California is an at-will employment state. A landmark California case put it thusly: “An
employment, having no specified term, may be terminated at the will of either
party on notice to the other." Dore v Arnold Worldwide, Inc. (2006) 39
C4th 384, 391, 46 CR3d 668. It is in every employer’s best interest to
keep the at-will relationship intact. Failure
to do so can create situations where the employment relationship may be only be
terminated upon a showing of good cause.
There are several ways in which the at-will status of an employee can be
modified. This article will explore some
of these.
Certain employer communications
or actions can give rise to an enforceable expectation by the employee that he
or she may only be terminated for good cause.
Some examples include verbal assurances of job security, regular
promotions, salary increases, and bonuses. Some creative employee-rights attorneys will even
use birthday cards with innocuous statements from supervisors – like “Keep up
the good work!” or “What would we do without you?” – as evidence that an
employee expected that termination could only be for good cause.
However, oral assurances, or
regular promotions and salary increases, do not automatically establish an
implied contract, i.e. that termination can only be for good cause. Several
courts have concluded that without more, "promotions and salary increases
are natural occurrences of an employee who remains with an employer for a
substantial length of time... and should not change the status of an 'at-will'
employee to one dischargeable only for just cause." Miller v Pepsi-Cola
Bottling Co. (1989) 210 CA3d 1554, 1559.
Courts will often consider
other documents prepared by the employer to determine the existence of an
implied contract to terminate only for cause.
These writings include employment applications, letters, stock option
agreements, bylaws, and other writings bearing on the employment relationship.
Yet the safest bet is to
include express language in an employee handbook which makes the at-will
relationship explicit, and states that such relationship can only be modified
in writing by the president/owner of the company. It’s also imperative to have the employee
sign-off on his or her copy of the employee handbook, showing that he or she
has read, understands, and agrees to be bound by the at-will relationship.
