Is California An At Will Employment State?

Is California An At Will Employment State?
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California, like every other state and Washington, D.C., is an at-will employment state. This means that when an individual is employed, her employer may terminate the employment relationship at any time without giving the employee any notice ahead of timewithin certain parameters. In California, as well as in many other states, there are exceptions to this arrangement, and throughout the U.S., firing employees for certain reasons is illegal.

At-Will Employment vs. Contractors

At-will employment is applicable only to individuals who are employed, not to individuals who are contracted. There are many differences between employees and independent contractors, the most significant of which is the role that the contract plays in defining the scope of the work to be performed and the terms of the individual's role while performing that work. Terminating an independent contractor without following the termination procedure in his contract is a breach of contract, a legal issue that is completely separate from the issue of at-will employment.

Defining At-Will Employment

Basically, at-will employment describes an employers’ rights to terminate employees at any time without notice and without providing just cause for their termination. This does not mean that every employee termination is legal. Under state and federal laws, firing an employee for certain reasons can be illegal in California. These reasons include, but are not limited to:

  • Engaging in labor union activities, like organizing colleagues or picketing in protest of labor practices the worker feels are unfair.

  • Filing a sexual harassment claim.

  • Firing based on the employee’s race, sex, pregnancy, religion, national origin, ethnic background or sexual orientation.

  • Requesting a reasonable accommodation for a worker's disability.

  • Providing witness testimony to support a colleague’s discrimination claim.

  • Acting as a whistleblower.

  • Exercising a worker's rights under the Family and Medical Leave Act.

Firing an employee for one of the above reasons or any of the other reasons deemed illegal under state or federal laws is considered a wrongful termination. Employees who lose their jobs to wrongful terminations are entitled to recover compensation for their losses, such as lost wages, lost benefits and missed career advancement opportunities. But when an employee termination is legal, the employee is not entitled to financial compensation to cover losses related to the dismissal. In many cases, determining whether a termination was wrongful or justifiable under the doctrine of at-will employment is complicated.

California At-Will Employment Exceptions

Although California is considered an at-will employment state, there are two broad California at-will employment exceptions: the public policy exception and the implied covenant of good faith. The implied covenant of good faith is not a document separate from the employment contract that the employee must sign, but a clause that is implied to apply to every contractual employment agreement. Under this covenant, the employer and employee both understand that the employer is not to terminate the employee’s position for any arbitrary, malicious or otherwise bad faith reason.

California is not the only state that imposes the implied covenant of good faith. Other states where this exception is a standard part of employment contracts are: Alabama, Alaska, Arizona, Delaware, Idaho, Massachusetts, Montana, Nevada, Utah and Wyoming. Many other states maintain different exceptions to at-will employment. These exceptions are public policy exceptions and implied contract exceptions.

An implied contract exception is different from the implied covenant of good faith in that with an implied contract, the employer explicitly promises not to terminate employees without good cause or if an employee is terminated, the termination will follow a specific procedure. When a termination occurs without this procedure or a stated just cause, the employee may pursue wrongful termination compensation.

Read More: California Law: Employee Protection Act

California’s Covenant of Good Faith in Action

All of the states that follow the covenant of good faith exception apply it uniquely. In California, it is generally interpreted to mean that the employer cannot fire the employee for a reason that can be deemed malicious, arbitrary or in bad faith. Examples of terminations that can be deemed malicious, arbitrary or in bad faith include:

  • Terminating a longtime employee to avoid paying retirement benefits.

  • Firing a well-performing employee to replace her with the supervisor's friend.

  • Firing an employee for poor performance without first reviewing his performance and attempting to help him correct it.

  • Terminating an employee for not knowing how to use a workplace system despite not training him on that system.

  • Lying to an employee about why she has been fired.

Although there is no need for just cause to be given for a termination because of the at-will employment doctrine, terminating an employee for a bad reason in California can give the employee grounds for a wrongful termination claim. For many employers and employees, the line between just cause and an unjust termination is murky because essentially, employers are required to justify their terminations in California, even though at-will employment is state policy.

The burden to prove a wrongful termination claim falls on the employee. This means that in his claim, the terminated employee must clearly demonstrate that his employer fired him for an illegal reason or for a reason that violated one of the two California at-will employment exceptions.

Public Policy Exception to At-Will Employment

Most states, California included, impose the public policy exception to at-will employment. Under this doctrine, employers may not terminate employees in situations where the termination would violate state law, federal law or the state’s public policy. This includes termination as retaliation for acting in accordance with the law or with public policy.

In 2019, the California state minimum wage is $12 per hour. In some cities, it is higher. Following the public policy exception to at-will employment, a regional director at a national fast food chain cannot terminate a California-based store manager for paying employees $12 per hour instead of the federal minimum wage of $7.25 per hour.

California At-Will Employment Notice Period

Generally, there is no California at-will employment notice period. Employers may terminate employees without advance notice, and employees may quit their jobs without giving notice ahead of time. However, it is common practice for employees to give their employers at least two weeks’ advance notice of their resignations. Some companies even require this much or more notice in their company policies.

Because of California’s covenant of good faith exception, terminating an employee who has given notice before completing her final two weeks may be considered a bad faith termination.

At-Will Employment California Wrongful Termination

Although there is no statewide California at-will employment notice period, and at-will employment generally applies to all employer/employee relationships, many termination circumstances that would not be considered wrongful termination in other states could be considered wrongful termination in California. A wrongful termination can hinder an individual’s earning capacity and stall or even end his career.

When an employee faces wrongful termination, she may file a wrongful termination claim to pursue financial compensation for her related losses. Depending on the circumstances of the case, this claim can be filed with the California Department of Fair Employment and Housing. Many employees choose to work with employment lawyers to file and pursue wrongful termination claims.

Tips

  • California is an at-will employment state.