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Wrongful Termination

California Law About Wrongful Termination of Employment

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Discharge for Good Cause Defined

Discharge for Good Cause Defined

Discharge for Good Cause in California Employment Law:

In California, employment is generally considered to be “at-will,” meaning that an employer can terminate an employee for any reason or no reason at all, as long as it is not in violation of specific laws or contractual agreements. However, there are important exceptions to this general rule, one of which is discharge for good cause.

1. Definition of Good Cause:

Good cause is a legal concept that implies that an employer has a legitimate and substantial reason to terminate an employee. It typically involves situations where an employee’s actions or behavior seriously harm the employer’s interests or violate company policies. Good cause can include, but is not limited to, the following:

  • Employee misconduct (e.g., theft, harassment, violence, insubordination).
  • Breach of employment contract terms.
  • Repeated violations of company policies or rules.
  • Poor job performance despite warnings and opportunities for improvement.
  • Violations of state or federal laws that directly affect the employment relationship.

2. Employment Contracts and Good Cause:

In some cases, an employment contract may specify the conditions under which an employee can be terminated, including what constitutes “good cause” for termination. These contractual agreements can either limit an employer’s ability to terminate an employee at-will or establish specific procedures that must be followed before termination.

3. Legal Consequences of Discharge for Good Cause:

When an employer terminates an employee for good cause in California, it generally does not give rise to a wrongful termination claim. This means that the employer’s actions are legally justified, and the employee does not have grounds for legal action. However, if an employee believes that their termination was not actually for good cause and that the employer’s stated reason is pretextual, they may challenge the termination in court.

4. Problems That Could Arise:

a. Dispute Over What Constitutes Good Cause: One common problem is a disagreement between the employer and the employee over whether the termination was justified. For example, an employee might argue that their job performance was satisfactory, while the employer claims otherwise.

Example: Sarah works for a tech company and is terminated for alleged poor job performance. She believes that her performance was excellent and that the company is using this as an excuse to terminate her because of her gender. Sarah files a wrongful termination lawsuit, claiming that the good cause cited was a pretext for discrimination.

b. Inconsistent Application of Policies: Employers must apply their policies consistently to avoid claims of discrimination or favoritism. If an employer is selective in enforcing policies, it could lead to legal problems.

Example:

James, an employee, is fired for a policy violation that was not enforced with other employees in similar situations. He claims that the company applied the policy unfairly and that his termination was not for good cause.

c. Failure to Follow Contractual Procedures: If an employment contract specifies procedures that must be followed before termination for good cause, failure to adhere to these procedures could result in a wrongful termination claim.

Example: Maria’s employment contract requires the company to provide her with a written warning and an opportunity to improve before termination for performance issues. The company fails to provide the required warning and terminates her abruptly. Maria files a wrongful termination lawsuit based on the contract breach.

d. Retaliation Claims: An employee who has engaged in legally protected activities, such as whistleblowing or exercising their rights under employment laws, might claim that their discharge for good cause is actually retaliation for their protected actions.

Example: John reports safety violations at his workplace to a government agency. Shortly after, he is terminated for a minor policy violation that was previously overlooked. John claims that his termination is retaliation for whistleblowing.

Conclusion:

In California, discharge for good cause is a concept that allows employers to terminate employees for legitimate reasons. However, disputes over what constitutes good cause, inconsistencies in policy enforcement, failure to follow contractual procedures, and retaliation claims can complicate the situation and potentially lead to wrongful termination lawsuits. It is crucial for employers to carefully document their decisions and ensure compliance with applicable laws and contracts to minimize legal risks. Employees who believe they were wrongfully terminated should consult with an employment attorney to assess their legal options.

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2404. Breach of Employment Contract—Unspecified Term—“Good Cause” Defined

Good cause exists when an employer’s decision to discharge an employee is made in good faith and based on a fair and honest reason. An employer has substantial but not unlimited discretion regarding personnel decisions[, particularly with respect to an employee in a sensitive or confidential managerial position]. However, good cause does not exist if the employer’s reasons for the discharge are trivial, arbitrary, inconsistent with usual practices, or unrelated to business needs or goals, or if the stated reasons conceal the employer’s true reasons.

In deciding whether [name of defendant] had good cause to discharge [name of plaintiff], you must balance [name of defendant]’s interest in operating the business efficiently and profitably against the interest of [name of plaintiff] in maintaining employment.

