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Terry K. Davis is in private practice in Santa Ana, California, where he specializes in employment law. Mr. Davis is an advocate of employee rights, representing employees exclusively in employment litigation and wrongful discharge litigation. Mr. Davis received his B.A. from California State University of Long Beach and his JD from Western State University. Mr. Davis is a Barrister in the American Inns of Court, an organization of seasoned trial lawyers and state and federal judges, which seeks to impart ideals of professionalism and ethics in the practice of trial law. He is a member of the labor and employment law sections of the California State Bar, Los Angeles County Bar Association and the Orange County Bar Association. Mr. Davis is a member of the California Employment Lawyers Association and the National Employment Lawyers Association; and is also a member and Board of Director of the Orange County Trial Lawyer's Association. Mr. Davis is licensed to practice in the State of California, as well as in Federal Court, the Ninth Circuit Court of Appeals and the United States Supreme Court.

The Law Offices of Terry K. Davis publications are distributed with the understanding that Terry K. Davis does not render any legal, accounting, or other professional advice. The information in this handbook is provided for general information purposes and is not intended to replace professional, specialized legal advice. Readers should not act upon information in this publication without seeking professional legal counseling. Additionally, readers should be mindful that the law is constantly changing and you should always inquire about the current state of the law concerning all areas. ©2001 All Rights Reserved.


In an era where corporate greed is replacing human need, employees, more than ever are facing challenging times. With downsizing and harassment discrimination at an all time high, job loss or discrimination, is a certain fact of life for many Americans. Written by an employee rights advocate, this guide is designed to help you understand your rights in the workplace. Should the worse occur, you will have a handy reference point to enable you to begin to understand your employment rights.


While the issue of employee versus Independent Contractor does not arise in the majority of cases, it is helpful to understand what issues arise, and the method of determination for those issues. Many employers fraudulently deprive employees of benefits by illegally misclassifying the employee. If the employer states you are an Independent Contractor or issues a 1099, then consider the following points.

Employee or Independent Contractor?

Many an employee has worked their job for a period of time only to learn subsequently that the so-called employer is classifying them as an independent contractor and not an employee. Many employers have distinct business reasons for classifying individuals as independent contractors. Doing so, enables a business to avoid income tax requirements, unemployment benefits, and Workers' Compensation benefits.

The Internal Revenue Service uses 20 common law factors to determine whether an individual is an independent contractor or an employee. Not all factors have to apply and the courts have given different weight to each factor, according to individual circumstance. Generally, someone may be deemed an independent contractor if they:

1. Are not required to follow specific instructions to do the job;
2. Are not trained by the hiring company;
3. Do not have to do the work themselves;
4. Do work not essential to the continuation of the hiring company;
5. Set their own work hours;
6. Do not have a continuing relationship with the hiring company;
7. Control their own assistance;
8. Have time to pursue other work; (Do not work full time for one business);
9. Determine where they work;
10. Control the order and sequence in which they do the work;
11. Are hired for the final result and are not required to give interim reports;
12. Are paid by the job, not by the hour;
13. Work for more than one company at a time;
14. Pay their own business expenses;
15. Furnish their own tools;
16. Have significant investment in their own equipment, office furniture, machinery;
17. Make services available to the general public (i.e., yellow page ads, business cards, business license or fictitious business name);
18. Risking losing their own money;
19. Cannot be fired, so long as they meet contract specifications;
20. Cannot quit without liability.


While the scope of this handbook is to address the rights as they apply to the employee who works for the private employer, public service employees and union workers have their own specific remedies. In brief, they are as follows for the public service employee:

A. Public Service Employees

1. If a dispute in the workplace as it relates to a public service employee does not arise out of age, race, or some other discriminatory practice, the employee's remedy is a so-called SKELLY hearing. The SKELLY appeal process was determined by the California Supreme Court on September 16, 1975. At least five calendar days prior to the effective date of any punitive action against an employee with permanent civil service status, gives right to a so-called SKELLY hearing.

The "SKELLY Information" can be presented in writing or at an informal meeting. It is the employee's opportunity to be heard.

A SKELLY officer, determined by management should be open-minded and fair, hears the evidence presented by both sides and issues a determination. The employee may choose to represent themselves or choose a representative, such as a friend or an attorney. These hearings can be tape recorded and note taking is allowed. Should the SKELLY hearing not result in a return to employment, the employee has certain appeal rights in a civil court within a specified period of time. It is advisable to consult an attorney prior to the first SKELLY hearing.

B. Union Employees

As a general rule, union employees who do not experience some discriminatory practice in the place of work are limited to the so-called grievance step process through arbitration. However, there is no remedy against a union who refuses to arbitrate a matter unless their actions are arbitrary and capricious.

If you think that the union is acting in an arbitrary and capricious manner, and simply does not care to arbitrate a matter for that reason, your remedy is to file a complaint with the National Labor Relations Board at the branch nearest you.


The scope of this book is to provide a basic understanding concerning employment rights and is aimed at the private employee, which represents the majority of the work force in America.


