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California Supreme Court Rules “At-will” Means What It Says

By statute (California Labor Code Section 2922) all employment is presumed to be at the will of either party, terminable with or without cause or notice. The presumption of at-will employment codified in section 2922 of the Labor Code can be overcome by an express or implied agreement to the contrary. Evidence outside the writing may sometimes be introduced to explain ambiguities in the contract establishing a “for cause” requirement overcome the at will presumption.

In Dore v. Arnold Worldwide, Inc., 39 Cal. 4th 384, the employee signed an employment letter containing an at-will provision and defining “at will” as the right to terminate the employment “at any time.” The employee argued that the verbal formulation “at any time” in the termination clause of an employment contract was ambiguous because it did not expressly speak to whether cause was required. The employee argued that he could introduce evidence that cause was required to explain the ambiguity. The Supreme Court disagreed. The court held the words “at any time” ordinarily encompassed the notion of “with or without cause.” The letter also stated that employment was “at will,” a term that, when used in an employment contract, normally conveyed an intent that employment could be ended by either party at any time without cause. Thus, no triable issues of fact existed as to breach of contract and breach of the implied covenant of good faith and fair dealing. So the employer won summary judgment.

This case must be distinguished from those other cases where the words “at will” and other language could be interpreted as requiring cause or that do not address the issue, thus leaving the door open for other evidence outside the written document that proves a good cause requirement for termination. Unfortunately, the court’s opinion provides no clue as to how it would rule on cases that had similar language (like termination on 30-days’ notice) but did not have at will language. Only one case out of five held the language clearly called for termination without cause. The other four allowed the employee to introduce evidence that 30-day notice meant “for good cause.”

Many questions remain in this ever-changing legal landscape. Employers should ensure that their offer letters, employment contracts and employee handbooks clearly state employment is at-will and may be terminated without notice and without cause.

The Law Office of Phillip J. Griego
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San Jose, CA 95113
Tel. 408-293-6341
Original article by Phillip J. Griego of The Law Office of Phillip J. Griego.

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Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.