CACI No. 2423. Breach of Implied Covenant of Good Faith and Fair Dealing - Employment Contract - Essential Factual Elements

Judicial Council of California Civil Jury Instructions (2024 edition)

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2423.Breach of Implied Covenant of Good Faith and Fair
Dealing - Employment Contract - Essential Factual Elements
In every employment [contract/agreement] there is an implied promise of
good faith and fair dealing. This implied promise means that neither the
employer nor the employee will do anything to unfairly interfere with
the right of the other to receive the benefits of the employment
relationship. Good faith means honesty of purpose without any intention
to mislead or to take unfair advantage of another. Generally speaking, it
means being faithful to one’s duty or obligation. However, the implied
promise of good faith and fair dealing cannot create obligations that are
inconsistent with the terms of the contract.
[Name of plaintiff] claims that [name of defendant] violated the duty
implied in their employment [contract/agreement] to act fairly and in
good faith. To establish this claim, [name of plaintiff] must prove all of
the following:
1. That [name of plaintiff] and [name of defendant] entered into an
employment relationship;
[2. That [name of plaintiff] substantially performed [his/her/nonbinary
pronoun] job duties [unless [name of plaintiff]’s performance was
excused [or prevented]];]
[3. That all conditions required for [name of defendant]’s
performance [had occurred/ [or] were excused];]
4. That [name of defendant] [specify conduct that the plaintiff claims
prevented plaintiff from receiving the benefits under the contract];
5. That by doing so, [name of defendant] did not act fairly and in
good faith; and
6. That [name of plaintiff] was harmed by [name of defendant]’s
New September 2003; Revised November 2019, May 2020
Directions for Use
In every contract, there is an implied promise that each party will not do anything to
unfairly interfere with the right of any other party to receive the benefits of the
contract. (Comunale v. Traders & General Ins. Co. (1958) 50 Cal.2d 654, 658 [328
P.2d 198].) Give this instruction if the employee asserts a claim that the employee’s
termination or other adverse employment action was in breach of this implied
covenant. If the existence of a contract is at issue, see instructions on contract
formation in the 300 series.
Include element 2 if the employee’s substantial performance of the employee’s
required job duties is at issue. Include element 3 if there are conditions precedent
that the employee must fulfill before the employer is required to perform. In element
4, insert an explanation of the employers conduct that violated the duty to act in
good faith.
Do not give this instruction if the alleged breach is only the termination of an at-
will contract. (See Eisenberg v. Alameda Newspapers (1999) 74 Cal.App.4th 1359,
1391 [88 Cal.Rptr.2d 802].)
See also the Sources and Authority to CACI No. 325, Breach of Implied Covenant
of Good Faith and Fair Dealing - Essential Factual Elements, for more authorities
on the implied covenant outside of employment law.
Sources and Authority
Contractual Conditions Precedent. Civil Code section 1439.
“We therefore conclude that the employment relationship is not sufficiently
similar to that of insurer and insured to warrant judicial extension of the
proposed additional tort remedies in view of the countervailing concerns about
economic policy and stability, the traditional separation of tort and contract law,
and finally, the numerous protections against improper terminations already
afforded employees.” (Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 693
[254 Cal.Rptr. 211, 765 P.2d 373].)
“A breach of the contract may also constitute a breach of the implied covenant
of good faith and fair dealing. But insofar as the employers acts are directly
actionable as a breach of an implied-in-fact contract term, a claim that merely
realleges that breach as a violation of the covenant is superfluous. This is
because, as we explained at length in Foley, the remedy for breach of an
employment agreement, including the covenant of good faith and fair dealing
implied by law therein, is solely contractual. In the employment context, an
implied covenant theory affords no separate measure of recovery, such as tort
damages.” (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 352 [100
Cal.Rptr.2d 352, 8 P.3d 1089], internal citation omitted.)
“We do not suggest the covenant of good faith and fair dealing has no function
whatever in the interpretation and enforcement of employment contracts. As
indicated above, the covenant prevents a party from acting in bad faith to
frustrate the contract’s actual benefits. Thus, for example, the covenant might be
violated if termination of an at-will employee was a mere pretext to cheat the
worker out of another contract benefit to which the employee was clearly
entitled, such as compensation already earned.” (Guz, supra, 24 Cal.4th at p.
353, fn. 18.)
“The reason for an employee’s dismissal and whether that reason constitutes bad
faith are evidentiary questions most properly resolved by the trier of fact.” (Luck
v. Southern Pacific Transportation Co. (1990) 218 Cal.App.3d 1, 26 [267
Cal.Rptr. 618], internal citations omitted.)
Secondary Sources
Chin et al., California Practice Guide: Employment Litigation, Ch. 4-D, Implied
Covenant of Good Faith and Fair Dealing, ¶¶ 4:330, 4:331, 4:340, 4:343, 4:346
(The Rutter Group)
1 Wrongful Employment Termination Practice (Cont.Ed.Bar 2d ed.) Contract
Actions, §§ 8.27-8.28
4 Wilcox, California Employment Law, Ch. 60, Liability for Wrongful Termination
and Discipline, §§ 60.02[2][c], 60.06 (Matthew Bender)
21 California Forms of Pleading and Practice, Ch. 249, Employment Law:
Termination and Discipline, § 249.14 (Matthew Bender)
California Civil Practice: Employment Litigation §§ 6:21-6:22 (Thomson Reuters)

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