California has at-will employment, meaning that either the employer or the employee can terminate the employment relationship at any time, with or without cause, reasons, or notice.
But the at-will presumption can be negated by express or implied agreements to the contrary. In addition, an employer may not dismiss an employee for discriminatory or retaliatory reasons. As a result of these exceptions, employers often find themselves subject to claims by terminated employees.
An employer can adopt various strategies to maintain at-will treatment and protect itself against wrongful termination lawsuits. Following are some key do’s and don’ts:
DO Include Repeated At-Will Statements
Job applications, offer letters, employee manuals, performance evaluations, and other employment-related materials all should clearly and prominently state the at-will policy. The policy should be restated next to any provisions that might be interpreted as conflicting with an at-will arrangement. For example, any list of reasons in an employee manual as to why an employee may be discharged should be accompanied by a disclaimer that the list is not exclusive and that the employment always remains at-will. It is hard to repeat the at-will policy too many times.
DON’T Give Assurances of Job Security
An employer should train its managers to not unwittingly make verbal statements to employees that might be interpreted as contradicting at-will employment, such as:
“If you continue to do fine work like this, you can look forward to a long and successful association with the Company,” or
“As long as you do a good job, you will always have a home here.”
DON’T Have Probationary Periods or Permanent Employees
Use of a “probationary” period for new employees arguably creates an inference that an employee can only be terminated for good cause once he or she has satisfactorily completed the period. An initial phase of employment instead should be referred to as an “introductory,” “orientation,” or “training” period. In addition, employees who complete the introductory period should be referred to as “regular” rather than “permanent” employees.”
DON’T Have a Progressive Discipline Program
A progressive discipline policy arguably creates an implied contract between the employer and the employee, requiring the employer to follow all the steps in the policy before discharging an employee. The practical result is that the employee can no longer be summarily terminated, as would otherwise be permissible with at-will employment.
DO Be Mindful of Anti-Discrimination Laws
An employer should take special care before discharging someone who is a member of a protected class (e.g., based on race, age, ethnicity, or disability), or whose termination might be viewed as in retaliation for a protected act (e.g., whistle-blowing). In such cases, an employer must be prepared to establish good cause for the termination, notwithstanding the general presumption of at-will status.
There are many traps for the unwary in attempting to maintain an at-will employment policy. Accordingly, an employer should have a competent professional periodically review its employment documents and practices. And because of the risk of wrongful termination claims, an employer should consult with legal counsel before discharging employees.