Wrongful Termination

In California, an employment contract of indefinite duration is generally deemed to be at the will of either party (Cal. Lab. Code § 2922). However, the "at will" relationship can be expressly or impliedly modified by the employer. For example, if the employer issues handbooks or other publications to employees which suggest that employees will not terminated or disciplined in accordance with certain procedures, the employee may argue that the employee was wrongfully demoted or terminated if the company fails to follow its own procedures in demoting firing the employee. Similarly, if the employer provides oral assurances of continued employment, the "at will" relationship may found to have been modified, which may require the employer to establish "good cause" prior to terminating the employee. In the legal sense of the phrase as used under California state law, "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 Int'l, Inc. (1998) 17 Cal.4th 93, 108).

California courts have also held that an employer's general right to terminate an "at-will" employee is 'subject to limits imposed by public policy, since otherwise the threat of discharge could be used to coerce employees into committing crimes, concealing wrongdoing, or taking other action harmful to the public weal.' (Collier v. Superior Court (1991) 228 Cal.App.3d 1117, 1121, citing Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 655). Thus, an exception to the general at-will employment presumption is made and a tortious wrongful discharge claim will lie where an employer's termination of an employee violates a fundamental public policy, or in other words, where "he or she is discharged for performing an act that public policy would encourage, or for refusing to do something that public policy would condemn." (Gantt v. Sentry Insurance (1992) 1 Cal.4th 1083, 1090; Green v. Ralee Engineering Co. (1998) 19 Cal.4th 66, 79-80; Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167). Therefore, unless the employee has an actual or implied contract with the employer which allows for termination only for cause or other specified reasons, the employer may fire an employee as long as the reasons are not illegal. Sometimes, it takes a skilled attorney to review the facts to determine whether the reasons for termination are illegal.

In proving wrongful termination, a plaintiff must prove either that the termination violated the FEHA or other statute, or that the existence of a "common law" (non-statutory) cause of action as wrongful termination in violation of public policy (see, generally, Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167; Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, and/or wrongful constructive termination in violation of public policy. (see, Turner v. Anheuser Busch, Inc. (1994) 7 Cal.4th 1238). Such causes of action are in addition to any possible federal causes of action under Title VII, and additionally, the California courts have made it clear that bringing an action under the FEHA does not foreclose bringing an action under the common law based on the same facts; the FEHA and common law actions are complementary, not mutually exclusive. (See eg., Rojo v Kliger, supra, 52 Cal.3d at 73, 82, 89 [holding that the FEHA does not displace any causes of action and remedies that are otherwise available to plaintiffs]).

The California Supreme Court's decision in Green v. Raley (1998) 19 Cal.4th 66 at 75-80, provides a helpful discussion of the history of wrongful termination and whistleblower cases:

Overview of Wrongful Termination Cases

This case requires us to restate and reaffirm our recent cases explaining what sources may be used to support a Tameny action as an exception to our statutory employment-at-will principle (§ 2922).

In Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 669, 254 Cal.Rptr. 211, 765 P.2d 373 (Foley ), we underscored the term "public" in Tameny 's public policy exception by observing that the employee's actions must further a policy affecting the public interest, which must be fundamental or substantial when the company discharges the employee. (Foley, supra, 47 Cal.3d at p. 670, fn. 11, 254 Cal.Rptr. 211, 765 P.2d 373.) In rejecting a tort claim based on an employee's discharge after he reported to management his supervisor's history of embezzlement, we held that alleged violations of internal practices that affect only the employer's or employee's interest, and not the general public's interest, will not give rise to tort damages. (Foley, supra, 47 Cal.3d at pp. 669-671, 254 Cal.Rptr. 211, 765 P.2d 373.) In other words, courts must focus not on compensation to employees, but rather on the "general social policies being advanced." (Foley, supra, 47 Cal.3d at p. 668, 254 Cal.Rptr. 211, 765 P.2d 373.) Even then, not all statutes (or constitutional provisions) will support a Tameny claim. "[M]any statutes simply regulate conduct between private individuals, or impose requirements whose fulfillment does not implicate fundamental public policy concerns." (Foley, supra, 47 Cal.3d at p. 669, 254 Cal.Rptr. 211, 765 P.2d 373.)

