In employment law, there are several key concepts to understand. These concepts determine what legal rights apply.

I.  “Employee” versus “independent contractor.” 

The latter term generally means one who is not paid on an hourly basis or a salary basis, but by a completed job.  An independent contractor is one who is in business for himself/herself, owns his/her own tools of the trade, has multiple clients, can have his/her own employees, and controls the details of how the job is done. An independent contractor is responsible for paying his/her own taxes. He or she is not eligible for unemployment compensation, workers’ compensation, or other fringe benefits.

An “employee” on the other hand is under the control of the employer as to how, when, and where a job duty is performed. The employee is compensated on an hourly basis or a salary basis.  Sometimes, employees who are sales personnel are compensated only by commission or by a combination of base salary and commissions.

An employer must withhold taxes from an employee’s compensation. An employee has a right to unemployment compensation and workers’ compensation.

An employer’s classification of a person as an “employee” or as an “independent contractor” is not determinative.  There is a rebuttable legal presumption that a person is an “employee.”  The

employer has the burden of proving that it correctly classified a person as an “independent contractor” using a multi-factor test.

II.  “Wrongful termination.”

A.  Only an “employee” may have a cause of action for “wrongful termination.”

A person who is an “employee” who is terminated may have a potential legal cause of action for “wrongful termination.”

A person who is an “independent contractor” who is terminated does not have a cause of action for “wrongful termination.”  However, if the independent contractor has an oral or written contract with the employer, he or she may have a cause of action for breach of the contract.

A “contractor” with an agency, which supplies workers to employers pursuant to an agreement, may in fact be an “employee” of the agency.

B.  A cause of action for “wrongful termination” is an exception to the doctrine of “employment at will.”

1.  Statutory presumption of employment at will. Almost all “employees” are considered to be “employees at will.”  There is a rebuttable statutory presumption in California that employment is at will.  That means that the employer or the employee is free at any time to terminate the relationship, without notice and without giving a reason. The employer may choose to state a reason but is not required to (assuming non-union employment.)

2.  Employee for a specific term.  In contrast to an “employee at will,”  an “employee for a specific term is one who has a contract for a job lasting only a limited period of time, e.g., six months, one year, three years.  “Employees for a specific term” can be fired only for “cause.”  Usually, the written contract will spell out what constitutes “cause,” e.g., specific misconduct, persistent tardiness, poor job performance, etc.

3.  Public employees.  The rights of employees who work for a public agency are usually determined by statute or regulation. By statute, some public agencies are permitted to have “employees at will” (e.g. sanitary district employees.)  Other public agencies by statute may treat “probationary employee” as “employees at will.” 

“Permanent employees,” however, can only be fired “for cause” with some minimal due process (e.g., notice and opportunity to be heard.) Such employees do not have a cause of action for “wrongful termination,” but do have a cause of action for violation of the applicable statute or regulation. Many public employees are also members of unions, which membership may give them additional rights under the collective bargaining agreement.  See below.

4.  Union employees.  The rights of unionized employees are governed by the union’s contract with the employer and by federal labor law. (CA public employees are also subject to the rulings of the CA Public Employees Relations Board.) Generally, a unionized employee can be disciplined or fired only for “cause.”  He or she can appeal discipline or termination by filing a grievance through the union.

C.  Two main branches of “wrongful termination” law.

1.  Cause of action for “tortious wrongful termination in violation of public policy.”

A. This body of law provides the individual who has been terminated with a cause of action against the employer, on the basis that the termination violated a strong public policy, enshrined in a constitution, statute, or regulation. Examples of categories of such public policies include:

Anti-discrimination laws.  These laws include those prohibiting discrimination on the basis of age over 40, sex (including sexual harassment, pregnancy), disability, national origin, race, sexual orientation, religion, marital status. 

Whistle-blower protection laws.  These laws provide that an employer shall not retaliate (by termination or other adverse action) against an employee who reports to management or to a regulatory government agency suspected violations of laws or regulations.

               Miscellaneous laws.  The California Labor Code provides for various rights of employees and provides either that their job should be held open for them for a period of time or that they should not be terminated for asserting those rights (e.g., CA Family Rights Act provides time off for the serious health condition of the employee or a family member; Pregnancy Discrimination Act provides for time off for childbirth;  other Labor Code sections provide for time off for jury duty, for breast-feeding infants, for parents to visit their children’s schools, etc).  A worker who files a workers’ compensation claim or an OSHA complaint is not to be terminated because of the claim.

              

B.  Proof

The employee bears the burden of proving that he or she was wrongfully terminated or otherwise retaliated against.  This is a significant burden, i.e., a preponderance of the evidence supports all of the elements of the cause of action.

Types of evidence that an employee can use to prove his or her case include documentary evidence, computer-generated evidence, oral testimony: statements made by supervisors and co-workers; evidence of how other employees (preferably of a different race or gender than the employee) were treated differently than the employee; statistics of the composition of the work force or certain job classifications.

C.  Prerequisites for preserving a cause of action: statutes of limitation and administrative claims

1.  Discrimination claims.  It is highly advisable to present in writing to your supervisor or H.R. representative

a succinct written summary of your assertions, specifically using the terms “discrimination, harassment, and/or retaliation on the basis of [age, race, sex, disability, etc.].”  If you fail to use such specific terms, the employer is likely to claim later that you never made a “claim of discrimination” and that therefore, it had no duty to conduct an investigation. It is also necessary to be explicit that you are demanding that the employer investigate and stop the discrimination, harassment, and/or retaliation.  If you fail to make such an explicit demand, the employer may be able to avoid liability because you did not give it a chance to remedy the situation.

