Does It Matter Whether Your Employees Are At-Will?

Some private employers worry whether they have done enough to preserve their at-will employment relationship with their employees. Others make risky decisions based on the unjustified belief that the at-will employment doctrine will protect them from liability. (Public employers do not face these issues, because their employees enjoy statutory and constitutional rights to their jobs. In unionized workplaces, collective bargaining contracts typically require just cause for discharge of union workers.)

In California, employment is presumed to be at-will, under Labor Code section 2922. That means that the employment relationship may be terminated at any time by either the employer or the employee. Even if the employer does not expressly agree to some other relationship, it may create an implied agreement not to discharge excerpt for good cause based on its actions, as explained in Foley v. Interactive Data Corp., 765 P. 2d 373 (1988).

In the absence of an express or implied agreement not to discharge except for good cause, the employer may discharge for any reason or for no reason, so long as it is not an illegal reason. That is a substantial limitation on the employer's discretion to end the employment relationship, because of the great number of illegal reasons under federal and California law. You cannot fire someone because of a protected characteristic, such as race, sex, disability, ethnicity, national origin, religious belief, age, or sexual orientation. You cannot fire someone in retaliation for complaining unlawful discrimination or harassment. You cannot fire someone in violation of public policy, such as whistle-blowing. And so on.

The way that the burdens of proof are allocated in employment lawsuit further diminishes the value of the at-will doctrine. Under the McDonnell-Douglas burden-shifting rule, the plaintiff bears the minimal burden of showing that he or she has a protected status (such as race, having complained about discrimination, or whistle-blowing), was subjected to adverse employment action, and some other minimal evidence that the protected status has a causal connection with the adverse action. For example, in a retaliation case, it is enough for the plaintiff to show that he or she complained and was fired, and that the firing came closely on the heels of the complaint. See Arteaga v. Brink's, Inc., 163 Cal. App. 4th 327 (2008). Once the plaintiff satisfies that minimal burden, the burden shifts to the employer to provide a legitimate reason for its action.

Because it is so easy for employees to challenge discharges in court, it is not safe to rely on the at-will doctrine to avoid liability in a lawsuit. Employers must make sure that there is a documented, legitimate basis for every discharge decision.

Lack Of Security Clearance Does Not Justify Discrimination

The Ninth Circuit has ruled that lack of a security clearance cannot be used as a shield for discrimination. The usual McDonnell Douglas burden shifting approach applies.

In Zeinali v. Raytheon Co., No. 09-56283 (9th Cir. Apr. 4, 2011), Hossein Zeinali, who was of Iranian descent, worked as an engineer for Raytheon for four years. Raytheon had told him that his continued employment was contingent on obtaining a "secret" level security clearance. Although Zeinali's request for an interim clearance was rejected, Raytheon retained him while a final clearance decision was pending. During that period, he received positive feedback about his job performance. After the Department of Defense finally denied Zeinali's request for a security clearance, Raytheon discharged him. Zeinali pointed out that two non-Iranian engineers without security clearance were retained after he was discharged.

In Brazil v. U.S. Department of the Navy, 66 F.3d 193 (9th Cir. 1995), the Ninth Circuit had ruled that federal courts could not review security clearance decisions in a Title VII discrimination action. "[T]he grant of a security clearance to a particular employee, a sensitive and inherently discretionary judgment call, is committed by law to the appropriate agency of the Executive Branch." However, where, as in the Zeinali case, the plaintiff does not question the judgment call to deny clearance, the Brazil reasoning does not apply. Zeinali accepted the denial of a security clearance, but argued that the security clearance was not a bona fide job requirement. Because he provided evidence that Raytheon retain non-Iranian engineers without security clearances, his claim should have survived summary judgment. That was sufficient for a reasonable factfinder to be able to find that the lack of a security clearance was a pretext for national origin discrimination.