In California, "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. Thus, California is an at-will state -employees may quit without notice and, absent a specific employment contract, be terminated without notice. It is in every employer's best interest to keep the at-will relationship intact. If the at-will relationship is modified, then situations can arise where the employment relationship can 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.
Certain employer 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 assurances of job security, regular promotions, salary increases, and bonuses. Some creative attorneys will even use birthday cards with canned statements from supervisors - "What would we do without you?" - as evidence that an employee expected that termination could only be for good cause.
However, verbal assurances, or regular promotions and salary increases, do not automatically establish an implied contract, i.e. where 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 usually evaluate other documents prepared by the employer to determine the existence of an implied contract to terminate only for cause. Such writings may include employment applications, letters, stock option agreements, bylaws, and other writings relating to the employment relationship.
Yet the safest bet is to include express language in an employee handbook which makes the at-will relationship clear. The language should also state that the at-will relationship can only be modified in writing by the president/owner of the company. It's also crucial to have the employee sign-off on his or her copy of the employee handbook, showing that he or she understands and agrees to be bound by the at-will relationship.
This article is for education and information purposes only; it should not be construed as legal advice. If you have an employment law question for inclusion in a future article, contact Brett T. Abbott at Gubler & Abbott ([email protected]). For specific employment law advice or other legal assistance, contact Gubler & Abbott , (559) 625-9600, 1110 N. Chinowith St., Visalia, CA 93291 (www.thecalifornialawyers.com).