New September 2003; Revised November 2018

Directions for Use

This instruction may not be appropriate in the context of an implied employment contract where the parties have agreed to a particular meaning of “good cause” (e.g., a written employment agreement specifically defining “good cause” for discharge).

If so, the instruction should be modified accordingly.

Include the bracketed language in the opening paragraph if the defense alleges that the plaintiff was in a sensitive or confidential managerial position.

When the reason given for the discharge is misconduct, and there is a factual dispute whether the misconduct occurred, then the court should give CACI

No. 2405, Breach of Implied Employment Contract—Unspecified Term—“Good Cause” Defined—Misconduct, instead of this instruction. (See Cotran v. Rollins Hudig Hall International, Inc. (1998) 17 Cal.4th 93, 107 [69 Cal.Rptr.2d 900, 948

P.2d 412].)

Sources and Authority

  • “Three factual determinations are relevant to the question of employer liability:

(1) did the employer act with good faith in making the decision to terminate; (2) did the decision follow an investigation that was appropriate under the circumstances; and (3) did the employer have reasonable grounds for believing the employee had engaged in the misconduct.” (Jameson v. Pacific Gas & Electric Co. (2017) 16 Cal.App.5th 901, 910 [225 Cal.Rptr.3d 171].)

  • “ ‘Good cause’ in the context of implied employment contracts is defined 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.’ ” (Serri v. Santa Clara University (2014) 226 Cal.App.4th 830, 872 [172 Cal.Rptr.3d 732], internal citations omitted.)

  • “It is the employer’s honest belief in the stated reasons for firing an employee and not the objective truth or falsity of the underlying facts that is at

issue . . . .” (Jameson, supra, 16 Cal.App.5th at p. 911.)

  • “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.                                                           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 v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 351 [100 Cal.Rptr.2d 352, 8 P.3d 1089].)

  • “ ‘Cotran did not delineate the earmarks of an appropriate investigation but noted that investigative fairness contemplates listening to both sides and providing employees a fair opportunity to present their position and to correct or contradict relevant statements prejudicial to their case, without the procedural formalities of a trial.’ [Citation] [¶]…….. Although the elements of the Cotran

standard are triable to the jury, ‘if the facts are undisputed or admit of only one conclusion, then summary judgment may be entered…………………………………………. ’ ” (Jameson, supra,

16 Cal.App.5th at p. 910.)

  • “[W]here, as here, the employee occupies a sensitive managerial or confidential position, the employer must of necessity be allowed substantial scope for the exercise of subjective judgment.” (Pugh v. See’s Candies, Inc. (Pugh I) (1981) 116 Cal.App.3d 311, 330 [171 Cal.Rptr. 917], disapproved on other grounds in Guz, supra, 24 Cal.4th at pp. 350–351.)
    • “[G]ood cause” in [the context of wrongful termination based on an implied contract] “is quite different from the standard applicable in determining the propriety of an employee’s termination under a contract for a specified term.” (Pugh, supra, 116 Cal.App.3d at p. 330.)
    • “We have held that appellant has demonstrated a prima facie case of wrongful termination in violation of his contract of employment. The burden of coming forward with evidence as to the reason for appellant’s termination now shifts to the employer. Appellant may attack the employer’s offered explanation, either on the ground that it is pretextual (and that the real reason is one prohibited by contract or public policy, or on the ground that it is insufficient to meet the employer’s obligations under contract or applicable legal principles. Appellant bears, however, the ultimate burden of proving that he was terminated wrongfully.” (Pugh, supra, 116 Cal.App.3d at pp. 329–330, internal citation omitted.)

Secondary Sources

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

§§ 219–221, 244

Chin et al., California Practice Guide: Employment Litigation, Ch.4-C, “Good Cause” for Termination, ¶¶ 4:270–4:273, 4:300 (The Rutter Group)

1 Wrongful Employment Termination Practice (Cont.Ed.Bar 2d ed.) Contract Actions, §§ 8.22–8.25

4 Wilcox, California Employment Law, Ch. 60, Liability for Wrongful Termination and Discipline, § 60.09[2] (Matthew Bender)

21 California Forms of Pleading and Practice, Ch. 249, Employment Law: Termination and Discipline, §§ 249.21[14][c], 249.63 (Matthew Bender)

10 California Points and Authorities, Ch. 100, Employer and Employee: Wrongful Termination and Discipline, §§ 100.22, 100.27, 100.29, 100.34 (Matthew Bender) California Civil Practice: Employment Litigation, § 6:19

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