102 | 2023 Cal-Peculiarities ©2023 Seyfarth Shaw LLP www.seyfarth.com 5.6 Claims for Breach of Implied Covenant of Good Faith and Fair Dealing Under California law, each employment contract necessarily implies a covenant of good faith and fair dealing. An employer breaches the covenant by any action, taken in bad faith, that deprives an employee of the benefit of the express terms of the contract. An employer might breach the implied covenant even where there is no breach of an express contract, such as where an employer dismisses a salesperson to avoid paying a commission on a sale that the salesperson has already completed,213 or misleads an employee into taking a job in reliance on a reasonable assumption that he would have a chance to perform his job to the good faith satisfaction of the employer, and revokes the offer before the new hire begins work.214 The implied covenant of good faith and fair dealing does not impose substantive terms beyond those to which the parties actually agreed, and thus cannot transform an at-will employment contract into a contract terminable only for good cause. To the extent that a plaintiff claims a breach of the implied covenant simply on the basis that she was fired without good cause, the claim lacks merit.215 5.7 Limited Effectiveness of Common Defenses and Procedural Devices 5.7.1 Workers’ compensation preemption In many states, the workers’ compensation act generally provides the exclusive remedy for a work-related injury, and thus preempts claims based on that injury. One California exception to that general rule is that an employee can pursue a FEHA claim for discrimination, harassment, or retaliation without regard to workers’ compensation exclusivity.216 California has gone a step further, to permit employees to pursue tort claims for intentional and even negligent infliction of emotional distress, notwithstanding the workers’ compensation act, where the tort claim stems from conduct (such as FEHA violations) alleged to violate public policy.217 California courts have reasoned that the employer’s tortious conduct was not one of the “normal risks of employment” covered by the workers’ compensation act.218 In recent years, however, a moderating trend of authority has limited these kinds of tort actions, recognizing that employer misconduct in connection with normal employment decisions is within the compensation bargain, even if the misconduct was arguably outrageous and intended to cause emotional harm.219 It still remains the case, though, that some California courts permit intentional tort claims to proceed against employers even though they arise out of employment.220 A 2017 Court of Appeal decision permitted an employee to pursue a claim for intentional infliction of emotional distress for conduct that was also retaliatory under FEHA.221 This decision reverted to a prior, discredited view that conduct violating FEHA necessarily “falls outside the compensation bargain” and thus can be subject to an IIED claim.222 This decision may be a classic case of bad facts making bad law. The defendant supervisor, knowing that the plaintiff was supporting another employee complaining of discriminatory conduct, ostracized the plaintiff in the workplace, encouraged her to lie to investigators, pursued her at home and in the office to see if she did so, and verbally and physically attacked her after she disobeyed.223 Power press exception. A statutory exception to workers’ compensation exclusivity is the “power press exception,” which benefits employees injured by their employer’s knowing removal of—or failure to install—a point-of-operation guard on a power press when required by the manufacturer.224 In a 2020 case, the Court of Appeal applied this exception to reinstate the lawsuit of a machine operator who had injured her hand while she was operating a power press without a protective guard.225 Her lawsuit invoked the “power press exception” to workers’ compensation exclusivity.226 The trial court granted summary judgment to the employer, which had neither removed nor failed to install a required protective guard on its power press, which the employer had bought, used, from another manufacturer.227 But the Court of Appeal reversed because of triable issues as to (1)
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