In an “at-will” employment agreement, an employer can fire an employee for any reason (or no reason!), as long as that reason isn’t illegal. And just as importantly, the employee can quit whenever they want, without giving a reason.
So, is California an at will state? The short answer is yes. But even though California is an at-will employment state, there are exceptions to the rule that protect employees from being wrongfully terminated.
It’s important to understand those exceptions! This article explores California’s at-will employment laws, examines the exceptions to the rule, discusses what to do if you think you’ve been wrongfully terminated, and answers some frequently asked questions.
What does “at-will” employment mean in California?
California is an “at-will” employment state. That means employers can fire employees for almost any reason, so long as the reason isn’t discriminatory or illegal. They don’t have to give notice or severance pay unless a contract says otherwise.
“Any reason” can include things like poor performance, personality conflicts, or even seemingly random decisions. What matters is that the decision doesn’t break anti-discrimination laws or go against public policy.
In California, the default assumption is that employment is at-will. Unless there’s a written or implied agreement stating otherwise, your job is considered at-will.
Unlawful Termination: When At-Will Employment Doesn’t Apply
Even though California is an at-will employment state, there are situations in which an employer can’t fire an employee. These exceptions generally fall into three categories: contractual exceptions, the implied covenant of good faith and fair dealing, and public policy exceptions.
Contractual Exceptions
The at-will doctrine doesn’t apply if there’s a contract between the employer and employee that specifies a term of employment or outlines the conditions under which the employee can be terminated. This contract would dictate the terms of termination.
Even without a written contract, an implied contract can be created through employer policies, promises, or conduct that suggests the employee should expect continued employment. Factors that can contribute to an implied contract include how long the employee has worked for the company, positive performance reviews, and assurances from the employer that the employee can expect to continue working there.
The Implied Covenant of Good Faith and Fair Dealing
California law says that every contract, including employment contracts, contains an implied promise that both parties will act in good faith and deal fairly with one another. This means that neither party can do anything that would deprive the other party of the benefits of the agreement.
So, even though an employer can generally terminate an at-will employee for any reason, they can’t do so in bad faith. For example, they can’t fire an employee just before their pension vests to avoid paying out the benefit.
Public Policy Exceptions
An employer can’t terminate an employee for a reason that violates public policy. This is a significant exception to the at-will rule.
Examples of public policy violations include firing someone for:
- Refusing to violate a law
- Performing a legal obligation, such as jury duty
- Exercising a legal right, such as filing a worker’s compensation claim
- Reporting illegal activity (whistleblowing)
For this exception to apply, the public policy that was violated must be “well-established and fundamental.”
Discrimination and Retaliation: Illegal Reasons for Termination
Even in an at-will state like California, employers can’t fire you for just any reason. Federal and state laws prohibit termination based on discrimination or retaliation.
Discrimination
You can’t be fired for reasons related to your race, religion, gender, age, disability, sexual orientation, or other protected characteristics. To prove a claim of discrimination, you’d have to show that you were treated differently from other employees who weren’t in your protected class but were in a similar situation.
Retaliation
Retaliation is when your employer takes negative action against you because you engaged in what’s known as “protected activity.” For example, if you report unsafe working conditions, file a complaint about discrimination or harassment, or participate in an investigation into alleged wrongdoing, your employer can’t fire you in response.
California’s SB 497, also known as the Equal Pay and Anti-Retaliation Protection Act, says that if you’re fired within 90 days of engaging in a protected activity, there’s a presumption that your employer was retaliating against you. Employers who violate the law can be penalized up to $10,000 per employee.
Fraudulent Inducement: Another Exception to At-Will Employment
Even in an at-will state like California, employers can’t get away with everything. One exception to the at-will rule is “fraudulent inducement.” This happens when an employer makes false promises to get someone to take a job, and then fires them later.
For example, imagine an employer lies about how well their company is doing to steal an employee away from a stable, secure job. If that employee is then terminated, they might be able to sue for fraudulent inducement.
What to do if you believe you were wrongfully terminated
If you think you were fired illegally, there are several steps you can take.
- Keep detailed records of all communications, performance reviews, and company policies.
- Consider filing an internal complaint with your HR department if you feel your termination was wrongful.
- File a complaint with a government agency. In California, you can contact the Department of Industrial Relations (DIR), the Civil Rights Department (CRD), or the Equal Employment Opportunity Commission (EEOC).
- Take legal action. You can file a lawsuit for wrongful termination.
If you win your case, you may be able to recover damages for:
- Lost wages
- Emotional distress
- Punitive damages
Speaking with an employment lawyer is essential. An attorney can evaluate your claim and guide you through the legal process. It’s important to contact an attorney as soon as possible after your termination to protect your rights.
Frequently Asked Questions
Is California an at-will state and what does that mean?
Yes, California is primarily an at-will employment state. This means that, unless there’s a contract or other agreement stating otherwise, an employer can terminate an employee for any reason, or no reason at all, as long as it’s not illegal. Similarly, an employee can leave a job at any time, for any reason, without penalty.
What are the exceptions to at-will employment in California?
While California is an at-will state, there are several crucial exceptions. You can’t be fired for discriminatory reasons (based on race, religion, gender, etc.), in retaliation for whistleblowing or reporting illegal activity, for refusing to perform an illegal act, or in violation of public policy. Additionally, an implied contract based on company practices or verbal assurances can override at-will status. Wrongful termination lawsuits often hinge on these exceptions.
Wrapping Up
California is an at-will employment state, but that doesn’t mean employers have free rein. There are many significant exceptions to the at-will doctrine.
If you work in California and you believe you’ve been wrongfully terminated, it’s important to understand your rights and seek legal advice from an experienced employment attorney. Similarly, California employers need to be aware of these exceptions to avoid costly lawsuits.
Navigating California’s labor laws can be complicated, and this article provides only a general overview. Be sure to seek advice from qualified employment counsel about your specific situation. Doing so can help you protect your rights, whether you’re an employee or an employer.