Under California Labor Code §2922, an employee in the State of California is presumed to be an "at-will" employee. Other states have similar statutes. What this means is that as an employee, you are free to quit working for your present employer and take another job with a competitor, making more money, should you wish to do so. However, in the alternative, an employer is free to fire you at will, meaning that they do not even need a reason known as "cause" to terminate your employment.

So often we hear about the football player who makes ten million a year for the next five years because he has a written contract with his employer. This type of employee is not an at-will employee because their is a contract of employment for a specified length of time. Most employees, when they are hired by a company have not been told how long they will work for a particular employer. Therefore, as a general rule, they are presumed to be at-will employees and can be dismissed at-will.

However, this is a general rule, and like anything in the law, there is always an exception to the general rule. A more concise statement of the rule is that an employee may be terminated at will from his or her employment, as long as the reason is not an illegal reason.


A. Written Contracts

Just like the example above with the football player, if you have a written contract for a specific length of time, you cannot be terminated from your employment at-will. The employer must have a reason known as "cause" in order to terminate your employment. Cause can include such things as lack of performance, violation of company policy, or disloyalty to the employer.

B. Oral Contracts

An oral contract for a specified length of time is an employment contract that is formed orally, usually upon a handshake, where the boss tells the employee that you will be working for the next five years. Such contracts are completely enforceable by law, giving rise to a cause of action for damages, should the employer suddenly terminate the employment relationship without any prior warning in breach of the oral contract.

C. Implied-In-Fact Contract

In some cases, it is possible to imply that there exists an agreement that the employee would not be terminated without cause. Even if there is not an express, written or oral agreement, an employee may be able to show, based upon the "totality of the circumstances" and the employer's conduct surrounding the relationship, that there is an implied contract which limits the employer's right to terminate the employee.

Generally, where there are factors such as a long duration of employment, promotions, salary increases, commendations, awards, lack of criticism in the employee file, and employer assurances of continued employment and the employer's policies, customs and practices, there may exist an implied contract of continued employment. Termination in breach of the implied contract gives rise to a cause of action for damages.

D. Statutory Violations

A further exception to the at-will doctrine, is conduct by the employer that results in statutory violations. The employee need not be terminated to have a cause of action against the employer. Such statutory provisions include, but are not limited to, California Constitution, Article I, Section I (Privacy Rights); Constitution, Article I, Section 8 (Anti-Discrimination); Fair Employment and Housing Act (F.E.H.A.), which bars termination on the basis of race, color, religion, national origin, physical handicap, medical condition, marital status, sex, pregnancy, age, or retaliation for taking action to exercise or protect such rights or complain about employers' conduct, like sexual harassment for example.

Even if an employee is not specifically terminated based upon these causes of action, but is instead refused a promotion or is demoted, or is simply harassed in the workplace, a cause of action can be maintained against the employer, leading to the recovery of damages. Such damages can include the difference between the promotion and the current wage level, the loss of wages in the event of a termination, or emotional distress damages, combined with punitive damages and attorney's fees.

In addition, should an employee complain about dangerous work conditions, or illegal conduct by the employer, which is sometimes known as "whistle-blowing", an employee may have an additional cause of action against the employer, should the employer's response to the employee's complaint be retaliatory in nature, such as a demotion or a termination.

E. Termination in Violation of Public Policy

Under California law, "public policy" has been recognized as an exception to the at-will doctrine. Tortious discharge in violation of public policy can be established if the employee can plead and prove that he or she was terminated as a result of the employer's conduct in violation of public policy.

The so-called public policy must be either established by the Constitution or by some statutory provision. For example, if the employee alleged that they were employed and complained about employees smoking in their work environment, which is a violation of California Labor Code, §6310 as well as §6404.5, and the employer's actions were retaliatory in nature, the employee may be able to establish that he or she was retaliated against in violation of public policy.

This type of exception to the at-will doctrine can be utilized in such cases as age, race discrimination and sexual harassment cases, in addition to numerous other statutory causes of action, such as the right to be allowed to perform jury duty. There are so many statutory causes of action that can give rise to a public policy violation, that it is simply impossible to enumerate each of them in this limited text. Only through a consultation with an employee rights attorney can you adequately explore if there is any such statutory provision in your favor.

F. Family and Medical Leave

Generally, under Federal law and California law, an employer is required to grant family and medical leaves to employees by allowing them to take up to twelve weeks of unpaid leave during a twelve month period because of: (1) A personal medical condition; a specified family member; or because of the birth or adoption of a child; (2) Maintain benefits during an employees leave; (3) Provide reinstatement to employees when they return from leave; (4) Post notices and keep certain records pertaining to family and medical leave.

Generally, both the Federal and State F.M.L.A. applies to private employers with fifty (50) or more employees. It also applies to public agencies and most Federal employers, regardless of the number of employees.

In order to qualify for leave, an employee must "be eligible". Generally, an employee is eligible if they have been employed by the employer for at least 12 months, been employed for at least 1250 hours during the 12 month period, be employed on the work site within 75 miles of where the employer has 50 or more employees.

This law recognizes a private right to file a lawsuit against the employer for violation of Family Medical Leave Act. A prevailing plaintiff can recover compensatory damages, including emotional distress damages, along with punitive damages and attorney's fees.

