Wrongful Termination

also known as

"I've been fired, can I sue my former employer?"

or

"I've just fired someone (or am about to), can I be sued?"

The general rule:  An Employee can be Fired at Any Time Without Liability

In California, the first issue to be considered is whether the employee was an "at-will" employee.  Generally speaking, most employees are "at-will" employees.  They can decide to quit their job at any time, for any reason, or for no reason. Likewise, the employer can also decide to let an employee go for any reason, or for no reason, without liability.  California Labor Code § 2922 states as follows:

"An employment, having no specified term, may be terminated at the will of either party on notice to the other.  Employment for a specified term means an employment for a period greater than one month."

Individuals are generally upset after being fired, and understandably so. In many situations, however, no matter how painful the experience, and no matter how bad the employer treated the employee in terminating them, there is no legal recourse for the employee. Even if the employer lies about the reason for termination, the employee has no claim. (Hunter v. Up-Right)

Exceptions to the general rule:

1.An employment agreement not to terminate except for "good cause."  This is the most common exception to the general rule.  This exception is so common that it could almost said to be the general rule, with at-will employment status being the exception.  This type of agreement can be written, oral, or implied.

Written employment contracts are rare.  They are usually reserved for upper management.  Union employees will also be covered by a written agreement.  The employee will need to review the terms of the collective bargaining agreement to determine his or her rights, and the administrative procedures that must be followed to make a claim.

An oral agreement could consist of a simple statement such as "You will not be fired as long as you continue to do a good job."  

Implied agreements are commonly created. This is typically based upon length of employment and other factors indicating that there is an expectation an employee will not be terminated if they perform their job satisfactorily. A policy of "progressive discipline" may also be significant.  An example of progressive discipline is where an employee is first given an oral warning, then a written warning, and then termination. The fact that a manager may use progressive discipline will not be itself preclude at-will employment. As a practical matter, except for matters of egregious conduct, almost everyone follows some type of "progressive discipline" to that an employee is not fired for every mistake. A written requirement, however, that some type of progressive discipline be used may create liability against the employer if the written policy is not followed.

If there is a conflict between potential agreements, the most common being a written agreement that employment is on an at-will basis, but there being later oral statements promising continued employment for satisfactory work, the written agreement will generally control.  

2.An agreement of employment for a specified term.  For example, if an employee has signed an employment agreement providing that the length of his or her employment will be one year, but the employee is terminated without justification after three months, the employee has wrongful termination and breach of contract claims.

3.Discrimination in violation of the California Fair Employment and Housing Act ("FEHA"). FEHA provides that even an at-will employee cannot be terminated if the termination is based upon a prohibited characteristic of the person, such as age, sex, race, etc.

4.Retaliation in violation of FEHA.  An employee cannot be terminated in retaliation for asserting a right protected by the Fair Employment and Housing Act. For example, an employee claims she was discriminated against or sexually harassed. After an investigation the employer determines that no actual discrimination or harassment occurred.  Nevertheless, the employee is terminated for having made the claim.  The employee has a valid retaliation claim under the California Fair Employment and Housing Act.

5.Termination in violation of public policy.  This is also known as a "Tameny" claim based upon the name of a Supreme Court case that recognizing this type of liability.  An employer cannot fire an employee is the termination is against public policy.  The most common example is when an employee is fired for complaining about illegal conduct.

6.Participation in a protected activity.  There are a number of activities or actions that can be taken by an employee for which they cannot be terminated.  This includes filing a workers compensation claim, jury duty, volunteer firefighting, taking time off for a child's school activities, not disclosing wages, not patronizing the employer, participating in alcohol or drug rehabilitation, political activities, disclosing information to a government or law enforcement agency when the employee reasonably believes that a law has been violated, military service, and refusing to disclose medical information. (California Labor Code §§ 132a, 230, 230.3, 230.8, 232, 450, 1025, 1101, 1102.5; California Military & Veterans Code § 394; California Civil Code § 56.10.)

7.Constructive discharge.  An employer cannot force an employee to resign by creating an inhospitable working environment.

Who can be sued:

An employee is hired by their employer, not their managers, supervisors, other employees, or even the board of directors.  Except for retaliation claims pursuant to the Fair Employment and Housing Act, a former employee can only sue their former employer.  The FEHA allows a former employee to sue their manager for retaliation after asserting a protected right.  However, the employee cannot sue their former manager for discrimination.  (Note that for harassment, which is a different topic, the employee can sue their manager.)

What damages are recoverable:

Emotional distress damages are not recoverable in a wrongful termination claim.  An employee can recover lost wages and the value of lost benefits.  Damages also include future lost wages and benefits. The employee, however, has a responsibility to mitigate their damages. He or she cannot do nothing and permit lost wages to accrue each month.  As an example, an employee fired on Monday obtains a new job on Tuesday that pays more with better benefits.  That employee has no damages. An employee cannot recover punitive damages or attorneys fees.

There is an exception for terminations in violation of the Fair Employment and Housing Act.  (Termination based on unlawful discrimination or retaliation.)  In this circumstance, the employee can recover emotional distress damages, attorneys fees, and potentially punitive damages as well.

An employee may also be able to obtain emotional distress damages, and potentially other recover as well, if they were terminated in violation of public policy or for participating in a protected activity.

Defenses to wrongful termination claims:  Good Cause

An employee can almost always be terminated for good cause.  Practically, most employees are terminated for good cause.  It can be expensive and time consuming for an employer to locate and hire a new employee.

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