Breach of Employment Contract

Breach of employment contract in the context of wrongful termination falls under the purview of employment law in the state of California. California, like many other states in the United States, recognizes the importance of employment contracts as legally binding agreements between employers and employees. When either party breaches the terms of an employment contract, particularly in cases of wrongful termination, there can be significant legal consequences.

Overview of Employment Contracts in California:

1. Employment contracts in California can take various forms, including written contracts, oral agreements, or implied contracts based on the employer’s actions or statements. The terms and conditions of employment are generally governed by these agreements. While at-will employment is common in California (meaning employers or employees can terminate the employment relationship at any time, for any reason, with or without notice), employment contracts may alter this default arrangement by specifying terms and conditions of employment, including termination procedures.

Wrongful Termination

1. Wrongful Termination: Wrongful termination occurs when an employer violates the terms of an employment contract, an implied contract, or state and federal employment laws when terminating an employee. Common examples of wrongful termination in California include:a. Discrimination: Termination based on an employee’s race, gender, age, disability, sexual orientation, or other protected characteristics violates anti-discrimination laws such as the California Fair Employment and Housing Act (FEHA) and federal laws like Title VII.b. Retaliation: Dismissing an employee for engaging in legally protected activities, such as whistleblowing or filing a complaint about workplace safety violations, is considered retaliation and is unlawful under California law.c. Breach of Contract: Failing to follow the termination procedures outlined in an employment contract can also constitute wrongful termination.

Legal Consequences of Breach of Employment Contract:

1. Legal Consequences of Breach of Employment Contract: When an employer breaches an employment contract, the consequences can be severe. Employees who believe they have been wrongfully terminated can take legal action against their employers. Legal remedies in California may include:a. Damages: Wrongfully terminated employees may be entitled to damages, including lost wages, benefits, and potentially punitive damages in cases of egregious misconduct.b. Reinstatement: In some cases, a court may order the employer to reinstate the employee to their former position.c. Attorney’s Fees and Costs: If an employee prevails in a wrongful termination lawsuit, the court may require the employer to pay the employee’s attorney’s fees and court costs.

Problems That Could Arise:a. Proving Wrongful Termination:

1. Problems That Could Arise:a. Proving Wrongful Termination: One challenge in wrongful termination cases is proving that the termination was indeed wrongful. Employers may argue that the termination was for legitimate reasons unrelated to discrimination, retaliation, or breach of contract.Example: An employee claims they were fired due to age discrimination, while the employer asserts that they were terminated for poor job performance. Proving discrimination can be challenging without strong evidence.b. Statute of Limitations: Wrongful termination claims in California have statutes of limitations, which vary depending on the type of claim. Failing to file a claim within the specified time frame can result in the loss of legal remedies.c. Contract Interpretation: Disputes may arise over the interpretation of employment contracts, particularly if the terms are ambiguous or open to different interpretations.Example: An employment contract specifies a termination procedure but does not define “just cause.” The employer may argue that they had just cause for termination, while the employee disagrees.

Conclusion

In conclusion, wrongful termination in breach of employment contracts in California can lead to complex legal disputes with significant consequences for both employers and employees. It’s essential for parties to understand their rights and obligations, seek legal counsel when necessary, and ensure compliance with employment laws and contract terms to avoid potential legal pitfalls.

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Additional Information

Breach of employment contract in the context of wrongful termination and employment law in California is an intricate subject with various legal facets.

Legal Framework

1. Nature of Employment Contracts in California:
   • California generally adheres to “at-will” employment, meaning either party can terminate the employment relationship without cause. However, employment contracts can modify this at-will presumption, stipulating terms for termination.
   • Contracts can be written, oral, or implied through company policies or employee handbooks.
2. Types of Employment Contracts:
   • Fixed-Term Contracts: Specify a definite employment duration.
   • Contracts Imposing Limitations on Termination: May require cause for termination.
3. Statutes Governing Breach of Contract:
   • The California Labor Code and relevant case law govern employment contracts and their breach.

Legal Consequences of Breach

1. Damages:
   • Economic losses, including lost wages and benefits.
   • Potential compensation for emotional distress.
   • Rarely, punitive damages in cases of egregious behavior.
2. Specific Performance:
   • In some cases, a court might order specific performance, requiring the employer to fulfill the terms of the contract.

Potential Problems

1. Proving the Existence of a Contract:
   • Particularly with oral or implied contracts, establishing their existence and terms can be challenging.
2. Determining What Constitutes a ‘Breach’:
   • Interpreting contract terms to decide whether a breach occurred can be complex, especially with vaguely worded agreements.
3. Mitigation of Damages:
   • The fired employee is often required to mitigate damages by seeking new employment, complicating damage calculations.

Examples

1. Breach of a Fixed-Term Contract:
   • An employee with a three-year contract is terminated after one year without cause, contrary to contract terms. The employee could claim damages for the remaining contract term.
2. Violation of Termination Clauses:
   • A contract requiring termination for cause, but the employee is fired without any stated cause or due process as outlined in the contract.

