When Can an Employer Legally Terminate an Employee?
California is considered an “at-will” employment state, which means employers can generally terminate employees for any lawful reason or no reason at all. However, this broad discretion is subject to many important exceptions.
Employers who ignore these limitations may find themselves facing legal action for wrongful termination, discrimination, or retaliation. Knowing the legal system helps both employers and employees act with clarity and avoid unnecessary disputes. In this article, we explain when a termination is legal and what situations can create liability.
The At-Will Employment Standard
Under California law, unless there is an agreement that states otherwise, employment is considered “at-will.” This gives employers the flexibility to terminate an employee without notice and without stating a cause. It also means employees are free to leave their jobs without reason or warning. But this principle isn’t absolute.
Employment law in California carves out several exceptions that restrict an employer’s right to discharge an employee at will. These exceptions include statutory protections, public policy concerns, implied contracts, and retaliatory motives.
Terminations That Violate Public Policy
A key limitation under California employment law involves public policy. An employer can’t fire an employee for reasons that violate a clear mandate of public policy.
This includes terminating someone for refusing to break the law, reporting unlawful conduct, performing a legal obligation, or exercising a legal right. For example, firing an employee who reports unsafe working conditions to OSHA could be considered wrongful termination in violation of public policy. Courts in California take these cases seriously because they want to protect workers who act in the public interest.
Discrimination-Based Termination
Federal and state employment laws strictly prohibit terminations based on protected characteristics.
In California, under the Fair Employment and Housing Act (FEHA), it’s illegal to terminate someone because of their race, religion, gender, sexual orientation, disability, national origin, age (over 40), or other protected category. Employers who base their decisions on bias—whether overt or subtle—violate employment law and open themselves to legal claims.
Discrimination can occur even if the employer never directly expresses bias. A pattern of behavior, unequal treatment, or inconsistent enforcement of rules can all support a claim that the termination was unlawful.
Retaliation for Protected Activities
Retaliation is one of the most common grounds for wrongful termination lawsuits in California.
Employment law protects workers who engage in “protected activities,” such as reporting discrimination, filing a workers’ compensation claim, requesting a reasonable accommodation, or complaining about unpaid wages. If an employer fires someone shortly after such an action, the timing alone may suggest retaliation.
California courts look for signs that the termination was connected to the protected activity, even if the employer offers a different explanation.
Contractual Limitations on Termination
Some employees aren’t truly “at-will” because they have an employment contract that limits when they can be terminated.
This might be a written agreement, a union contract, or even an implied contract created by an employer’s conduct. If a company handbook says employees will only be fired “for cause” or promises progressive discipline before termination, courts may treat that as a binding agreement.
Employers who don’t follow their own policies can be held liable for wrongful termination.
Legal Grounds for Termination Under California Employment Law
Some legal grounds for termination include:
Poor job performance
Misconduct or violation of workplace rules
Repeated tardiness or absenteeism
Layoffs due to economic necessity
Business restructuring or closure
Expiration of a fixed-term employment contract
Insubordination or refusal to follow reasonable instructions
Dishonesty or theft
Failure to maintain required credentials or licenses
Behavior that harms workplace morale or safety
All of these reasons are generally considered lawful under California employment law, provided they aren’t used as pretexts for discrimination or retaliation.
Terminations That May Appear Legal But Aren’t
Employers sometimes mask an unlawful motive behind a seemingly valid reason. This is known as a pretext. For example, an employer may claim that an employee was let go due to performance issues but fail to provide documentation of any prior warnings or evaluations.
Or they may claim a layoff was necessary due to business conditions, yet the terminated employee was the only one let go and happens to be the only pregnant or older employee.
California courts recognize that an employer's stated reason may not be the true reason for a termination, and they allow plaintiffs to challenge these explanations with circumstantial evidence.
Protected Leaves of Absence
California employment law also prohibits terminating an employee for taking legally protected leave. This includes family or medical leave under the California Family Rights Act (CFRA) or the federal Family and Medical Leave Act (FMLA), pregnancy disability leave, jury duty leave, or military leave.
If an employee is terminated while on leave or shortly after returning, the employer must show that the decision was unrelated to the leave. Otherwise, it can amount to unlawful retaliation.
Whistleblower Protections
Whistleblowers—employees who report legal violations—are protected under several California statutes. If an employer terminates a whistleblower for reporting wrongdoing, they may be liable for damages under the California Whistleblower Protection Act. This law applies whether the employee reported the issue internally or to a government agency.
Even if the reported violation turns out to be incorrect, the whistleblower is protected as long as the complaint was made in good faith.
Economic Layoffs and WARN Act Compliance
When employers lay off a large number of employees, they must comply with the California Worker Adjustment and Retraining Notification (WARN) Act. This law requires certain employers to give 60 days’ notice before a mass layoff, relocation, or plant closure. Failure to provide this notice can result in penalties and back pay.
Although layoffs for economic reasons are generally lawful, failure to follow proper procedures can make them legally problematic.
Best Practices to Avoid Liability
For employees, keeping written records of performance evaluations, complaints, and disciplinary actions can support legal claims if a termination appears unfair.
California employment law rewards transparency and penalizes retaliation. When clients come to an attorney with a termination issue, they can examine every piece of the puzzle to determine whether the decision was made for a lawful reason or as cover for something else.
What to Do After a Termination
If you’ve been terminated and suspect that the decision was unlawful, there are several steps to take. First, gather any documentation that supports your claim, such as emails, performance reviews, or text messages.
Next, consider filing a complaint with the California Civil Rights Department (CRD) or the Equal Employment Opportunity Commission (EEOC), depending on the nature of your claim. In some cases, filing a government complaint is a prerequisite to filing a lawsuit.
You should also contact an employment law attorney to assess your options and determine the best path forward. There are strict deadlines for filing claims, so it's important to act promptly. Attorneys work with clients to evaluate potential claims and pursue appropriate remedies, including reinstatement, back pay, or damages.
Call Our Firm to Learn More
At the Law Offices Of Charles P. Boylston, we help clients on both sides of the issue understand their rights, review the facts, and determine whether the termination was legal. Our employment lawyers are proud to serve Temecula, California, and surrounding areas. Call today.