In discussing whether an employee's Tameny claim could state a discharge that actually implicated public policy, we held that "[t]he absence of a distinctly 'public' interest in this case is apparent when we consider that if an employer and employee were expressly to agree that the employee has no obligation to, and should not, inform the employer of any adverse information the employee learns about a fellow employee's background, nothing in the state's public policy would render such an agreement void. By contrast, in the previous cases asserting a discharge in violation of public policy, the public interest at stake was invariably one which could not properly be circumvented by agreement of the parties. For example, in Tameny, supra, 27 Cal.3d 167, 164 Cal.Rptr. 839, 610 P.2d 1330, a contract provision purporting to obligate the employee to comply with an order of the employer directing the employee to violate the antitrust laws would clearly have been void as against public policy.... Because here the employer and employee could have agreed that the employee had no duty to disclose such information, it cannot be said that an employer, in discharging an employee on this basis, violates a fundamental duty imposed on all employers for the protection of the public interest." (Foley, supra, 47 Cal.3d at pp. 670-671, fn. 12, 254 Cal.Rptr. 211, 765 P.2d 373.)

In Gantt, we discussed further the requirements for a wrongful discharge claim alleging a public policy violation. Gantt considered whether an employee stated a cause of action for wrongful discharge against public policy after his employer terminated him in retaliation for supporting a coworker's sexual harassment claim. (Gantt, supra, 1 Cal.4th at pp. 1087-1089, 4 Cal.Rptr.2d 874, 824 P.2d 680.) The court recognized that public policy cases fall into one of four categories: the employee (1) refused to violate a statute; (2) performed a statutory obligation; (3) exercised a constitutional or statutory right or privilege; or (4) reported a statutory violation for the public's benefit. (Id. at pp. 1090-1091, 4 Cal.Rptr.2d 874, 824 P.2d 680.) After observing that all four categories involved statutory provisions, Gantt allowed the plaintiff's claim, but specifically limited Tameny 's application to those cases in which a plaintiff's public policy source is "tethered to" either a specific constitutional or statutory provision. (Gantt, supra, 1 Cal.4th at p. 1095, 4 Cal.Rptr.2d 874, 824 P.2d 680.) Gantt also observed that, in order to provide an exception to section 2922's at-will mandate, the policy must be "public" in that it "affects society at large" rather than the individual, must have been articulated at the time of discharge, and must be " 'fundamental' " and " 'substantial.' " (Gantt, supra, 1 Cal.4th at p. 1090, 4 Cal.Rptr.2d 874, 824 P.2d 680; see also 1052Stevenson, supra, 16 Cal.4th at p. 890, 66 Cal.Rptr.2d 888, 941 P.2d 1157.)

Gantt 's limitation on public policy sources (that they must be supported by either constitutional or statutory provisions) grew from our belief that " 'public policy' as a concept is notoriously resistant to precise definition, and that courts should venture into this area, if at all, with great care and due deference to the judgment of the legislative branch" in order to avoid judicial policymaking. (Gantt, supra, 1 Cal.4th at p. 1095, 4 Cal.Rptr.2d 874, 824 P.2d 680.)

Although Gantt did not address whether its rule includes governmental regulations adopted to implement particular constitutional or statutory provisions, the court did observe the considerable disparity existing between those states adopting broad views of the public policy exception and those applying a stricter limitation on how they define public policy. [FN4] (Gantt, supra, 1 Cal.4th at pp. 1092-1093, 4 Cal.Rptr.2d 874, 824 P.2d 680.) Recognizing that " '[t]he term "public policy" is inherently not subject to precise definition,' " we interpreted the term to mean " ' "that principle of law which holds that no citizen can lawfully do that which has a tendency to be injurious to the public or against the public good...." ' " (Id. at p. 1094, 4 Cal.Rptr.2d 874, 824 P.2d 680, quoting Safeway Stores v. Retail Clerks etc. Assn. (1953) 41 Cal.2d 567, 575, 261 P.2d 721.)

