©2023 Seyfarth Shaw LLP www.seyfarth.com 2023 Cal-Peculiarities | 101 require “good cause” for discharge unless the parties have expressly provided, in writing, for employment at will. Moreover, unilateral statements by the employer to this effect are not necessarily conclusive.203 Accordingly, the only reasonably effective way for employers to ensure at-will status is to have the employee sign contract-like statements to that effect. An at-will provision in an express written agreement signed by the employee cannot be overcome by a contrary implied agreement.204 To preclude jury findings of implied promises of continued employment, express employment-at-will statements should also appear everywhere the employer states a policy regarding factors the employer will consider in terminating or changing the terms of employment, and in confidentiality agreements and other agreements that the employee signs.205 California employers sometimes make the mistake of relying on certain disclaimer language that generally works outside California. Employers traditionally sought to shield themselves from implied-contract claims by placing disclaimers in handbooks and job applications to the effect that “this policy is not a contract.” That language can have unintended consequences for the California employer who wishes to use a handbook or job application as a shield against claims for breach of implied contract. In one case, at-will language appearing in a job application failed to preclude a contract claim, because the application also contained broad “no contract” language; the Court of Appeal reasoned that the application could not “establish a binding employment condition [i.e., at-will employment] while at the same time expressly providing that neither the application nor subsequent communications can create a binding employment condition or contract.”206 A better approach, under California law, would be to state that the employment-at-will language is contractual and that other language appearing in the document in question—whether it be a handbook, job application, or employment policy—is not a promise of continued employment. Actions short of termination. The implied-contract action, like the tort claim for breach of public policy, extends to “wrongful demotion.” The California Supreme Court has recognized an enforceable promise not to be demoted without good cause.207 Procedural violations. The theory of implied contract may also challenge an employer’s failure to follow promised pre-termination procedures. The California Supreme Court has held that an employee might be able to recover on the basis that he would not have been dismissed in a reduction in force had the employer followed its own RIF procedures.208 5.5.2 Standard for “good cause” Balancing test. The standard of “good cause” for dismissal or demotion formally permits the employer to rely on any legitimate, nontrivial reason for dismissal. Here again, though, the latitude that the law appears to give to employers may be more nominal than real. A standard California jury instruction permits juries to apply the “good cause” standard in a discretionary fashion, balancing the employee’s interest in continued employment against the employer’s interest in operating the business efficiently and profitably.209 (Which way do you suppose the balance tips when the scale is administered by a jury of the plaintiff’s peers?) “Good cause” in cases of misconduct. In cases of suspected misconduct, an employer may have good cause for dismissal even if the employer’s belief in the existence of misconduct turns out to be factually mistaken. But a California employer that relies on a factually mistaken ground for dismissal must show that it conducted an “appropriate investigation,” which typically must include private interviews of witnesses, adequate documentation, and an opportunity for the accused to address the allegations.210 The investigation need not be perfect, but should be “appropriate” in light of all of the existing circumstances.211 Assuming the requisite level of propriety and fairness, courts will be hesitant to interfere with an employer’s legitimate exercise of managerial discretion in determining that an employee’s conduct constituted good cause for termination.212
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