San Francisco Employment Law Firm Blog

California workplace operates under the basic presumption that in the absence of agreement otherwise, a worker is an at-will employee. This means that an employee can be terminated for any reason, arbitrary reason, or no reason, but not for illegal reason such as discrimination, harassment, and retaliation. This presumption is codified in California Labor Code section 2922, which provides that an employment, having no specified term, may be terminated at the will of either party on notice to the other.

This presumption of at-will employment may be superseded by an express or implied contract limiting the employer's right to discharge employee. The landmark California Supreme Court case on the issue of existence of implied employment contract is Foley v. Interactive Data Corporation (1988). In that case, the Court stated the general principle that courts seek to enforce the actual understanding of the parties to a contract, and in so doing may inquire into the parties' conduct to determine if it demonstrates an implied contract. The Court further noted that in the employment context, several factors may be considered to determine whether implied employment contract existed, including (1) personal policies or practices of the employer; (2) the employee's longevity of service; (3) actions or communications by the employer reflecting assurances of continued employment; and (4) the practices of the industry in which the employee is engaged.

The Foley court, considering the above factors, came to the conclusion that there was an implied contract to not terminate employment where the employee, who worked for his employer for over 6 years, received excellent performance evaluations and promotions, was told that if he was going to do a good job, his future was secure, and where the employer admitted that it did not normally fire employee without cause.

These factors, however, don't have much weight if the employee actually signed a written form, stating that he understands that he is an at will employee and may be terminated at any time with or without cause.

Posted by Arkady Itkin | Permalink | Email This Post

Posted In: At-Will Employment , Contract Claims , Employment Contracts , Wrongful Termination

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Your employer has the right to the undivided loyalty of its employees. The duty of loyalty is breached and may give rise to the employee's liability in a civil suit for unfair competition when the employees takes action adverse to the employer's best business interests. Stokes v. Dole Nut Co. (1995). For example, employees who take for themselves, against their employer's interests and to the employer's loss, business opportunities in the employer's line of business may be subjected to liability.

Normally, the unfair competition actions are governed by California Labor Code 2860, which states that "Everything which an employee acquires by virtue of his employment, except the compensation which is due to him from his employer, belongs to the employer, whether acquired lawfully or unlawfully, or during or after the expiration of the term of his employment. In one case, while still employed, several employees of a company attempted to divert business to their newly formed company by using confidential client information. The court found that their conduct constituted misappropriation of employer's trade secrets. Courtesy Temporary Service, Inc. v. Camacho (1990).

However, an employee may announce a change of his or her employment to the current employer's customers, if no solicitation of customers to switch vendors / service provides takes place. "Solicit" implies "personal petition to a particular individual to do a particular thing" which in the context of employment and unfair competition means personal petition to customers to change the way they conduct business.

If you have any questions about trade secret or unfair competition issues, feel free to contact San Francisco employment lawyer Arkady Itkin to discuss your business and employment issues.

Posted by Arkady Itkin | Permalink | Email This Post

Posted In: Contract Claims

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Generally, it is always a good idea to memorialize the terms of any agreement, including employment contracts, in writing. This helps avoid confusion, misunderstanding, lack of clarity in terms, and it also allows to not rely on their memory as to what they agreed on.

However, it is well established under California law that an oral agreement can be valid and enforceable. This is usually the case when the conduct of the parties suggests that they must have had an agreement about their relationship. For instance, if a worker is hired by his employer without signing any written employment agreement, a contractual employee-employer relationship is still created. The parties might later dispute the terms of employment (most commonly compensation and wages due), but if the employee presents evidence of performing work for the employer, statements from witnesses, and history of past compensation by the same employer, lack of written contract will not relieve an employer from his obligation to pay his employee wages and fulfill other applicable duties.

Still, certain contracts must be in writing in order to be valid under the "Statute of Frauds" exception. The most common such contracts are: (1) contracts for sale of goods for over $500; (2) a contract for services that will take one year or longer to perform, marriage, divorce, land sale transactions, and a promise to pay for debts of another (surety or loan guarantee).

Posted by Arkady Itkin | Permalink | Email This Post

Posted In: Contract Claims

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