California’s “At-Will” Employment Presumption: Statutory Authority and Judicial Exceptions

Introduction

California law recognizes a strong presumption that employment with no specified term is “at-will,” meaning either the employer or employee may end the relationship at any time, with or without cause. This presumption, codified at Labor Code section 2922, is foundational in employment litigation and forms the basis for evaluating breach of contract and wrongful termination claims.

I. Statutory Presumption of At-Will Employment

Labor Code section 2922 provides:

“An employment, having no specified term, may be terminated at the will of either party on notice to the other. Employment for a specified term means an employment for a period greater than one month.” (Lab. Code § 2922.)

II. Overcoming the At-Will Presumption

The at-will presumption may be overcome by evidence that the parties agreed to limit termination, such as requiring discharge only for good cause. (Haycock v. Hughes Aircraft Co., 22 Cal. App. 4th 1473, 1488 (1994); Foley v. Interactive Data Corp., 47 Cal. 3d 654, 680 (1988).) The issue turns on whether the parties’ words or conduct demonstrate an actual mutual understanding on employment terms. (Guz v. Bechtel Nat’l, Inc., 24 Cal. 4th 317, 337 (2000).)

III. Nature of the Presumption

The presumption impacts the burden of proof in litigation. A plaintiff alleging breach of an agreement for continued employment carries the burden of proving an express or implied limitation. (Alexander v. Nextel Communications, Inc., 521 Cal. App. 4th 1376, 1381-82 (1997).)

IV. Directions for Practice

The Judicial Council of California Civil Jury Instructions (CACI) No. 2400 confirms that at-will employment means either party may terminate the relationship for any lawful reason, but the presumption may be rebutted by contrary evidence.

V. Real-World Example

Suppose an employee is hired and receives a handbook stating: “Employment with Acme Corp. is at-will and may be terminated at any time, by either party, for any reason.” Later, in a meeting, that employee is told by a manager, “You’ll have a job here as long as you do good work.” After being terminated, the employee alleges breach of contract, arguing that the manager’s statement created an implied promise of continued employment except for good cause. If the jury finds the manager’s promise was sincere and created a reasonable expectation of job security, the at-will presumption may be rebutted and the employer could be liable for wrongful termination. (See Guz, 24 Cal. 4th at 335–337.)

VI. Checklist: Employer Best Practices for At-Will Employment

1. Use clear “at-will” disclaimers in offer letters, contracts, and employee handbooks.

2. Avoid oral or written statements contradicting the at-will relationship (e.g., promising “permanent employment” or “employment so long as you do good work”).

3. Train managers and supervisors to refrain from making assurances of job security.

4. When implementing discipline or termination, document lawful reasons and reference the at-will nature of the relationship.

5. Periodically review employment documents for consistency with at-will status.

6. Consult counsel for language addressing termination so as to minimize risk of implied contract claims.

VII. Conclusion

California’s at-will presumption offers flexibility but can be rebutted by affirmative evidence of a contrary agreement or conduct. Clear documentation and consistent communications remain essential to minimize litigation risk.

Citations:

Lab. Code § 2922; Haycock v. Hughes Aircraft Co., 22 Cal. App. 4th 1473 (1994); Foley v. Interactive Data Corp., 47 Cal. 3d 654 (1988); Guz v. Bechtel Nat’l, Inc., 24 Cal. 4th 317 (2000); Alexander v. Nextel Commc’ns, Inc., 52 Cal. App. 4th 1376 (1997); CACI No. 2400.