Wrongful Termination Cases in California

Categories: Employment and Labor Law

Wrongful Termination Under California Law

Author: James Baker
Editor: Dustin L. Collier

The presumption in most employment agreements is that an employer can terminate or demote an employee “at-will,” or at any time for any reason.  Despite this presumption, the law does afford a remedy for employees demoted or wrongfully terminated for refusing to comply with an employer’s wishes that violate public policy.  If your employer demoted or terminated you, and that action was in response to your refusal to violate the law/public policy or your reporting of a violation of public policy by your employer, then you may be redressed for your injuries through a claim of wrongful termination.

The claim of wrongful termination began with Tameny v. Atlantic Richfield Company.  That case involved a retail sales representative, Tameny, who worked for Arco.  Over the course of more than ten years, Tameny had been steadily promoted at the company.   In 1975, Arco asked him to engage in price-fixing activities that would violate antitrust law. When he refused to participate in the scheme, he was terminated, allegedly for incompetence and notwithstanding Tameny’s history of promotion at the company. See Tameny v. Atlantic Richfield Co., 27 Cal 3rd 167, 169 (1980).

Tameny sought redress on five different theories, including the tort of wrongful termination, but his employer was granted a demurrer on all but the allegation that Arco breached the employment contract.  Due to the presumption of an employer’s “at-will” powers, the contract governing the employment was never breached and Tameny’s case was ultimately dismissed at the trial court (including the wrongful termination claim).  On appeal, however, the court held that wrongful acts committed in the course of a contractual employment relationship can afford both tort and contractual relief, opening the door to common law wrongful termination claims. See Id. at 174.

The court reasoned that an employer coercing an employee to commit a criminal act through the wrongful termination of those who refuse to comply violates “a basic duty imposed by the law on all employers.” Id. at 178.  Were employers allowed such coercive powers, the law would implicitly sanction illegal activity, which courts must naturally oppose. Casella v. SouthWest Dealer Services, Inc., 157 Cal. App. 4th 1127, 1138-39. (2007).  The new rule allows these demoted or discharged employees to recover damages for injuries they suffer related to their employer’s wrongful termination or demotion, and thereby incentivizes employees to comply with public policy and report unlawful activity by their employers to the proper authorities.

Wrongful Termination Limits: Not All Policy Violations Afford Recovery

The test for determining whether or not a given policy can be used to support a claim for wrongful termination was best outlined in Stevenson v. Superior Court, 16 Cal 4th 880, 889-90 (1997):

  1. The policy must be supported by either constitutional or statutory provisions.
  2. The policy must be ‘public’ in the sense that it ‘inures to the benefit of the public’ rather than serving merely the interests of the individual.
  3. The policy must have been articulated at the time of the termination.
  4. The policy must be ‘fundamental’ and ‘substantial.’

The first requirement has been further articulated to include administrative regulations, such as the FAA safety violation reported in Green v. Ralee Engineering Co., 19 Cal. 4th 66, 82 (1998).  In that case, an employee was able to recover after being terminated for reporting FAA violations in his workplace.  The reasoning behind the decision is partially derived from the protection from retaliation afforded by the Fair Employment and Housing Act.  For more information on the Fair Employment and Housing Act, see our other articles on the subject in the Labor and Employment section of the “Know Your Rights” blog.

It is difficult, however, to make a wrongful termination claim based on an employer’s conduct not explicitly mentioned in the constitution or a statute, because there is a strong inference that it is not “fundamental” or “substantial” enough. See, e.g., Carter v. Escondido Union High School Dist., 148 Cal 4th 922, 930 (2007).  In Carter, a teacher was not able to recover for wrongful termination after he reported a violation of a code that implies that gym teachers cannot recommend nutritional supplements to students.  It was determined that policies  such as these, which are not clear enough to put employers on notice of their unlawful conduct, are not substantial and fundamental enough to sustain a wrongful termination claim.  By contrast, the public policy against sexual harassment in the workplace has been held to support such claims. See Kelley v. Conco Companies, 196 Cal. App. 4th 191, 216.

