California Wrongful Termination Suits and Good Cause

California Wrongful Termination Suits and Good Cause

When misconduct makes it necessary to discharge an employee, many employers are unsure how to do so without running afoul of a wrongful termination lawsuit. Employers facing this situation should consider consulting with an Orange County business attorney to review the basis of the action and any possible lawsuits.

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What Basis Will A Court Use To Evaluate Our Decision To Terminate?

In cases where an employee is severed for misconduct, the most common basis for a wrongful termination lawsuit is a clause in the employment contract stating the employee will not be fired except for “good cause.” An Orange County business attorney can help you to understand whether the good cause standard is applicable to your situation. In determining whether or not there was good cause to discharge for misconduct, the court will instruct that good cause existed if the employer:

  1. Acted in good faith;
  2. Conducted an appropriate investigation; and
  3. Had reasonable grounds to believe that the employee engaged in misconduct.

“Good faith” exists where the decisions to initiate the investigation or to terminate are not based on a bad motive. For example, discharging an employee to avoid paying a bonus would not constitute good faith, even if the employee had engaged in misconduct.

“An appropriate investigation” must be reasonable given the circumstances of the alleged misconduct. The employee must be notified of the investigation and given a chance to answer the allegations before being discharged.

“Reasonable grounds to believe” ensures that employers cannot later be found liable because the allegations prove to be untrue. At one time, it was unclear whether an employee who did not, in fact, engage in any misconduct would always recover in a wrongful termination lawsuit, even though the employer reasonably believed the misconduct had occurred. The California Supreme Court decided that as long a good faith investigation gave an employer “reasonable grounds to believe” that the misconduct had happened, the employer could not later be held liable.

Finally, it is important to remember that good cause relies heavily on the facts of each case. The law allows employers a wide degree of latitude to exercise their own subjective judgment, especially where the employee occupies a critical or managerial position. If you are worried that you might face a wrongful termination suit, the experienced Orange County business attorneys of Daily Aljian LLP are here to advise you. Call 949-861-2524 for a consultation.