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The ‘just cause’ standard in employment contracts

As one of the perks of a job, many San Diego employers will offer their prospective employees some extra job security by promising in a formal employment agreement not to terminate the employee except for good cause or just cause.

In other cases, an employer may create what is called an implied contract by making promises to an employee of ongoing job security, even if the promise lacks the formality of a detailed written agreement. California courts can and do enforce these sorts of implied promises.

However, the courts also take a very broad view, which some could see as pro-employer, of what constitutes a just cause for letting an employee go. Unless the terms are spelled out in the contract as to what is or is not just cause, then an employer in California is free to fire a person for cause if the employer had a fair and honest reason to do so, even if the employee denies any alleged misconduct and completely disagrees with the employer.

All the employer is expected to show at court is that it acted in good faith toward the employee, meaning, for example, that the reasons cannot be concocted or specially designed to get rid of an employee who is costing the company too much in benefits or a similar reason.

What this means for employees who are going to be under contract is that, if they are only allowed to be fired for cause or if other benefits, buyouts and bonuses depend on whether they get terminated for cause, they need to make sure a definition of what constitutes good cause for terminate is spelled out in the contract. Otherwise, they may be effectively left in the same position as an at will employee who has to rely on the mercy of his or her employer in order to keep his or her job.


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