Is California an At-Will State? 4 Key Exceptions You Need to Know

California permits at-will employment, but specific exceptions restrict when employers may legally terminate an employee without explanation. Contracts, public policy, fraud, and fairness-based exceptions can provide legal grounds for challenging terminations.

By Brad Nakase, Attorney

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Table of Contents

1. Introduction

2. Exceptions

3. Filing a Lawsuit

Introduction

Is California an At-Will state? Yes, California is a state that employs people “at will.” This implies that the majority of occupations are subject to termination at any time by both the employer and the employee. The termination of employment does not require a cause to be provided.

However, is California an At-Will state in all cases? At-will termination is illegal in four circumstances:

You have a written or unwritten agreement that forbids your employer from terminating you at will;
Your company’s implied promise of good faith & fair dealing is broken by the termination;
A significant public policy is broken by the dismissal; and/or
Fraudulent misrepresentations are the basis for the termination.

Exceptions

You may be able to file a wrongful termination lawsuit if you were let go in breach of any or all of the at-will employment exclusions.

Exception to the Contract

Is California an At-Will state even if there’s a contract in place? California’s at-will employment regulation may be waived by a contract between you and the company where you work. This agreement may be implicit in your employer’s actions or stated explicitly (in writing or verbally).

Our experience has shown that the following situations demonstrate an implicit contract exception for at-will employment:

Basic personnel rules and regulations utilized by your organization;
How long have you been employed by your employer?
Your employer’s actions or statements guaranteeing that you will be employed longer; and
Industry standards.

Implied job contracts usually include a clause that states you can’t be dismissed without a valid reason, like bad performance.

Example: For ten years, Lily has been a receptionist at a highly regarded dentist’s office. The employment handbook of the dentistry group outlines several grounds for termination, such as misconduct and subpar work.

After Lily is abruptly fired, one of the business owners appoints his daughter to the position. Because of the implicit agreement exception to at-will work, Lily might be able to bring an action against her previous employer for unfair dismissal.

Exception for Implied Covenants

Good faith & fair dealing implied covenants are unwritten commitments made by every party to an implied contract to operate in good faith and treat each other equitably when fulfilling the conditions of the agreement.

If you were fired by the company in poor faith, this covenant may help prove wrongful termination. We’ve observed that this usually occurs when the company:

Dismissed you in contravention of the company’s personnel regulations,
Dismissed you to prevent you from receiving benefits that you would have been otherwise entitled to according to your contract of employment (such as a pension or previously earned compensation), and/or
Told a falsehood about why you were fired.

Example 1: According to an employment agreement, a worker may be fired for failing to do their job effectively. Despite having no unfavorable performance assessments, the worker gets sacked for dating the manager’s ex-girlfriend. According to the implied obligation of good faith & fair dealing, the worker may be able to sue the company under the exemption relating to at-will employment.

Example 2: An individual receives a job offer that necessitates leaving their current position and relocating to another state or city. But before the new hire had an opportunity to prove themselves in their new position, the employer fired them. This might be against the good faith & fair dealing agreement.

Exception for Public Policy

Is California an At-Will state? Yes, but employees cannot be fired for reasons that violate fundamental public policy. In the event that your termination violates a significant public policy, you may file a lawsuit against your employer under California labor legislation’s public policy clause for at-will employment.

In the event that you get terminated for the following reasons, you are entitled to file an unfair dismissal lawsuit:

Declined to break a law,
Carried out a legal duty,
Used a privilege or right granted by law, or
Reported a suspected legal infraction to a supervisor, the government, or police enforcement.

Aspects of the Case

The following four components of the California jury instructions must be proven by the overwhelming majority of the evidence in order for you to prevail in an unlawful dismissal action under the public policy exemption to at-will employment:

A legislation, constitutional clause, governmental regulation, or obligatory ethical guideline must specify the rule that you said was broken or that you refused to break yourself.

The public, not just a single person, must gain from the policy.
The policy ought to be substantial and basic.
When you got fired, the policy had to be well-established.

The Public Policy Exception’s Applicability

According to the public policy exception, the following policies have been involved in a few victorious wrongful termination instances in California:

Antitrust regulations, such as the possibility of termination for reporting your employer’s antitrust offenses to the authorities,
Laws towards sexual harassment and sex discrimination (for instance, if you are fired for not complying with your boss’s sexual demands),
Laws prohibiting discrimination against people with disabilities or other protected groups,
Professional conduct guidelines for lawyers (for instance, if you are dismissed for not breaking these guidelines),
Regulations against bribery,
Retaliation for whistleblowing, and
Taking time off with job protection under the Fair Employment & Housing Act of California

At-will employment is exempt from the public policy exception, however, in the following situations:

The relevant law is not basic and substantial; rather, it is small.
You are unable to demonstrate a direct link between your termination and what you did in favor of the legislation or policy.

Example: Armen finds out that an elected council member is receiving payments from his company in return for supporting projects they are working on. Despite his boss’s wishes, Armen declines to falsify the payments in the accounting records. Armen loses his job after a week.

Armen may be able to sue his employer for wrongful termination under the public policy exemption that applies to at-will employment.

Exception for Fraud

In California, situations where the company made particular assurances to you to get you to accept a position are typically covered under the fraud exemption to the at-will provision. Then they broke those commitments, though, and you were fired.

In order to prevail in a fraud action against your company, you must demonstrate:

Your employer gave you misleading details (either by blatant lying or by withholding or omitting to disclose crucial information);
Your employer was aware of the false statement they were presenting;
To influence you to do something, your employer fabricated information.
You depended on the false statements, and
This resulted in damages for you.

If the company caused you harm as a consequence of your first acceptance of the job, you have the right to sue them. You would have to rely on another exemption to the at-will rule, such as the implicit agreement exception, in order to obtain damages that result from the unlawful termination itself.

Example: When Andrew relocates across the nation to work for Rykoff, the corporation deceives Andrew about its financial stability. After that, Andrew loses his job when Rykoff integrates with another business.

Under the at-will employment fraud exception, Andrew has the right to sue the Rykoff Corporation. He might be compensated for the losses he sustained when he left his previous position and relocated across the nation.

Filing a Lawsuit

A reputable employment law company would help with the preparation of your documentation and the collection of supporting documentation, such as communication with the company or statements from colleagues detailing pertinent instances. The government agency will provide you the ability to file a civil action if it later finds that your termination was unlawful.

The judge can provide you with compensation for both emotional suffering and lost wages if the claim is successful. You may be able to return to work in certain situations. Additionally, the judge may even grant you additional compensation if your employer committed fraud, oppression, or malice. So, is California an At-Will state? Yes—but with important limitations

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Is California an At-Will State? 4 Key Exceptions You Need to Know

Introduction

Exceptions

Filing a Lawsuit

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