“At-Will” Employment in California: What You Need to Know
California operates under “at-will” employment laws. What does that mean? Simply put, employers in California generally have the right to terminate an employee for any reason, or even for no reason at all, provided that the reason isn’t against the law.
This article is designed to provide a detailed look at “at-will” employment in California, covering the legal framework, the exceptions to the rule, and what it all means for both employers and employees.
Grasping the ins and outs of “at-will” employment is vital for anyone working or employing people in California. It helps you understand your rights and responsibilities under the state’s complex labor laws.
The foundation of at-will employment in California
Here’s the basis for at-will employment in the state of California:
Labor Code Section 2922
California Labor Code Section 2922 is the law that puts at-will employment into practice. Under this code, employers can fire employees without giving a reason, as long as there’s no contract or agreement stating otherwise.
Employer’s duty to provide a reason
In California, employers usually don’t have to provide a reason for firing an employee. Common reasons for firing someone in an at-will employment situation include performance issues, company restructuring, or changes in business needs.
Exceptions to at-will employment: contracts and agreements
Even though California is an at-will employment state, there are situations in which an employer can’t legally fire you for no reason.
Express contracts
An express contract is a written agreement that lays out the terms of your employment, including how long you’ll be employed and what conditions would have to exist for your employment to be terminated.
If you have an express contract, your employment is no longer considered at-will. Your employer has to stick to the terms laid out in the contract regarding when and why you can be fired.
Implied contracts
An implied contract is based on the employer’s conduct. It can be created through company policies, employee handbooks, past practices, and any promises the employer makes about continued employment.
If you’re trying to prove that an implied contract exists, the courts will consider things like how long you worked there, whether you received positive performance reviews, and any statements the employer made about your job security.
Collective bargaining agreements
If you’re a member of a union and are covered by a collective bargaining agreement (CBA), you typically can’t be fired without just cause. CBAs usually include a process by which you can challenge a termination.
Exceptions to At-Will Employment: Public Policy, Discrimination, and Retaliation
Even in an at-will employment state, employers can’t terminate workers for just any reason. There are some important exceptions.
Public Policy Exception
It’s against public policy to fire someone for a reason that violates fundamental public policy. This could include refusing to break the law, performing a legal duty, exercising a legal right, or reporting illegal activity (aka whistleblowing). It also includes retaliating against someone for blowing the whistle.
To win a wrongful termination suit based on public policy, you have to show that the policy is well-established and fundamental to the public good.
Discrimination
It’s illegal to fire someone based on their race, religion, gender, age, disability, or sexual orientation.
Both federal and state laws prohibit employers from making employment decisions based on these protected characteristics.
Retaliation
Retaliation occurs when an employer punishes an employee for engaging in legally protected activities, such as reporting unsafe working conditions, filing a discrimination complaint, or taking family leave.
California’s Senate Bill 497, the Equal Pay and Anti-Retaliation Protection Act, creates a presumption of retaliation if an employee is fired within 90 days of engaging in a protected activity. Penalties can be as high as $10,000 per employee.
Additional exceptions: Implied covenant and fraud
Even with at-will employment, there are a few more protections for California employees.
Implied covenant of good faith and fair dealing
The implied covenant of good faith and fair dealing protects employees from being fired in bad faith. For example, an employer can’t violate its own written personnel policies when terminating someone, nor can they deny earned benefits.
So, if you’re about to earn a commission or bonus, your employer can’t legally fire you just to avoid paying it.
Fraud exception
Employers also can’t make false promises to get someone to take a job. For example, they can’t misrepresent how financially sound the company is just to get someone to accept employment.
What to do if you are wrongfully terminated
Even in an “at-will” state like California, you have options if you believe you were wrongfully terminated.
The first step is often filing a complaint with a relevant agency, such as:
- The California Labor Commissioner
- The Civil Rights Department
- The Equal Employment Opportunity Commission (EEOC)
You can also file a civil lawsuit if your termination violated anti-discrimination laws or breached a contract. If you win your case, you may be able to collect damages for:
- Lost wages
- Emotional distress
- Punitive damages
Frequently Asked Questions
What does it mean that California is an at-will state?
Being an at-will state means that employers in California can terminate an employee for any reason, or no reason at all, as long as it’s not an illegal reason. Similarly, employees can leave their jobs at any time, without notice or justification. This creates a flexible employment environment, but it also means that terminations can happen without warning.
What are the exceptions to at-will employment in California?
Even though California is an at-will state, there are several exceptions. You can’t be fired for discriminatory reasons (race, religion, gender, etc.), in retaliation for reporting illegal activities (whistleblowing), for refusing to break the law, or in violation of a contract (express or implied). Also, public policy violations prevent an employer from firing you for reasons that are against the public interest.
Summary
California’s at-will employment law has nuances that can be tricky for both employers and employees to navigate. That’s why it’s essential to seek legal advice if you’re facing issues related to job termination.
If you’re an employee who’s been terminated, it’s wise to consult with an attorney as soon as possible to protect your rights. Don’t wait!
Employers should also consult with legal counsel to make sure their termination practices are in line with California law and to avoid potential legal problems down the road. Consulting an attorney is especially important when you think an employee may have a wrongful termination claim.