Table of Contents
Employees may have agreements that dictate the terms of employment, such as job titles, job duties, compensation, incentive pay, benefits, and consequences for termination without “cause.”
Breach of Contact
- A written or oral employment contract can override the at-will employment presumption and create a contract to terminate only for cause.
- If an employment contract specifies that you will terminate only for cause, this creates an implied covenant requiring you to exercise “good faith and fair dealing” in the employment relationship. Guz v. Bechtel National, Inc., 24 California 4th 317 (2000); CACI Nos. 303, 305, 325.
- “Good cause” means “fair and honest reasons, regulated by good faith on the part of the employer, that are not trivial, arbitrary or capricious, unrelated to business needs or goals, or pretextual.
- A reasoned conclusion, in short, supported by substantial evidence gathered through an adequate investigation that includes notice of the claimed misconduct and a chance for the employee to respond.” Cotran v. Rollins Hudig Hall International, Inc., 17 Cal.4th 93, 108, (1998); Silva v. Lucky Stores, Inc., 65 Cal.App.4th 256, 264 (1998).
Earned Contractual Wages
- A written contact that has the criteria to earn incentive pay is enforceable as a breach of contract or as unpaid wages under the Labor Code. Labor Code § 200(a); CACI No. 2700.
- The California Supreme Court created a right to sue for “wrongful demotion” in breach of a contract to demote only for good cause. Scott, et al. v. Pacific Gas & Electric Co., 11 Cal.4th 454 (1995).
- Except in limited circumstances, “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” Business & Professions Code § 16600. This makes almost all post-employment non-compete provisions unenforceable.
- Unenforceable are provisions requiring an employee to litigate or arbitrate outside of California a claim that arose in California or depriving the employee of the substantive protection of California law for a claim that arose in California. Labor Code § 925(a), (d).