At-Will Employment in California: Definition & Limitations.

Upset office manager packing the box and leaving the office

In California, most employment is “at-will.” This means it can be terminated by the employee or employer at any time, with or without cause. But it’s important to understand that this doctrine has many limitations. California courts recognize a number of contractual, statutory, and public policy exceptions to the at-will employment rule that help to protect workers and their livelihoods.

What is “At-Will” Employment?

Under California Labor Law, employment with no specified term is “at-will” by default. An employee is free to quit their job, or their employer can fire them for any reason — as long as it isn’t illegal or discriminatory. Although it is presumed that employment is at-will, employers may also include a provision or acknowledgment in an employment application, contract, or handbook to reinforce that the employment can be terminated at any time.

Contractual Exceptions to At-Will Employment

A crucial exception to the at-will employment doctrine is contractual-based employment. An employer’s right to fire an employee without cause may be limited if the parties entered into an express contract or an implied-in-fact contract. Specifically, an express contract is one in which both the employer and employee agree to terms that are explicitly stated — these types of agreements may be written or verbal. In contrast, an implied-in-fact contract is formed when the conduct of the parties gives rise to the understanding that a contract exists.

An example of an express contract is a provision in an employment agreement restricting an employer’s right to terminate an employee, unless they have “good cause” to do so. In such cases, an employer would need a fair and honest reason to terminate the employee, rather than one that is trivial. An employer also cannot fire an employee in bad faith and fabricate a pretextual reason to conceal their motives.

Courts in California evaluate a variety of factors to determine whether an implied-in-fact contract exists. Specifically, it would look to the company’s personnel policies, the length of time the employee had been working for the employer, industry practices, and any assurances of continued employment made by the employer. As with cases involving express contracts, employers must have a legitimate business reason to terminate an employee if there is an implied-in-fact contract in place.

Statutory Exceptions to At-Will Employment

There are several critical statutory exceptions that limit the at-will employment doctrine. Importantly, California and federal laws prohibit employers from terminating workers for discriminatory or unlawful reasons. Statutory limitations on employment termination include the following:

  • Anti-discrimination laws — Under the California Fair Employment and Housing Act (FEHA) and Title VII of the Civil Rights Act, employers may not terminate employees based on their protected characteristics or membership in a protected class. Significantly, California law offers a broader scope of protection than federal law, prohibiting employment discrimination in connection with an employee’s race, religion, color, national origin, ancestry, disability, medical condition, genetic information, marital status, sex, gender, gender identity, age, pregnancy, or military status.
  • Union protections — The National Labor Relations Act protects the rights of employees who form or join a union, and exercise their collective bargaining rights. Under this law, an employer may not fire an employee for participating in union activity.
  • Whistleblower statutes — Employers may not terminate or retaliate against employees for “whistleblowing.” They cannot fire an employee for reporting a labor law violation to a government agency or making an unsafe workplace complaint to human resources, regardless of whether the employment is at-will.
  • Protected leaves of absence — Employees in California are protected from termination when they exercise their right to certain types of leave. Common leaves of absence protected by law include family leave, military leave, maternity leave, and medical leave. In addition, employers may not fire employees for voting in a statewide election, or those who are called to jury duty.

There are many other situations in which an employee may be protected by a statute from termination, even if their employment is at-will. An employee in California may also not be terminated for their political affiliation or for engaging in political activity during their time off work.

Public Policy Exceptions to At-Will Employment

Public policy limits an employer’s ability to fire an at-will employee — employers are strictly prohibited from terminating employees for any reason that results in a violation of public policy. While public policy limitations often evolve through case law, courts specifically look to statutes, government regulations, and the California Constitution to determine whether a public policy violation occurred.

Termination in violation of public policy often arises in cases where an employee exercised a legal right or reported an employer’s illegal activity. Employees who were fired because they performed a legal obligation or refused to violate a law at their employer’s request may also have a claim for wrongful termination in violation of a public policy.

In order to establish that the termination was wrongful under this theory, a court must find that the public policy is:

(1) Set forth in a statute, constitutional provision, or government regulation;

(2) Beneficial to the public at large, as opposed to an individual;

(3) Substantial and fundamental; and

(4) Well-established at the time the employee was terminated.

Common public policies in California can include laws against sexual harassment and discrimination, laws prohibiting disability discrimination, laws against bribery, and antitrust laws. Notably, the public policy limitations to at-will employment will not apply if the employee is unable to show a nexus between their protected action and the termination.

Wrongful Constructive Discharge

Sometimes, employees may be able to take legal action against their employers pursuant to an exception to the at-will employment doctrine if they resigned from their position, rather than be terminated. In California, there are wrongful “constructive discharge” laws that protect employees in the event that their employer makes their working conditions so intolerable that they are compelled to resign.

However, to sue your employer on the grounds of wrongful constructive discharge, you are also required to show that your employer did not have a legal right to fire you — and had you not resigned, you would have had a valid wrongful termination case. Wrongful constructive discharge cases can arise when an employer constructively terminates an employee in violation of an implied contract, for participating in whistleblower activities, or for reporting workplace harassment.

Contact a Knowledgeable California Employment Law Attorney

Being terminated from your employment can be devastating — financially, psychologically, and emotionally. If you were terminated by your employer and an exception to the at-will employment doctrine applies, you may be eligible to take legal action to recover your damages. The experienced employment law attorneys at Optimum Employment Lawyers will diligently assess your case and advise you regarding your legal rights and remedies. Providing reliable representation and skillful advocacy, we strive to ensure the best possible outcome for every client. Contact us at (949) 954-8181 for a free consultation.

Article References:

California Labor Code § 2922

Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654

California Fair Employment and Housing Act

Title VII of the Civil Rights Act of 1964

National Labor Relations Act

California Labor Code § 1102.5

State of California Employment Development Department: California Paid Family Leave

California Law Chapter 11 § 19775: Military Service, Pay and Benefits

California Code Regs. tit. 2 § 11035: Pregnancy, Childbirth, or Related Medical Conditions

California Elections Code 14000: Privileges of Voters

California Labor Code § 1101: Political Affiliations

California Constitution

Turner v. Anheuser-Busch, Inc. (1994) 7 Cal.4th 1238