Unfair Work Discipline Demotion Laws

Although there are no federal or state laws protecting an employee from unfair work discipline demotion laws, the California Supreme Court does recognize an employee’s right to sue for “wrongful demotion” if a contract is breached without a just cause. Since personal grudges sometimes become reality in the work place, it is important for employees to protect themselves against unfair work discipline demotion laws.

Wrongful demotion occurs when the employer commits an unfair work discipline demotion due to lack of a just cause. Meanwhile, a just cause is defined as a fair and honest cause or reason, acted on in good faith by the employer. Therefore, in order to legally demote an employee with just cause, there must not be a breach in any written, oral or implied contract for any reason. Similar to termination laws, unfair work discipline demotion laws clarify that an employee cannot be demoted due to retaliation for exercising a legal right. Examples of this would be demotions due to filing a workers’ compensation claim, picketing or striking without violating just policies, or stopping an employee from climbing higher up the company’s salary structure.

A case in point of such unfair work discipline demotion happened when two senior managers were disciplined for alleged misconduct. The exact demotions were reductions in their salaries and benefits. However, the court agreed with the managers' argument that the employer's policies, practices and communications created an implied contract not to demote without just cause. Since the employer's handbook contained a progressive discipline system requiring counseling, oral and written warnings, and other disciplinary steps before demotion would occur, the court found a breach of the implied contract not to demote without good cause.