Reasoning and Logic

• Contract Interpretation: Courts will interpret employment contracts by examining the language of the contract, the conduct of the parties, and any relevant industry practices.
• Damages Calculation: The primary goal in breach of contract cases is to put the injured party in the position they would have been in had the breach not occurred. This often means calculating lost wages and benefits.
• At-Will Presumption: Unless an employment contract explicitly states otherwise, employment is typically at-will. This can complicate breach claims as employers can argue that no specific terms were breached due to the at-will nature of the employment.

Conclusion

Breach of employment contract cases in California hinge on the nature of the contract, the circumstances of the termination, and the ability of the employee to demonstrate that a breach occurred. These cases often involve complex legal interpretations and significant factual investigations to determine the existence and terms of a contract and whether a breach occurred. The balance between the at-will employment presumption and contractually stipulated job security plays a critical role in these disputes.

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2401. Breach of Employment Contract—Unspecified Term—Actual or Constructive Discharge—Essential Factual Elements

New September 2003; Revised November 2018

Directions for Use

Element 3 on substantial performance should not be confused with the “good cause” defense: “The action is primarily for breach of contract. It was therefore incumbent upon plaintiff to prove that he was able and offered to fulfill all obligations imposed upon him by the contract. Plaintiff failed to meet this requirement; by voluntarily withdrawing from the contract he excused further performance by defendant.” (Kane

v. Sklar (1954) 122 Cal.App.2d 480, 482 [265 P.2d 29], internal citation omitted.) Element 3 may be deleted if substantial performance is not a disputed issue.

An employee may be “constructively” discharged if the employer intentionally created or knowingly permitted working conditions to exist that were so intolerable that a reasonable person would have had no reasonable alternative except to resign. (Turner v. Anheuser-Busch, Inc. (1994) 7 Cal.4th 1238, 1251 [32 Cal.Rptr.2d 223, 876 P.2d 1022].) If constructive rather than actual discharge is alleged, include “by forcing [name of plaintiff] to resign” in the introductory paragraph and “constructively” in element 4. Then also give CACI No. 2510, “Constructive Discharge” Explained.

Elements 2 and 4 may be modified for adverse employment actions other than discharge, for example demotion. The California Supreme Court has extended the implied contract theory to encompass adverse employment actions that violate the terms of an implied contract. (See Scott v. Pac. Gas & Elec. Co. (1995) 11 Cal.4th 454, 473-474 [46 Cal.Rptr.2d 427, 904 P.2d 834].) See CACI No. 2509, “Adverse

Employment Action” Explained.

For an instruction on damages, give CACI No. 3903P, Damages From Employer for Wrongful Discharge (Economic Damage). See also CACI No. 304, Oral or Written Contract Terms, and CACI No. 305, Implied-in-Fact Contract.

Sources and Authority

• At-Will Employment. Labor Code section 2922.
• Contractual Conditions Precedent. Civil Code section 1439.
• “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.)
• The employee bears the ultimate burden of proving that he or she was wrongfully terminated. (Pugh v. See’s Candies, Inc. (Pugh I) (1981) 116 Cal.App.3d 311, 330 [171 Cal.Rptr. 917].)
• “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.)

• “In Foley, we identified several factors, apart from express terms, that may bear upon ‘the existence and content of an . . . [implied-in-fact] agreement’ placing limits on the employer’s right to discharge an employee. These factors might include ‘ “the personnel policies or practices of the employer, the employee’s longevity of service, actions or communications by the employer reflecting assurances of continued employment, and the practices of the industry in which the employee is engaged.” ’ ” (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 336–337 [100 Cal.Rptr.2d 352, 8 P.3d 1089], internal citations omitted.)
• “Standing alone, constructive discharge is neither a tort nor a breach of contract, but a doctrine that transforms what is ostensibly a resignation into a firing. Even after establishing constructive discharge, an employee must independently prove

a breach of contract or tort in connection with employment termination in order to obtain damages for wrongful discharge.” (Turner v. Anheuser-Busch, Inc. (1994) 7 Cal.4th 1238, 1251 [32 Cal.Rptr.2d 223, 876 P.2d 1022], original italics, internal citation omitted.)

