California Civil Jury Instructions (CACI)

2403. Breach of Employment Contract - Unspecified Term— Implied-in-Fact Promise Not to Discharge Without Good Cause

An employer promises to [discharge/demote] an employee only for good cause if it is reasonable for an employee to conclude, from the employer's words or conduct, that [he/she] will be [discharged/demoted] only for good cause.

In deciding whether [name of defendant] promised to [discharge/ demote] [name of plaintiff] only for good cause, you may consider, among other factors, the following:

(a) [Name of defendant]'s personnel policies [and/or] practices;

(b) [Name of plaintiff]'s length of service;

(c) Any raises, commendations, positive evaluations, and promotions received by [name of plaintiff]; [and]

(d) Whether [name of defendant] said or did anything to assure [name of plaintiff] of continued employment; [and]

(e) [Insert other relevant factor(s).]

Length of service, raises, and promotions by themselves are not enough to imply such a promise, although they are factors for you to consider.

Directions for Use

In certain cases, it may be necessary to instruct the jury that if it finds there is an express at-will agreement, there may not be an implied agreement to the contrary: "[M]ost cases applying California law, both pre and post-Foley, have held that an at-will provision in an express written agreement, signed by the employee, cannot be overcome by proof of an implied contrary understanding." (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 340 fn. 10 [100 Cal.Rptr.2d 352, 8 P.3d 1089].)

This instruction should be read when an employee is basing his or her claim of wrongful discharge on an implied covenant not to terminate except for good cause. Only those factors that apply to the facts of the particular case should be read.

"[A]n employee's mere passage of time in the employer's service, even where marked with tangible indicia that the employer approves the employee's work, cannot alone form an implied-in-fact contract that the employee is no longer at will. Absent other evidence of the employer's intent, longevity, raises and promotions are their own rewards for the employee's continuing valued service; they do not, in and of themselves, additionally constitute a contractual guarantee of future employment security." (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 341-342 [100 Cal.Rptr.2d 352, 8 P.3d 1089].)

Sources and Authority

Civil Code sections 1619-1621 together provide as follows: "A contract is either express or implied. An express contract is one, the terms of which are stated in words. An implied contract is one, the existence and terms of which are manifested by conduct."

"Where there is no express agreement, the issue is whether other evidence of the parties' conduct has a 'tendency in reason' to demonstrate the existence of an actual mutual understanding on particular terms and conditions of employment. If such evidence logically permits conflicting inferences, a question of fact is presented." (Guz, supra, 24 Cal.4th at p. 337, internal citations omitted.)

"In the employment context, factors apart from consideration and express terms may be used to ascertain the existence and content of an employment agreement, including 'the personnel policies or practices of the employer, the employee's longevity of service, actions or communications by the employer reflecting assurances of continued employment, and the practices of the industry in which the employee is engaged.' " (Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 680 [254 Cal.Rptr. 211, 765 P.2d 373], internal citation omitted.)

"We agree that disclaimer language in an employee handbook or policy manual does not necessarily mean an employee is employed at will. But even if a handbook disclaimer is not controlling in every case, neither can such a provision be ignored in determining whether the parties' conduct was intended, and reasonably understood, to create binding limits on an employer's statutory right to terminate the relationship at will. Like any direct expression of employer intent, communicated to employees and intended to apply to them, such language must be taken into account, along with all other pertinent evidence, in ascertaining the terms on which a worker was employed." (Guz, supra, 24 Cal.4th at p. 340, internal citations omitted.)

"Conceptually, there is no rational reason why an employer's policy that its employees will not be demoted except for good cause, like a policy restricting termination or providing for severance pay, cannot become an implied term of an employment contract. In each of these instances, an employer promises to confer a significant benefit on the employee, and it is a question of fact whether that promise was reasonably understood by the employee to create a contractual obligation." (Scott v. Pacific Gas & Electric Co. (1995) 11 Cal. 4th 454, 464 [46 Cal.Rptr.2d 427, 904 P.2d 834].)

Secondary Sources

2 Witkin, Summary of California Law (2000 supp.) Agency and Employment, § 184 E

4 Wilcox, California Employment Law, Ch. 60, Liability for Wrongful Termination and Discipline, § 60.05[2][a]-[e] (Matthew Bender)

1 Wrongful Employment Termination Practice (Cont.Ed.Bar 2d ed. 1997) Contract Actions, §§ 8.6-8.16

21 California Forms of Pleading and Practice, Ch. 249, Employment Law: Termination and Discipline, §§ 249.01, 249.13, 249.15, 249.50 (Matthew Bender)

10 California Points and Authorities, Ch. 100, Wrongful Termination and Discipline, Forms 2, 5, 8-10, 15, 22 (Matthew Bender)

Bancroft-Whitney's Cal. Civil Practice: Employment Litigation (2001 supp.) Termination of Employment, §§ 6:13-6:14

(New September 2003)