FN4. For example, the New Jersey Supreme Court favored broadly defining public policy exceptions: "The sources of public policy include legislation; administrative rules, regulations or decisions; and judicial decisions. In certain instances, a professional code of ethics may contain an expression of public policy." (Pierce v. Ortho Pharmaceutical Corp. (1980) 84 N.J. 58, 417 A.2d 505, 512.) By contrast, the Michigan Supreme Court held that wrongful discharge tort actions must be based in public policies found in statutes or constitutional provisions. (Suchodolski v. Michigan Consol. Gas Co. (1982) 412 Mich. 692, 316 N.W.2d 710, 712.)

In 1984, our Legislature provided "whistleblower" protection in section 1102.5, subdivision (b), stating that an employer may not retaliate against an employee for disclosing a violation of state or federal regulation to a governmental or law enforcement agency. This provision reflects the broad public policy interest in encouraging workplace whistle blowers to report unlawful acts without fearing retaliation. Section 1102.5, subdivision (b), concerns employees who report to public agencies. It does not protect plaintiff, who reported his suspicions directly to his employer. Nonetheless, it does show the Legislature's interest in encouraging employees to report workplace activity that may violate important public policies that the Legislature has stated. The state's whistle blower statute includes administrative regulations as a policy source for reporting an employer's wrongful acts and grants employees protection against retaliatory termination. Thus, our Legislature believes that fundamental public policies embodied in regulations are sufficiently important to justify encouraging employees to challenge employers who ignore those policies.

Like California, most sister states recognize a public policy exception to at-will employment. [FN5] Plaintiff relies on cases from other jurisdictions to support his contention that a public policy claim involving commercial airline safety may be grounded in administrative regulations that serve the statutory policy. (See Pratt v. Brown Mach. Co. (6th Cir.1988) 855 F.2d 1225, 1237 [at-will employee not required to prove statutory violation for wrongful termination in violation of public policy, observing that statutes are "the legislative foundation upon which a cause of action of this nature could be implied"]; accord, Johnston v. Del Mar Distributing Co. (Tex.Ct.App.1989) 776 S.W.2d 768, 772; McQuary v. Bel Air Convalescent Home, Inc. (1984) 69 Or.App. 107, 684 P.2d 21, 24.) Other cases are even more to the point. In Anderson v. Evergreen Intern. Airlines, Inc. (1994) 131 Or.App. 726, 886 P.2d 1068 (Anderson ), an airline employer fired the plaintiff, a maintenance worker, when he refused to install a defective airline part. The plaintiff alleged the employer fired him for refusing to violate FAA safety regulations and for refusing to participate in the employer's attempt to cover up those violations. (Id. 886 P.2d at pp. 1072-1073.) Noting that " '[A]ir safety ranks somewhere in pecking order between motherhood and the American flag,' " the court concluded the plaintiff's discharge for refusing to violate FAA regulations fell within the public policy exception to at-will employment. (Id. at p. 1073, fn. 8, quoting F.A.A. v. Landy (2d Cir.1983) 705 F.2d 624, 637; see also Adolphsen v. Hallmark Cards, Inc. (Mo.Ct.App.1995) 907 S.W.2d 333, 338-339 [regulations may support public policy claim if regulation involves clear public policy mandate]; Pierce v. Ortho Pharmaceutical Corp., supra, 417 A.2d at p. 512 [allowing at-will employee to base public policy claim on administrative rules and regulations]; but see Winters v. Houston Chronicle Pub. Co. (Tex.1990) 795 S.W.2d 723, 723-724 [restricting public policy exceptions to cases involving employee's refusal to perform illegal acts or employer's deliberate attempt to avoid pension fund contribution].)

