An Administrator's Guide to California Private School Law

Chapter 4 - Employment Contracts And Separation Of Employees

A. G OOD C AUSE M AY B E D EFINED W ITHIN A C ONTRACT In an employment contract for an indefinite or specified term of employment, the parties are free to negotiate and agree upon what constitutes good cause for termination. Examples of cause for termination that an employment contract may specifically include are breach of the obligations contained in the contract, breach of school policies, failure to perform job responsibilities, breach of student confidentiality, or any conduct that is injurious to the school. If good cause is not defined by the parties, then it will be defined by the fact finder (e.g. judge, jury, or arbitrator) in the event of a dispute. LCW Practice Advisor

Where a contract that may only be terminated for “good cause” is for an indefinite term, damages may be uncertain. While the school will want to argue that such a contract was annual and limited to one school year, the absence of clarity on that issue permits a jury to determine what an employee’s reasonable expectation should be regarding the length of the term extended by the school. This can create significant potential for damages for schools.

B. G OOD C AUSE D EFINED B Y C ASE L AW Absent express definitions of what constitutes good cause for termination in the contract, a definition of “good cause” for termination has evolved from existing case law. The California Supreme Court has set forth the standard for an employer to demonstrate “good cause,” as follows:

Fair and honest reasons, regulated by good faith on the part of the employer, that are not trivial, arbitrary or capricious, unrelated to business needs or goals, or pre-textual. A reasoned conclusion, in short, supported by substantial evidence gathered through an adequate investigation that includes notice of the claimed misconduct and an opportunity for the employee to respond. 414

A school’s “reasonable belief” that the employee engaged in misconduct warranting termination constitutes “good cause.” 415 The school need not demonstrate that the employee actually engaged in the conduct. In order to terminate for good cause based on the employer’s reasonable belief that the employee engaged in misconduct, the employer must demonstrate that it did the following:  that it acted in good faith;  that the decision followed an adequate investigation; and  that the employer had reasonable grounds for believing the charges against the employee are true. 416

An Administrator’s Guide to California Private School Law ©2019 Liebert Cassidy Whitmore 112