WRONGFUL TERMINATION

In reality, the term is a misnomer because often there are employment terminations that are wrongful in the sense that the employer acted morally wrong, but which does not expose the employer to any legal liability. This is because in California (and most if not all other jurisdictions) employment is presumed to be "at-will." In other words, the employer can usually fire the employee at any time for a good reason, or for no good reason. They just can't fire the employee for a bad reason.

One "bad reason" is if the employee is a victim of discrimination or harassment on a basis of some protected class. For a discussion of federal and state laws prohibiting such conduct, click here.

Another "bad reason" is if the termination contravenes some statutorily or constitutionally based fundamental public policy. Common examples of causes of action for "wrongful termination in violation of public policy" include situations where an employee is fired for refusing to engage in illegal conduct, or in retaliation for complaining about safety conditions. Employees who suffer from discrimination or harassment by employers who are not covered by the state or federal employment statutes (i.e., employers with less than five employees) can sue under this theory based on the public policy against discrimination stated in California employment statutes and the California Constitution. Damages for this cause of action include lost wages, benefits, and earning capacity, medical expenses (if any), emotional distress, and in some extreme cases, punitive damages, but not reasonable attorney's fees.

Another way to overcome the at-will presumption is to prove that there is either an express or implied contract not to be terminated without good cause. Written contracts requiring good cause to fire are relatively rare. However, the California Supreme Court has ruled that the statutory at-will presumption can also be overcome by a showing that the employee had a reasonable belief that she would not be terminated without good cause. Common factors used to prove the existance of such an "implied contract not to terminate without good cause" are proof of long-term employment, assurances of value to the company and/or of continued employment, and the policies and procedures of the employer.

Even if an express or implied contract not to be terminated without good cause can be shown, the employee still must show that the employer did not have a right to terminate him for good cause. The justice system is reluctant to substitute a judge or jury's judgment for the business decisions of employers. The California Supreme Court recently clarified that the key inquiry is not regarding what the employee did to get fired, but rather whether the decision to fire was made in good faith. In order to show that the employer breached the contract not to terminate without good cause, the employee must show the decision was arbitrary and capricious, pretextual, or that the employer did not make an appropriate investigation, including giving the employee an opportunity to present her position. The only damages available for breach of an employment contract are economic damages such as lost wages and benefits.

If an employment contract is proven to exist (whether express or implied) there is inherent in that contract an implied covenant of good faith and fair dealing. It goes without saying that terminating an employee without good cause violates that covenant. However in 1987 the California Supreme Court held that only economic damages are available for violation of this implied covenant in the employment context (unlike in insurance cases, where emotional distress and even punitive damages are available). Therefore, in practice this cause of action is rarely of any additional value in the termination context, since the same damages are available for breach of contract. An open question, however, is whether a breach of this implied covenant can exist without an express or implied contract not to terminate without good cause. Some courts have indicated that in some rare situations such a breach may be proven.

Other causes of action that sometimes arise in the wrongful termination context include assault and battery, defamation, fraud, and infliction of emotional distress.

NOTE: None of the information on this page should be taken as legal advice for any specific situations, nor can it substitute for consulting with an attorney.