• “Constructive discharge occurs when the employer’s conduct effectively forces an employee to resign. Although the employee may say, ‘I quit,’ the employment relationship is actually severed involuntarily by the employer’s acts, against the employee’s will. As a result, a constructive discharge is legally regarded as a firing rather than a resignation.” (Turner, supra, 7 Cal.4th at pp. 1244–1245, internal citation omitted.)
  • “In order to amount to a constructive discharge, adverse working conditions must be unusually ‘aggravated’ or amount to a ‘continuous pattern’ before the situation will be deemed intolerable. In general, ‘[s]ingle, trivial, or isolated acts of [misconduct] are insufficient’ to support a constructive discharge claim. Moreover, a poor performance rating or a demotion, even when accompanied by reduction in pay, does not by itself trigger a constructive discharge.” (Turner, supra, 7 Cal.4th at p. 1247, internal citation and fns. omitted.)
  • “Whether conditions were so intolerable as to justify a reasonable employee’s decision to resign is normally a question of fact.” (Valdez v. City of Los Angeles (1991) 231 Cal.App.3d 1043, 1056 [282 Cal.Rptr. 726].)
  • “In some circumstances, a single intolerable incident, such as a crime of violence against an employee by an employer, or an employer’s ultimatum that an employee commit a crime, may constitute a constructive discharge. Such misconduct potentially could be found ‘aggravated.’ ” (Turner, supra, 7 Cal.4th at p. 1247, fn. 3.)
  • “Each individual incident need not be sufficient standing alone to force a resignation; rather, the accumulation of discriminatory treatment over time can amount to intolerable working conditions.” (Brome v. California Highway Patrol (2020) 44 Cal.App.5th 786, 801–802 [258 Cal.Rptr.3d 83].)
  • “[T]he standard by which a constructive discharge is determined is an objective one—the question is ‘whether a reasonable person faced with the allegedly intolerable employer actions or conditions of employment would have no reasonable alternative except to quit.’ ” (Turner, supra, 7 Cal.4th at p. 1248, internal citations omitted.)
  • “In order to establish a constructive discharge, an employee must plead and prove, by the usual preponderance of the evidence standard, that the employer either intentionally created or knowingly permitted working conditions that were so intolerable or aggravated at the time of the employee’s resignation that a reasonable employer would realize that a reasonable person in the employee’s position would be compelled to resign. [¶] For purposes of this standard, the requisite knowledge or intent must exist on the part of either the employer or those persons who effectively represent the employer, i.e., its officers, directors, managing agents, or supervisory employees.” (Turner, supra, 7 Cal.4th at p. 1251.)

• “The length of time the plaintiff remained on the job may be one relevant factor in determining the intolerability of employment conditions from the standpoint of a reasonable person. Neither logic nor precedent suggests it should always be dispositive.” (Turner, supra, 7 Cal.4th at p. 1254, original italics.)
• “ ‘Good cause’ or ‘just cause’ for termination connotes ‘ “a fair and honest cause or reason,” ’ regulated by the good faith of the employer. The term is relative. Whether good cause exists is dependent upon the particular circumstances of each case. In deciding whether good cause exists, there must be a balance between the employer’s interest in operating its business efficiently and profitably and the employee’s interest in continued employment. Care must be exercised so as not to interfere with the employer’s legitimate exercise of managerial discretion. While the scope of such discretion is substantial, it is not unrestricted. Good cause is not properly found where the asserted reasons for discharge are ‘trivial, capricious, unrelated to business needs or goals, or pretextual.’ Where there is a contract to terminate only for good cause, the employer has no right to terminate for an arbitrary or unreasonable decision.” (Walker v. Blue Cross of California (1992) 4 Cal.App.4th 985, 994 [6 Cal.Rptr.2d 184], internal citations omitted, abrogated on another ground in Guz, supra, 24 Cal.4th at p. 351.)
• “The general rule is that the measure of recovery by a wrongfully discharged employee is the amount of salary agreed upon for the period of service, less the amount which the employer affirmatively proves the employee has earned or with reasonable effort might have earned from other employment.” (Parker v. Twentieth Century-Fox Film Corp. (1970) 3 Cal.3d 176, 181 [89 Cal.Rptr. 737,

474 P.2d 689], internal citations omitted.)

Secondary Sources

Chin et al., California Practice Guide: Employment Litigation, Ch.4-A, Employment Presumed At Will, ¶¶ 4:2, 4:8, 4:15 (The Rutter Group)

Chin et al., California Practice Guide: Employment Litigation Ch.4-B, Agreements Limiting At-Will Termination, ¶¶ 4:65, 4:81, 4:105 (The Rutter Group)

Chin et al., California Practice Guide: Employment Litigation, Ch.4-C, “Good Cause” for Termination, ¶¶ 4:270–4:273 (The Rutter Group)

1 Wrongful Employment Termination Practice (Cont.Ed.Bar 2d ed.) Contract Actions, §§ 8.4–8.20B

4 Wilcox, California Employment Law, Ch. 60, Liability for Wrongful Termination and Discipline, §§ 60.05, 60.07 (Matthew Bender)

21 California Forms of Pleading and Practice, Ch. 249, Employment Law: Termination and Discipline, §§ 249.10, 249.15, 249.43, 249.90, Ch. 250, Employment Law: Wage and Hour Disputes, § 250.66 (Matthew Bender)

5 California Points and Authorities, Ch. 50, Contracts, §§ 50.10, 50.11 (Matthew Bender)

10 California Points and Authorities, Ch. 100, Employer and Employee: Wrongful Termination and Discipline, §§ 100.21, 100.22, 100.28, 100.29, 100.31 (Matthew

Bender) California Civil Practice: Employment Litigation §§ 6:9–6:11 (Thomson Reuters)

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