Perhaps the easiest way to understand the differing outcomes in the Carter and Kelley cases is to understand how tort law defines a “duty.” Fundamental to the concept of tort law is the idea that people have certain duties to each other that everyone should intuitively know.  For example, we have a duty not to assault one another and to take reasonable steps to avoid running over pedestrians with our cars. Duties can be more complex when the actor holds special responsibilities due to his or her occupation, such as the special duties applicable to doctors and lawyers.  For more information on the concept of “duty” in tort law, see our other article on that very subject: “Personal Injury Basics: Determining Duty in Negligence Actions.”

The concept of duty becomes broader when applied to occupations, insofar as they require specialized knowledge that anyone in the relevant practice should have that an average non-practitioner might not. This additional knowledge will broaden that actor’s “duties.” For example, a lawyer has a duty under tort law to ably represent their clients, and missing well-known statutory deadlines might constitute a violation of that duty.

Following this principle, it is difficult to imagine that any employer would be unaware of the duty to not fire an employee for reporting sexual harassment at work.  Any employer who does so is therefore guilty of wrongful termination.  Less unusual would be teacher or principal whom is unaware of a policy against recommending nutritional supplements to student-athletes.  Sometimes these distinctions are even easier to make: an employer is always liable when the violation of public policy is coercing an employee into the commission of a crime, for example. Tameny at 178.

Before contradicting your employer on the basis of public policy and arguing that you have been subjected to a wrongful termination, consider whether or not it is common knowledge that your employer’s act or failure to act is a violation of law.  If you are suspicious that your employer is coercing you to violate the law through wrongful termination, it may be best to receive a consultation before you refuse to comply, to ensure that you are in fact protected.

Wrongful Termination Limits: Illegitimate Reason Must Have Been a

“Substantial Motivating Factor”

Establishing that your wrongful termination or demotion was caused by your refusal to comply with conduct contravening public policy can be complicated. For example, an employee seeking protection under a whistle-blower statute because of workplace crimes he had reported was not able to claim wrongful termination for a poor performance evaluation and termination that occurred five years later. Turner v. Anheuser-Busch, Inc., 7 Cal. 4th 1238, 1258-59 (1994).  On the other hand, an employee need only establish that an illegitimate factor formed a “substantial motivating reason” in the wrongful termination, even if other lawful factors also influenced the decision. Grant-Burton v. Covenant Care, Inc., 99 Cal. 4th 1361, 1379.

Prima facie proof of an unlawful reason shifts the burden of proof onto the employer, who now must prove by a preponderance of evidence that it would have made the termination decision even if it had not considered the illegitimate reason.  Evidence in these cases is typically circumstantial, and it is up to the judge or jury to decide whether or not the employer’s decision to terminate the employment was because of an ongoing policy violation.  They will look at factors like the time between the protected act and the discharge, your employment reviews before and after the protected act, and other case-specific factors that may come up during trial.

Wrongful Termination Benefits and Burdens: Special Considerations

Beyond granting clients greater power to sue in “at-will” employment agreements, claiming the tort of wrongful discharge against your employer has certain other advantages.  Tort law allows for broader damages beyond lost wages, including punitive damages, and damages for emotional distress.  By contrast, contract claims are typically limited to the amount one would have received under the contract itself, which means lost wages and benefits for most employees.  However, in order to recover for emotional distress an employee must be able to show a connection between the discharge and extreme emotional distress, which may be difficult depending on the facts.

There is a two-year limitations period proscribed by CCP § 335.1 for claims for wrongful termination.  The clock starts running at the time of the wrongful termination, and not when the employee was notified of the dismissal.  Some defendants, such as public entities, have even tighter deadlines and requirements (for public entities, for example, a “Government Tort Claim” must be filed within six months).  This means that if you feel you have been wrongfully terminated, it is important to pursue your claim as soon as possible (this is true any time you feel your legal rights have been violated).

The safest route is to contact a lawyer as soon as possible to ensure your case is not dismissed due to a missed deadline.  If you believe you have been wrongfully terminated in violation of public policy, please visit the “Contact Us” page to initiate your free consultation with an experienced trial attorney.