FN5. Several states do not recognize a public policy exception to the employment-at-will doctrine. (See, e.g., Murphy v. American Home Products Corp. (1983) 58 N.Y.2d 293, 461 N.Y.S.2d 232, 448 N.E.2d 86, 89 [refusing to recognize wrongful termination exception to at-will doctrine outside legislative declaration]; see also Salter v. Alfa Ins. Co., Inc. (Ala.1990) 561 So.2d 1050, 1051-1053 [no exceptions to at-will rule]; Perry v. Sears, Roebuck & Co. (Miss.1987) 508 So.2d 1086, 1089- 1090 [same]; Evans v. Bibb Co. (1986) 178 Ga.App. 139, 342 S.E.2d 484, 485-486 [same]; Smith v. Piezo Technology & Prof. Adm'rs (Fla.1983) 427 So.2d 182, 184 [same].)

After Gantt, we decided several wrongful termination cases that refined and explained its reasoning, including Turner v. Anheuser-Busch, Inc. (1994) 7 Cal.4th 1238, 1256-1257, 32 Cal.Rptr.2d 223, 876 P.2d 1022 (Turner ). In Turner, the plaintiff had alleged, in part, that he was forced to resign from the company (i.e., he was constructively discharged) after complaining to management about violations of internal operating practices and the company's collective bargaining agreements. (Id. at pp. 1256-1257, 32 Cal.Rptr.2d 223, 876 P.2d 1022.) Without pointing to a statute or constitutional provision that applied directly to the defendant, the plaintiff made vague allegations that the defendant had violated the federal " 'Alcohol, Tobacco and Firearms laws.' " (Id. at p. 1257, 32 Cal.Rptr.2d 223, 876 P.2d 1022.) Although Turner was a constructive discharge case, it did reaffirm our view of what it takes to establish a claim for wrongful discharge in violation of fundamental public policy. (Id. at p. 1256, 32 Cal.Rptr.2d 223, 876 P.2d 1022.) Indeed, we held: "Assuming, as we must in a summary judgment posture, that [the plaintiff] could prove these claims at trial, none of them implicates a fundamental public policy embodied in a statute or constitutional provision. The tort of wrongful discharge is not a vehicle for enforcement of an employer's internal policies or the provisions of its agreements with others. [The plaintiff's] failure to identify a statutory or constitutional policy that would be thwarted by his alleged discharge dooms his cause of action." (Id. at p. 1257, 32 Cal.Rptr.2d 223, 876 P.2d 1022.)

In General Dynamics Corp. v. Superior Court (1994) 7 Cal.4th 1164, 32 Cal.Rptr.2d 1, 876 P.2d 487 (General Dynamics ), we held that, under most circumstances, an in-house attorney could maintain "a retaliatory discharge claim against his or her employer ... [if] the attorney was discharged for following a mandatory ethical obligation prescribed by professional rule or statute." (Id. at p. 1188, 32 Cal.Rptr.2d 1, 876 P.2d 487.) Our reference to "professional rule" was specifically to the Rules of Professional Conduct, a code of conduct adopted pursuant to statute by the California State Bar with the approval of this court and binding on all attorneys in the state. (See Bus. & Prof.Code, §§ 6076, 6077.) Although General Dynamics did not specifically address how to reconcile its holding with our earlier pronouncements in Gantt, the court implicitly recognized that Gantt 's analysis would not exclude all Tameny claims rooted in statutorily based administrative regulations. (General Dynamics, supra, 7 Cal.4th at p. 1180, 32 Cal.Rptr.2d 1, 876 P.2d 487.)

