The most common bases for lawsuits under California wrongful termination laws are:

1. Exceptions to “at-will” employment in California wrongful termination law

Most employment relationships in California are “at will”–which means an employee can be dismissed at any time, for any reason.

But California labor law has carved out a number of exceptions to the general rule of at-will employment. These include:

  • An “implied contract” not to terminate employment without good cause;
  • A breach by the employer of an implied covenant of good faith and fair dealing; 
  • Wrongful termination in violation of public policy (for example, terminating an employee because s/he refused to help an employer violate the law, or performed a legal duty); and
  • Fraud/misrepresentation.5

For most fired employees, the most helpful of these exceptions to at-will employment are the implied contract and public policy theories of wrongful discharge.

An “implied contract” is an agreement that is understood by both parties, even if they have not signed a written document memorializing this.

An employer may create an implied contract not to terminate an employee without good cause by issuing an employee handbook listing specific reasons why employees may be fired, and/or by telling an employee in person that his/her job is safe as long as s/he doesn’t do certain things.

Wrongful termination in violation of public policy typically happens when an employee is fired for refusing to cooperate with an employer in committing acts that are against the law or considered socially undesirable.

For example, if an employee is fired for refusing to help an employer violate criminal fraud laws, s/he will have a valid case for public policy wrongful termination.

2. Whistleblower protection and California wrongful termination lawsuits

One common form of wrongful termination in violation of public policy is so-called “whistleblower” retaliation. Whistleblower termination occurs when an employer fires an employee for reporting a potential violation of law by the employer to a government or law enforcement agency.

California’s main whistleblower protection law is Labor Code 1102.5 LC. This law provides that employers may not retaliate against (including by wrongfully firing) any employee who reports a suspected violation of law by the employer to a government or law enforcement agency, or to a supervisor or other employee who has the authority to investigate or correct the violation.

Other statutes provide more specific forms of whistleblower protection.

For example, the whistleblower protections of the Sarbanes-Oxley Act of 2002 (a federal law designed to protect investors from fraudulent accounting by public companies) give employees of publicly-traded companies the right to sue for wrongful termination if their employer fires them for reporting suspected securities fraud to the federal government or a supervisor.

Another important whistleblower law is the “qui tam” section of the California False Claims Act. California’s qui tam law allows an employee to sue their employer on behalf of the state government. This applies if the employer has committed fraud or embezzlement with respect to government funds.

If an employer then terminates or otherwise retaliates against an employee for bringing a qui tam suit, the employee has the right to sue for wrongful discharge/qui tam retaliation.

3. Wrongful discharge under the Fair Employment and Housing Act

 California’s Fair Employment and Housing Act–the main state law prohibiting workplace harassment and employment discrimination–makes it illegal for employers to retaliate against employees who 

  • Oppose harassment or discrimination,
  • File a complaint about harassment or discrimination, or
  • Testify or assist in any investigation or lawsuit over harassment or discrimination.

4. Wrongful constructive termination

Under California “wrongful constructive termination” / “constructive discharge” laws, it is possible for employees to sue their employers for wrongful termination even if they are not actually fired from a job. Constructive termination means that an employer makes working conditions so intolerable for an employee that s/he has no choice but to resign.

An employee may be able to sue for wrongful constructive termination if:

  1. His/her employer intentionally created or knowingly permitted working conditions that were so intolerable that a reasonable employer would expect a reasonable employee to resign because of them; and
  2. The employer would not have been within his/her rights to terminate the employee outright (because of an implied oral contract, or because termination would have been against public policy).

In addition, several California workplace retaliation laws–including laws against whistleblower retaliation and FEHA retaliation–prohibit employers from retaliating against employees in ways other than termination or constructive termination.

5. Wrongful termination for political activities

California employees are sometimes able to sue their employers for wrongful termination if they lose their job due to protected political activities or speech.

The First Amendment to the U.S. Constitution does not apply to terminations by private employers.12 But California labor law also provides that employers cannot control or direct their employees’ political activities or speech. Thus, an employee who is fired for political activity has the right to sue for wrongful discharge.

California employees also have grounds for a wrongful termination lawsuit if they are fired for joining a labor union or participating in union activities.

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