California Civil Jury Instructions (CACI) (2017)

2421. Breach of Employment Contract - Specified Term— Good Cause Defense

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2421.Breach of Employment Contract—Specified Term—Good-
Cause Defense (Lab. Code, § 2924)
[Name of defendant] claims that [he/she/it] did not breach the
employment contract because [he/she/it] [discharged/demoted] [name of
plaintiff] for good cause. To establish good cause, [name of defendant]
must prove:
[that [name of plaintiff] willfully breached a job duty] [or]
[that [name of plaintiff] continually neglected [his/her] job duties]
[or]
[that a continued incapacity prevented [name of plaintiff] from
performing [his/her] job duties.]
New September 2003; Revised June 2012
Directions for Use
This instruction sets forth the statutory grounds under which an employer may
terminate an employment contract for a specified term. (See Lab. Code, § 2924.) It
should be given when the employee alleges wrongful discharge in breach of the
contract and the employer defends by asserting plaintiff was justifiably discharged.
This instruction may not be appropriate if the parties have agreed to a particular
meaning of “good cause” (e.g., a written employment agreement specifically
defining “good cause” for discharge). (See Uecker & Assocs. v. Lei (In re San Jose
Med. Mgmt.) (B.A.P. 9th Cir. 2007) 2007 Bankr. LEXIS 4829.) If so, the
instruction should be modified to set forth the contractual grounds for good cause.
In the absence of grounds for termination in the contract, the employer is limited to
those set forth in the statute. (See Khajavi v. Feather River Anesthesia Medical
Group (2000) 84 Cal.App.4th 32, 57 [100 Cal.Rptr.2d 627].)
The third option may not be asserted if the plaintiff has a statutory right to be
absent from work (for example, for family or medical leave or to accommodate a
disability) throughout the entire period of incapacity.
Sources and Authority
• At-Will Employment. Labor Code section 2922.
Termination of Employment for Specified Term. Labor Code section 2924.
• “[L]abor Code section 2924 has traditionally been interpreted to ‘inhibit[] the
termination of employment for a specified term except in case of a wilful
breach of duty, of habitual neglect of, or continued incapacity to perform, a
duty.’ ” (Khajavi v. Feather River Anesthesia Medical Group (2000) 84
Cal.App.4th 32, 57 [100 Cal.Rptr.2d 627], internal citations omitted.)
• “Unlike a wrongful discharge based on an implied-in-fact contract, an employee
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who has a contract for a specified term may not be terminated prior to the
term’s expiration based on an honest but mistaken belief that the employee
breached the contract: Such a right would treat a contract with a specified term
no better than an implied contract that has no term; such a right would dilute
the enforceability of the contract’s specified term because an employee who had
properly performed his or her contract could still be terminated before the
term’s end; and such a right would run afoul of the plain language of Labor
Code section 2924, which allows termination of an employment for a specified
term only ‘in case of any willful breach of duty . . . habitual neglect of . . .
duty or continued incapacity to perform it.’ Termination of employment for a
specified term, before the end of the term, based solely on the mistaken belief
of a breach, cannot be reconciled with either the governing statute’s text or
settled principles of contract law.” (Khajavi, supra, 84 Cal.App.4th at pp.
38–39.)
• Good cause in the context of wrongful termination based on an implied contract
“ ‘is quite different from the standard applicable in determining the propriety of
an employee’s termination under a contract for a specified term.’ ” (Khajavi,
supra, 84 Cal.App.4th at p. 58, internal citations omitted.)
• “An employer is justified in discharging his employee, when the latter fails to
perform his duty, even though injury does not result to the employer as a result
of the employee’s failure to do his duty.” (Bank of America National Trust &
Savings Ass’n v. Republic Productions, Inc. (1941) 44 Cal.App.2d 651, 654 [112
P.2d 972], internal citation omitted.)
• “To terminate an employment without the expiration of its contractual term
‘there must be good cause.’ The grounds for terminating such an employment
are stated in Labor Code section 2924. . . . It is therefore not every deviation
of the employee from the standard of performance sought by his employer that
will justify a discharge. There must be some ‘wilful act or wilful misconduct
. . .’ when the employee uses his best efforts to serve the interests of his
employer.” (Holtzendorff v. Housing Authority of the City of Los Angeles (1967)
250 Cal.App.2d 596, 610 [58 Cal.Rptr. 886], internal citation omitted.)
• “ ‘Willful’ disobedience of a specific, peremptory instruction of the master, if
the instruction be reasonable and consistent with the contract, is a breach of
duty—a breach of the contract of service; and, like any other breach of the
contract, of itself entitles the master to renounce the contract of employment.”
(May v. New York Motion Picture Corp. (1920) 45 Cal.App. 396, 403 [187 P.
785].)
• “An employment agreement that specifies the length of employment (e.g., two
years) limits the employer’s right to discharge the employee within that period.
Unless the agreement provides otherwise (e.g., by reserving the right to
discharge for cause), the employer may terminate employment for a specified
term only for [the grounds specified in Labor Code section 2924].” (Chin et al.,
California Practice Guide: Employment Litigation, Ch. 4-A, Employment
Presumed At Will, ¶ 4:47 (The Rutter Group)
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Secondary Sources
Chin et al., Cal. Practice Guide: Employment Litigation, Ch. 4-A, Employment
Presumed At Will, ¶¶ 4:2, 4:47, 4:56, 4:57 (The Rutter Group)
Chin et al., California Practice Guide: Employment Litigation, Ch. 4-B, Agreements
Limiting At-Will Termination, ¶¶ 4:47, 4:56, 4:57 (The Rutter Group)
1 Wrongful Employment Termination Practice (Cont.Ed.Bar 2d ed.) Contract
Actions, §§ 8.22–8.26
4 Wilcox, California Employment Law, Ch. 62, Avoiding Wrongful Termination and
Discipline Claims, § 62.02 (Matthew Bender)
21 California Forms of Pleading and Practice, Ch. 249, Employment Law:
Termination and Discipline, §§ 249.13, 249.21, 249.60–249.63 (Matthew Bender)
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