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Q: Wrongful termination and defamation claims due to 'performance-based' layoffs? ( Answered,   2 Comments )
Subject: Wrongful termination and defamation claims due to 'performance-based' layoffs?
Category: Business and Money > Employment
Asked by: gardener-ga
List Price: $10.00
Posted: 29 Apr 2002 18:26 PDT
Expires: 29 May 2002 18:26 PDT
Question ID: 6624
Can someone successfully prosecute a wrongful termination or
defamation suit in California if the real reason for the termination
was economics based rather than 'performance-based'?  What if it is
common knowledge that company has taken the performance-based mass
layoff approach with respect to a large number of employees?  Is a
class action suit the best way to approach the causes of action one
would have?  What sort of claims and damages are available?
Subject: Re: Wrongful termination and defamation claims due to 'performance-based' layoffs?
Answered By: alexander-ga on 30 Apr 2002 03:48 PDT
Remember, not legal advice...

In California, as in most other states, employment is "at will". This
means that an employee can be fired for any "good" reason, including
economics, or no reason at all.

The only "bad reasons" are ones that are explicitly illegal: Usually,
if there is evidence that the employee was fired based on any kind of
discrimination (age, race, sex, nationality, disability), the employee
was a "whistleblower" (reported on illegal activity of the company,
refused to engage in illegal activity), filed for worker's comp, etc.

Your next thing to try would be a breach of contract case. If you have
a written contract (such as with a union), examine it for a "good
cause" termination clause. These are rare, and you probably would know
by now if it contained one, but it's worth a shot. Otherwise, you
could try to prove that there was an implied contract. The California
Supreme Court has ruled that the "at will" presumption can be overcome
by showing that the employee had a reasonable belief that they would
not be fired without good cause. Establishing the implied contract
generally involves showing a decent length of service to the company,
showing that the company expected the employee to be around for a
while (the provision of benefits is a common way of doing this), and
showing the expectation that the employee would not be fired without
good cause (often by referring to an employee handbook that outlines a
policy of "progressive discipline" before firing). See for more

However, even if you are able to establish that there was an implied
contract, you still aren't likely to be successful in a suit. The
reason for this is that having an implied contract will only really
protect you from "arbitrary and capricious" firings. An employer would
simply need to show that the firings were made in "good faith". Having
an economic reason for laying off employees would satisfy this. An
employee, however, must show that "the decision was arbitrary and
capricious, pretextual, or that the employer did not make an
appropriate investigation". Further, the only damages available for
breach of an employment contract are lost wages and benefits.

A defamation suit would be a very different way of approaching the
situation, and would require much different claims. According to , defamation
(in a legal sense) is "saying, writing, or otherwise communicating any
untrue and derogatory statement that may harm a person's reputation.
Usually, this must be to a third person -- say, one of your current
employees or another employer. It doesn't matter who the third persons
are, as long as they understand what you're saying." This would depend
very much on your situation, but large companies are often very
attuned to what they must avoid to prevent people from bringing these
claims, and I think it's unlikely that this would apply in a
mass-layoff environment.

In a class action suit, you still need to prove legal wrongdoing, and
as shown above, that appears to be difficult to do. If you do have a
situation where there is clear legal wrongdoing to a large number of
people, a class action suit may be appropriate.

I'm sorry if this isn't the answer you want to hear, but it sounds
like mass layoffs are just a sign of the times, and you probably have
little legal remedy. If you'd like more information, I'm sure an
employment lawyer near you would be happy to consult with you on this
issue further.


Search terms: california "wrongful termination", california "wrongful
termination" "implied contract", california "wrongful termination"
"defamation suit"
Subject: Re: Wrongful termination and defamation claims due to 'performance-based' layoffs?
From: johnfrommelbourne-ga on 30 Apr 2002 09:11 PDT
Mine is a usless comment I know  but perhaps of academic interest to
  By way of comparison to your country our  industrial laws in
Australia provide for what is termed "unfair dismissal" and around 
32% of the people who make such claims are successful. In most cases
such people would have their job reinstated or if not possible for
whatever reason  a monetary sum made available by the employer to
compensate for time lost while "fired".  Such laws  cover the same
sort of grounds quoted by your researcher i.e dismissal based on sex,
race, union affiliation, no good reason etc.  Firing "at will" however
is definately "not on" unless company going broke,or other major
economic reason or very clear and serious misconduct. This has been
the situation for some 7 or 8 years now but since right of centre
government came to power they are attempting to bring in "at will" for
very small businesses

 ..a point of interest perhaps, thats all
Subject: Re: Wrongful termination and defamation claims due to 'performance-based' layoffs?
From: steph1000-ga on 19 Dec 2002 21:55 PST
I believe the person who answered the question is missing the point of
the question.

Companies are currently using falsified 'performance-based' reviews to
avoid paying unemployment benefits, that's the reason they're doing
it. I ain't no lawyer, but I would assume this is fraud -- this is
fraud against the state and this is fraud against the terminated
employee who will be deprived of his rightful benefits.

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