The At-Will Employment Rule and Its Exceptions

California is an at-will employment state, meaning that in the absence of a contract stating otherwise, either the employer or the employee may end the employment relationship at any time, with or without cause, and with or without notice. Many employees assume this means a termination can never be challenged. That assumption is incorrect. At-will employment does not permit an employer to fire someone for an illegal reason.

Concrete example: A Silicon Valley software engineer reports to HR that her manager is inflating expense reports. Two weeks later, with no prior performance issues on record, she is terminated for "restructuring." No other position on her team is eliminated. The timing, combined with the absence of a legitimate documented reason, supports a retaliation claim under California Labor Code section 1102.5 — even though the company will argue the termination was at-will.

"At-will employment is the default rule in California — not a shield against every wrongful termination claim. The exceptions exist precisely because some reasons for firing someone are never lawful."

Ground One: Termination in Violation of Public Policy

California courts have long recognized that an employer cannot terminate an employee for a reason that violates a fundamental public policy, even in an at-will relationship. This tort, first recognized by the California Supreme Court in Tameny v. Atlantic Richfield Co. , applies when an employee is fired for refusing to commit an illegal act, exercising a legal right, performing a legal obligation such as jury duty, or reporting a legal violation.

Common examples include termination for refusing to falsify safety records, for filing a workers' compensation claim, or for reporting suspected fraud to a regulatory agency. A public policy claim requires that the policy be tethered to a specific constitutional or statutory provision and that it benefit the public generally, not just the individual employee.

Ground Two: Discrimination and Retaliation

California's Fair Employment and Housing Act (FEHA) prohibits termination based on protected characteristics including race, sex, age, disability, national origin, religion, sexual orientation, and pregnancy, among others. FEHA also prohibits retaliation against an employee who complains about discrimination or harassment, participates in an investigation, or requests a reasonable accommodation.

Separately, California Labor Code section 1102.5 protects employees who report suspected violations of law to a government agency, a supervisor, or another employee with authority to investigate — commonly known as whistleblower protection. An employee terminated shortly after making such a report, without a well-documented, legitimate performance issue, has a strong basis to investigate a retaliation claim.

Ground Three: Breach of an Implied Contract or the Covenant of Good Faith

Even without a written employment contract, an employee may be able to show that an implied contract existed limiting the employer's right to terminate at will — based on factors such as length of employment, employer policies and handbooks promising termination only for cause, oral assurances of job security, and consistent past practice. Where such an implied contract exists, a termination inconsistent with it may support a breach of contract claim.

McLellan Law Group represents clients in Saratoga, San Jose, Cupertino, Los Gatos, and throughout Silicon Valley and Santa Clara County.

What to Do if You Believe You Were Wrongfully Terminated

If you believe your termination was unlawful, preserve all relevant evidence immediately: emails, text messages, performance reviews, the termination letter, and the names of potential witnesses. Do not sign a severance agreement or release of claims before having it reviewed by an employment attorney — these agreements typically waive your right to sue in exchange for a payment that may be far less than what your claim is worth.

• Deadlines to file a complaint with California's Civil Rights Department or pursue a claim can be as short as three years for FEHA claims — act promptly.
• Do not accuse your employer of illegal conduct in writing without legal guidance; consult an attorney first.
• Keep a written timeline of events while your memory is fresh.

Frequently Asked Questions

About the Authors

ADVERTISING MATERIAL DISCLAIMER — This communication is an advertisement for legal services by McLellan Law Group, LLP. The content is intended for informational purposes only and should not be construed as legal advice. Each case and its facts are unique, and the outcomes mentioned in this advertisement, if any, are not guarantees of future results. Responsible Lawyer: Claire Melehani, Esq., 20665 4th Street, Suite 202, Saratoga, CA 95070.