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In California, an employment relationship may be generally terminated by either the employer or the employee for any reason or no reason (except not for discriminatory or retaliatory reasons). This means that, unless they agree otherwise by contract, no reason has to be given for terminating the employment relationship by either party. (Cal. Labor Code section 2922). However, sometimes employers abuse the at-will rule by firing employees for reasons contrary to public policy as expressed in statutory and constitutional provisions. In response, courts have created an except to to at-will employment principle: an employer may not terminated an at-will employee for a reason that violates fundamental public policy. This exception is enforced through a civil lawsuit for wrongful discharge in violation of public policy.
The first California court decision to recognize the wrongful termination in violation of public policy was Petermann v. International Brotherhood of Teamsters (1959). In that case, the plaintiff sue his employer after he was fired for refusing to lie and perjure himself during the investigative hearing before the Legislature. The Court of Appeal noted that it would be obnoxious to the interests of the state and contrary to the state's public policy to allow an employer to terminate an employee on the ground that that employee refused to commit perjury. The court further stated that California Penal Code section 118, prohibiting perjury, derives from the general principle that the presence of false testimony tends to interfere with the proper administration of public affairs and carrying out of the justice.
In 1980, the California Supreme Court addressed the public policy claim in its landmark Tameny v. Atlantic Richfield Co. decision. In that case, the employer was found to be liable for terminating an employee for refusing to participate in an illegal scheme to fix retail gasoline prices, reaffirming that an employer's obligation to not discharge an employee who refuses to commit a criminal act reflects a duty imposed by law upon all employers in order to implement the fundamental public polices embodied in the state's penal statutes.
The state Supreme Court went further to define the framework of the public policy claim in Gantt v. Sentry Insurance (1920), finding that it is against public policy for an employer to terminate an employee for resisting the employer's pressure to lie during the investigation of a co-worker's sexual harassment compliant.
Today, the public policy claim is an important weapon in the hands of employees of were demoted or fired for refusing to engage in activity which is either criminal or otherwise against the fundamental public policy of this state.
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