Wrongful Termination Law Overview

Pursuant to California Labor Code § 2922, an employment, having no specified term, may be terminated at the will of either party on notice to the other. This is known in California as the "at-will" employment law rule. Wrongful termination from employment violates labor laws, however, when the termination occurs in violation of a fundamental public policy. As a general rule, an employer's right to discharge an employee is subject to limits imposed by public policy. Thus, an employer's discharge which violates a fundamental public policy gives rise to a tort action for wrongful termination in violation of public policy.For purposes of wrongful termination laws in California, public policy is “fundamental” when it is carefully tethered to a policy delineated in constitutional or statutory provisions, involves duty affecting the public at large, rather than one owed to or imposed solely upon the parties to a dispute, and is well established and sufficiently clear to employer at time of the discharge. 

The critical inquiry in assessing a wrongful termination claim is whether the discharge is against public policy and affects a duty which inures to the benefit of the public at large rather than to a particular employer or employee. Only where some interest which transcends the employer- employee relationship is at stake will a wrongful termination claim lie. In addition, the public interest involved in the claim must be substantial. Only termination in violation of a fundamental public policy expressed in a statute or a constitutional provision will support a wrongful discharge action. After reviewing the sources of public policy recognized by other states in which a wrongful termination action is permitted, the court held: (1) The public policy exception to the right to terminate an employee at will must be found in either a constitutional or statutory provision; (2) While an at-will employee may be terminated for no reason, or for an arbitrary or irrational reason, there can be no right to terminate for an unlawful reason or a purpose that contravenes fundamental public policy. The cases in which violations of public policy are found generally fall into four categories: (1) refusing to violate a statute; (2) performing a statutory obligation; (3) exercising a statutory right or privilege; and (4) reporting an alleged violation of a statute of public importance.

Wrongful termination cases typically arise when employer retaliates against employee for refusing to violate statute, performing statutory obligation, exercising statutory right, or reporting alleged violation of statute of public importance; however, action for wrongful discharge is not strictly limited to these situations, but will lie wherever basis of discharge contravenes fundamental public policy. Discharge of employee in retaliation for his reporting violations of overtime pay law to management violates fundamental public policy of California. Overtime wages are an example of a public policy fostering society's interest in a stable job market, it is crime for employer to fail to pay overtime wages as fixed by Industrial Welfare Commission, and there is no requirement that employee be direct beneficiary of the policy violated by his discharge. An employee terminated in retaliation for refusing an employer's sexual advances may state a wrongful termination cause of action under California employment laws. However, California law is clear that an individual may not bring a cause of action for wrongful termination in violation of public policy based upon a statute does not impute individual liability.