘by evidence that despite the absence of a specified term, the parties agreed that the employer’s power to terminate would be limited in some way, e.g., by a requirement that termination be based only on “good cause.” ’ ” (Haycock v. Hughes Aircraft Co. (1994) 22 Cal.App.4th 1473, 1488 [28 Cal.Rptr.2d 248], internal citations omitted.)
“Where there is no express agreement, the issue is whether other evidence of the parties’ conduct has a ‘tendency in reason’ to demonstrate the existence of an actual mutual understanding on particular terms and conditions of employment. If such evidence logically permits conflicting inferences, a question of fact is presented. But where the undisputed facts negate the existence or the breach of the contract claimed, summary judgment is proper.” (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 337 [100 Cal.Rptr.2d 352, 8 P.3d 1089], internal citations omitted.)
“Because the presumption of at-will employment is premised upon public policy considerations, it is one affecting the burden of proof. Therefore, even if no substantial evidence was presented by defendants that plaintiff’s employment was at-will, the presumption of Labor Code section 2922 required the issue to be submitted to the jury.” (Alexander v. Nextel Communications, Inc. (1997) 52

Cal.App.4th 1376, 1381–1382 [61 Cal.Rptr.2d 293], internal citations omitted.)

“The presumption that an employment relationship of indefinite duration is intended to be terminable at will is therefore ‘subject, like any presumption, to contrary evidence. This may take the form of an agreement, express or implied, that . . . the employment relationship will continue indefinitely, pending the occurrence of some event such as the employer’s dissatisfaction with the employee’s services or the existence of some “cause” for termination.’ ” (Foley

v. Interactive Data Corp. (1988) 47 Cal.3d 654, 680 [254 Cal.Rptr. 211, 765 P.2d 373], internal citation omitted.)

Secondary Sources

3 Witkin, Summary of California Law (11th ed. 2017) Agency and Employment,

§ 244

Chin et al., California Practice Guide: Employment Litigation, Ch.4-A, Employment Presumed At Will, ¶¶ 4:2–4:4 (The Rutter Group)

Chin et al., California Practice Guide: Employment Litigation, Ch.4-B, Agreements Limiting At-Will Termination, ¶ 4:65 (The Rutter Group)

1 Wrongful Employment Termination Practice (Cont.Ed.Bar 2d ed.) Contract Actions, §§ 8.4–8.14

4 Wilcox, California Employment Law, Ch. 60, Liability for Wrongful Termination and Discipline, §§ 60.01–60.02 (Matthew Bender)

21 California Forms of Pleading and Practice, Ch. 249, Employment Law: Termination and Discipline, §§ 249.10, 249.11, 249.13, 249.21, 249.43[1], [8] (Matthew Bender)

10 California Points and Authorities, Ch. 100, Wrongful Termination and Discipline, §§ 100.20–100.23 (Matthew Bender)

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