A prerequisite to filing any lawsuit for discrimination is to file an administrative claim with either  the CA Dept. of Fair Employment and Housing (“DFEH”) and/or the federal Equal Employment Opportunity Commission (“EEOC”.)  Claims filed with DFEH must be filed no later than one year from the date of termination or one year from the date of the discriminatory act (e.g., denial of a promotion, a demotion, act of harassment.)

EEOC claims must be filed within six months of the date of termination or other discriminatory act.

2.  Whistle blower claims and other violations of statutes providing employee rights.  There is no requirement for filing an administrative claim prior to filing a law suit.   The time limit for filing a law suit in CA is generally two years from the date of the termination.

3.  Public employees.  A public employee who is terminated by a CA public agency must first file an administrative claim against the public agency, within six months of the termination.  This requirement is a prerequisite to filing a law suit.

C.  Damages.  The employee must show that he or she has been damaged. Types of damages that may be awarded include: emotional distress damages, punitive damages, loss of income and fringe benefits, other compensatory damages (e.g., medical treatment for stress).

D. Attorneys’ fees. In many tortious wrongful termination cases, an applicable statute may provide that, if the employee wins the lawsuit, the employer has to pay his/her reasonable attorneys’ fees and costs.  This provision for attorneys’ fees can significantly increase the value of a case and can be a significant incentive for an employer to settle a case.

2.  Wrongful termination cause of action for “breach of implied contract”

A.  Employee’s burden of proof.  To invoke this cause of action, an employee must initially prove a variety of factors: e.g., the employer spoke out of both sides of its mouth by simultaneously claiming that employment was “at will” but also having a consistent practice of progressive discipline and termination only “for cause”, and making promises of “permanent” employment absent gross misconduct.  Other relevant factors include the employee’s length of employment (longer is better) and a history of steady promotions and raises, and the employer violated its own internal rules and procedures in firing the employee.

B. Employer’s burden of proof. If the court applies the doctrine of breach of implied contract, the employer must then prove that it had “good cause” to terminate the employee.  “Good cause” is a legal term of art.  It means cause which is not arbitrary or capricious or irrational.  Before terminating the employee, the employer should have conducted a good faith “investigation” and provided the employee with basic notice of the charges and an opportunity to respond.

C.  Statute of limitation.  If the termination occurred after Jan. 1, 2003, a law suit must be filed within two years from the date of termination.  For a prior termination, the statute of limitation is one year.

D.  Types of damages recoverable.  Only loss of income and benefits and “compensatory damages” are recoverable.  Not recoverable are: the employee’s attorneys’ fees and costs, emotional distress damages, and punitive damages.  Hence, a breach of implied contract claim usually has much lower settlement value than a discrimination claim.

III.  OTHER TYPES OF EMPLOYMENT CLAIMS

A. “Wage” claims

1. An employee has the option of filing an administrative claim with the CA Labor Commissioner.  This is a good option to pursue if less than $50,000.00 is involved. The Commissioner holds a settlement conference and tries to get the parties to resolve their dispute.  If no resolution occurs, a hearing before an administrative law judge is held.

For claims of $50,000 or more, it is probably advisable to obtain representation by an employment attorney and file a law suit in Superior Court.  If the employee wins the lawsuit, the court will order the employer to pay the reasonable attorneys’ fees and costs of the employee.

2.  Types of wage claims include:

a.  Unpaid overtime compensation. Hourly employees  are entitled to overtime compensation for hours worked of more than eight per workday or more than 40 hours per week.  Hourly employees are distinct from “exempt” employees who are “administrative,” “professional,” or “executive” employees.  CA regulations provide very specific definitions of the three exempt categories.  An employer’s classification of an employee as exempt or nonexempt is not determinative. Under CA law, an employee who spends more than 51% of his or her time performing nonexempt duties must be paid overtime.  Hence, there have been cases where an employer has classified an employee as an “exempt manager,” but that person performs nonexempt work more than 51% of his actual work time and is therefore eligible for overtime compensation.  The statute of limitations for wage claims under CA law is generally four years from the time the compensation was due, where the employee files a law suit.

b.  Unpaid accrued but unused vacation time;

c.  Severance benefits where the employer does not have an ERISA approved plan;

d.  Unpaid bonuses which have been fully earned under the employer’s plan; and/or

e.  Unpaid commissions where the employee has substantially performed all the required work to earn the commissions.

3.  Penalties for the employer’s delay in paying wage claims can be recovered where the failure to pay is “willful.”

B.  Fraudulent inducement by an employer to take a position under CA Labor Code Section 970 or common law tort of fraud.

C.  “WARN” Act violation: employer failed to give the required advance notice before a mass layoff.

D.  Violations of CA Family Rights Act or federal Family Medical Leave Act, where employer denies leave but does not terminate the employee.

E. Workers’ compensation claims for disability benefits and/or for “discrimination” due to the filing of such a claim.

F.  “Blackballing”: former employer attempts to prevent a person from obtaining new employment.  CA Labor Code Section 1050 et seq.  Alternatively, tort of defamation.  

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