In Jennings v. Marralle (1994) 8 Cal.4th 121, 32 Cal.Rptr.2d 275, 876 P.2d 1074 (Jennings ), and Stevenson, supra, 16 Cal.4th at pages 892-894, 66 Cal.Rptr.2d 888, 941 P.2d 1157, we again narrowly defined what sources will provide fundamental public policy that limits an employer's ability to discharge an at-will employee. Jennings held that the Fair Employment and Housing Act's (FEHA) ban on age discrimination, which defines an employer as a person "regularly employing five or more persons," does not apply to an employer with fewer than five employees. (Jennings, supra, 8 Cal.4th at pp. 135-136, 32 Cal.Rptr.2d 275, 876 P.2d 1074; Gov.Code, § 12926, subd. (d).) We rejected the Court of Appeal's conclusion that, notwithstanding the exemption for small employers, the public policy expressed in the statute reflected a "fundamental" policy that would support a common law cause of action in violation of public policy under Gantt, supra, 1 Cal.4th at page 1095, 4 Cal.Rptr.2d 874, 824 P.2d 680. (Jennings, supra, 8 Cal.4th at p. 133, 32 Cal.Rptr.2d 275, 876 P.2d 1074.) We observed that "the inclusion of age in the policy statement of the FEHA alone is not sufficient to establish a 'fundamental' public policy for the violation of which an employer may be held liable in a common law tort action. The Legislature's decision to exclude small employers from the FEHA and the omission of any other legislation barring discrimination on the basis of age precludes finding a fundamental policy that extends to age discrimination by small employers." (Jennings, supra, 8 Cal.4th at p. 135, 32 Cal.Rptr.2d 275, 876 P.2d 1074.)

In Stevenson, we concluded that the FEHA policy prohibiting age discrimination against older workers supported the plaintiff's Tameny claim after she was discharged by an employer who employed more than four persons. (Stevenson, supra, 16 Cal.4th at p. 885, 66 Cal.Rptr.2d 888, 941 P.2d 1157.) In allowing the claim, we expressly stated the reason courts must be careful not to extend a Tameny cause of action beyond policy based in either a constitutional or statutory provision: "In the context of a tort claim for wrongful discharge, tethering public policy to specific constitutional or statutory provisions serves not only to avoid judicial interference with the legislative domain, but also to ensure that employers have adequate notice of the conduct that will subject them to tort liability to the employees they discharge...." (Stevenson, supra, 16 Cal.4th at p. 889, 66 Cal.Rptr.2d 888, 941 P.2d 1157.)

Our review of the above cases makes clear that wrongful termination cases involving a Tameny cause of action are limited to those claims finding support in an important public policy based on a statutory or constitutional provision. (Stevenson, supra, 16 Cal.4th at pp. 888-890, 66 Cal.Rptr.2d 888, 941 P.2d 1157.) This limitation recognizes an employer's general discretion to discharge an at-will employee without cause under section 2922, and best serves the Legislature's goal to give law-abiding employers broad discretion in making managerial decisions. It also acknowledges the fact that fundamental public policy may be enunciated in administrative regulations that serve the statutory objective. To acknowledge statutorily authorized regulations as evidence of public policy in retaliatory discharge actions is wholly consistent with the rationale for limiting these tort actions set forth in Gantt, supra, 1 Cal.4th at page 1095, 4 Cal.Rptr.2d 874, 824 P.2d 680. [FN6] As noted above, one of the primary reasons for requiring the public policy that gives rise to a wrongful termination action to have "a basis in either constitutional or statutory provisions," is to limit "judicial policymaking" " 'lest [courts] mistake their own predilections for public policy which deserves recognition at law.' " (Ibid.) Contrary to the dissenting opinions, when courts discover public policy in regulations enacted under statutory authority, they are not "mistak [ing] their own predilections for public policy," but rather are recognizing a public policy that the Legislature has formulated and the executive branch has implemented. The question we now address is whether important public safety regulations governing commercial airline safety may provide a basis for declaring a public policy in the context of a retaliatory discharge action.

FN6. To the extent one can read Gantt, supra, 1 Cal.4th at page 1095, 4 Cal.Rptr.2d 874, 824 P.2d 680, to conclude that important administrative regulations implementing fundamental public policies as reflected in their enabling statutes are not "tethered to" legislative enactments, we overrule it. We emphasize, however, that our holding does not include any other potential sources of policy not discussed here or in any of our cases following Gantt.

Wrongful termination cases are fact driven and therefore each case must be carefully and separately analyzed. It is therefore important that the employee keep copies of any letters or phone logs evidence communications with the employer or its management, as well as employee handbooks, and performance evaluations so that a reviewing attorney can better assist in evaluating the potential case.

Employment Law

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