Terminating the Employment Relationship

E. C ONTRACT E MPLOYEES

1. E MPLOYMENT C ONTRACTS

Some public employees serve pursuant to written employment contracts with a definite term. In the event an agency terminates a contract employee, it is imperative that the contract be reviewed. Some contracts differentiate between procedures required for performance based terminations and for cause terminations. In some cases, it may make financial sense to allow a contract to expire rather than move forward with for cause termination proceedings. The reason for termination may also invoke a severance pay clause. In the event an employer fails to abide by the terms of a contract, the employee may bring a breach of contract claim. The remedy will be to put the employee back into the position s/he was had there been no breach, which may include substantial back pay. 2. I MPLIED C ONTRACTS Contracts, including employment contracts, can be “express” or “implied.” An express contract is generally a written agreement, whereas an implied contract is an unwritten and unspoken agreement between two parties formed by the parties’ conduct. Employees separated from at- will employment frequently argue that they had an implied employment contract assuring them of continued employment, separation only for cause, or due process upon termination. Employees also often assert that the employer breached the “covenant of good faith and fair dealing” that is implied in all employment contracts. This “covenant” theoretically creates a duty to treat employees fairly. Under California law, there are no implied contracts of employment in public sector employment because public employment is governed by statutes, local ordinances and personnel rules, not by contracts. 29 As with implied contracts, there is persuasive authority that the covenant of good faith and fair dealing does not exist in public sector employment. Because public employment is governed by statute and not contract, there can be no covenant. 30 Nevertheless, at-will employees frequently make implied contract and covenant of good faith and fair dealing claims which, they argue, grant them the right to be disciplined only for cause. And, employees make these claims even if their employment is governed by a written agreement that expressly states at-will status. 31 The following are steps a public agency can take to avoid creating implied employment contracts with at-will employees.

Step 1 Adopt an ordinance or resolution barring oral or implied employment contracts to prevent the likelihood of implied employment contract claims. 32

Step 2 Review job announcements and employment applications for at-will employment positions to ensure that they reflect the at-will nature of the employment.

Terminating the Employment Relationship ©2019 (s) Liebert Cassidy Whitmore 26