Understanding the Exceptions to At-Will Employment

California’s Labor Code, like most states, officially recognizes that an employment relationship that does not specify a definitive time-period for the job is considered “at-will” employment. This means that the employer has the right to terminate the employment without cause or warning, just as the employee has the right to end the employment relationship themselves at any time, without prior notice.

However, this does not mean an employer can just fire whomever they want for whatever reason they want. There are some very important exceptions to at-will employment doctrine that all employers should be aware of.

Express Agreement

This may seems like common sense, but if there is an express agreement made that an employee can only be terminated with good cause and for specific reasons, then that agreement overrules the at-will employment doctrine. Additionally, a contract such as a collective-bargaining agreement that guarantees job security protects an employee from at-will termination.

Statutory Exceptions

There are many pre-established statutes that overrule an employer’s ability to terminate at-will. For example, the Civil Rights Act of 1964 expressly states in Title VII that an employer is prohibited from terminating employment based on a protected class such as race or ethnicity. Other examples that are hopefully quite obvious to you as an employer include things like protection from discrimination based on religion or sex, but lesser known statutory exceptions in California include protections for whistleblowers or for political affiliation. It’s extremely important to consult with knowledgeable legal counsel like IGC who can inform you of the many statutory exceptions to at-will employment in California.

Similar to statutory exceptions are public policy exceptions to at-will employment. For example, in California it is well-established and explicitly stated that employees are entitled to file for worker’s compensation if they are injured on the job. As an employer, you cannot terminate an employee for filing such a claim.

The public policy exception to at-will doctrine also covers an employee’s right to refuse to break the law on behalf of an employer.

Implied Exceptions

Case law regarding “Implied Contracts” have thoroughly weakened the reach and power of at-will employment doctrine in California. This refers to situations where an employer makes either verbal or written representations to an employee about his or her job security or other policies that can justifiably be regarded as an implied verbal or written contract. For example, if you told an employee that you would only fire them if they were late five times in a year, but you terminated their employment after three tardies, then you could be sued for wrongful termination.

A lesser utilized, but still recognized implied exception in California is with regard to what’s known as “good faith and fair dealing.” California law recognizes a good-faith covenant in the employer-employee relationship that the employer will not engage in malicious or arbitrary discipline or other adverse employment actions. This exception has been applied in cases such as when a long-time employee was terminated without cause or an employer’s actions in terminating an employee were read as retaliatory for something personal.

As you can imagine, all of the aforementioned exceptions, and particularly the implied exceptions strongly affect the way in which an employer can engage in at-will termination of an employee in California. Your company needs strong and knowledgeable counsel to help you ensure that your employee termination practices are well within the bounds of California law. Give Integrated General Counsel a call to learn more.

Integrated General Counsel