Written by Galen T. Shimoda and Jennet F. Zapata
Most employees are presumed to be "at-will." That means that an employee may be terminated for any reason or no reason, so long as it is not a discriminatory reason. Often times, long-term employees are terminated if there is a change in direction in the company or new management. Under the at-will doctrine, this is permissible and not illegal. However, there are limitations to the at-will status of most employees in certain circumstances. The parties can enter into a legally-enforceable agreement about the term of employment or an employee may be terminated only if there is good cause for doing so.
For instance, an express agreement is that which is stated in words. An employer can agree not to fire an employee or to keep a person employed for a period of time (such as two years) by a written or oral agreement. In order to find such an agreement, the court will look to the expressions of the parties, not their subjective, unexpressed belief. When the agreement is for a period of time, the length of time must be specified. An agreement can also relate to the length of notice required for termination, such as three months prior to termination. So, if the notice period is not abided by, a person can recover wages for the time of notice that was not provided. When there is an agreement for a period of time, the employer cannot fire the employee prior to the end of such period unless he or she engages in a willful violation of duty, a habitual neglect of duty, or a continued incapacity to perform his or her duty. The employee may also terminate the employment agreement if the employer does not pay the promised salary.
Employees may prove an agreement exists through course of conduct, including oral representations. The parties' acts and conduct are interpreted in the light of the subject matter and the surrounding circumstances. The terms can be developed over the course of the employment relationship and are not necessarily fixed by the parties' understanding at the time of employment. In determining whether such an agreement exists, courts will look to the totality of the circumstances, including:
Each case turns on its facts and the court seeks to enforce the actual understanding of the parties.
An employer's promise not to discharge without good cause may be implied from the employer's personnel policies included in their handbooks and manuals, lay-off guidelines, or past practices or length of employment. But long-term employment, by itself, or good performance reviews, promotions, and salary increase are not sufficient on their own to show that the employee is not at-will. Instead, statements to the effect of "you will have a job as long as you chose to work for the company," or "you can expect to be employed here for the rest of your career," limited the employer's ability to terminate the employee only for cause.
Assurances by the employer that seniority and years of employment will protect their job may be sufficient to show there was an agreement not to discharge except for good cause.
Also, when a new employee has relied on promises of employment with a company to his detriment, the employer cannot terminate the employee before allowing him or her a good faith opportunity to demonstrate the ability to perform the services for which he or she was hired. This may occur when an employee leaves other employment under assurances that he would have a job with the new company and ultimately does not after he or she has already resigned his or her other employment.
As stated above, there are certain circumstances under which an employer has a limited ability to terminate employees. Sufficient evidence of that promise or understanding is required. If you believe you may have entered into an agreement to work for an employer for a certain period of time or not to be discharged but for cause, please contact the Shimoda Law Corp. to seek further advice.