G. Americans With Disabilities Act

The employment provisions for the Americans With Disabilities Act (A.D.A.) apply to all employers with at least fifteen employees. It strictly limits employers from making any employment decisions that adversely affect the employee's job, unless it is, (1) job related; (2) a business necessity; and (3) cannot be remedied by reasonably accommodating the individual's disability.

Exceptions are made if the accommodation would create a hardship for the employer, or if the individual would impose a direct threat to health and safety in the workplace. However, "disability" under the A.D.A. is defined very broadly, and each case must be determined on a case-by-case basis by consulting with an employee rights advocate who understands the laws and the different exceptions that apply.


When an employee is terminated, he or she should immediately file for unemployment insurance benefits. However, often times, the employer will try to contest the employee's right to benefits, by asserting that the employee either quit the job "without cause" or committed some type of "misconduct". Governed by California Unemployment Insurance Code, §1256, an employee may not receive unemployment benefits if they quit "without cause" or if they commit "misconduct".

In many cases, the employer asserts some concocted reason for the alleged misconduct, in order to avoid the payment of unemployment benefits. An employer is responsible for half of the benefits that the employee receives and therefore has a motive to prevent the employee from receiving their benefits. In addition, small employers are noted for hotly contesting the rights to benefits, because the portion that they would ultimately pay, represents a substantial sum.

Should an employer contest your right to receive unemployment benefits, and a case interviewer from the Employment Development Department agrees with the employer, you will be denied your unemployment insurance benefits and will be forced to appeal the decision. Generally, you must appeal the decision within twenty days and have a hearing in front of an Administrative Law Judge who will make a decision by reviewing the evidence, which includes testimony under oath and documents. Many times, the employer has an attorney to represent them to try to defeat your rights to benefits. You have the right to subpoena documents and witnesses to prove your case, and have the right for an attorney to represent you.


Many times, when an employee quits their employment or is suddenly terminated, they realize that they have a claim for unpaid wages. These wages can include unpaid commissions, vacation pay and overtime, as well as regular straight time, should the employer have failed to pay the wages. Generally, an employee can file a claim with the Division of Labor Standards and Enforcement for the Wages owed. Since the employer can be subject to waiting time penalties under Labor Code, §203, which can include up to thirty days of pay at the average daily rate, often times, the employer hires an attorney to represent them at this hearing.

Generally after the claim is filed, a Conference is scheduled where a Deputy Labor Commissioner tries to informally resolve the matter between the parties. Should the matter not be settled at this conference, the Deputy Labor Commissioner then schedules a 98(a) Hearing which is a formal hearing that provides the right to subpoena documents and witnesses from both sides. Generally based upon the defenses that the employer raises, it is imperative that you retain an attorney to represent you because, even if you win at this point, the employer has a right to appeal the Deputy Labor Commissioner's ruling into civil court.

The waiting time penalty provision of Labor Code, §203 provides a substantial deterrent to employers who refuse to pay their employee's wages. A couple of years ago, a client of mine presented a wage claim to me and during the course of the hearing, the employer proved that they had paid the employee all of his wages. However, during the course of the hearing, we learned for the first time that the employer had failed to pay the employee a vacation pay check in the amount of $189.00. The vacation pay check was a partial vacation pay check because the employee had used some days off in lieu of vacation pay. Even though the employee was not entitled to regular wages, my client was awarded waiting time penalties because the employer failed to pay the vacation pay check. The employee received (30) days of pay at his average rate and recovered from the employer almost $4,600.00 because the employer had failed to give him a $189.00 vacation pay check on the day he was fired.

Therefore, it is imperative to consult with an employee rights advocate who can determine whether or not there are any wage violations against the employer. In addition, California courts have recognized the employee's right to file a civil lawsuit against the employer. When done, the employee is not limited to the thirty days of waiting time penalty, but rather can sue for a violation of a fundamental public policy, as well as punitive damages, emotional distress and attorney's fees.


In addition to the above, often times, an employee may have an additional claim that can only be discovered through a consultation. Such claims may include, but are not limited to, defamation, assault and battery, fraud, interference with business, and promissory fraud.


Should an employee be terminated, demoted, or denied a promotion that they are qualified for, or be laid off, some of the remedies that an employee can seek are as follows:

Monetary compensation; reinstatement; improved settlement packages in the event of a layoff, tax advantage structuring; letters of recommendation; changes in the employer's policies and practices.

Statute of Limitations

This handbook does not attempt to inform you of your own particular statute of limitations. Such statute of limitations can only be determined through consultation with a qualified attorney. However, as a general rule, some statute of limitations for cases are one year, but they may not necessarily begin on the date of termination. In some cases, statute of limitations are a few days for union claims or it could be six or twelve months for claims against governmental agencies.

In addition, there may be a two year statute of limitations for back wages, as well as breach of oral or implied contracts. There can be a three year statute of limitations for fraud and four years for breach of written contract.

Only through consultation with a qualified attorney, can you determine what the appropriate statute of limitations in your particular case may be. Therefore, it is imperative, that if you feel you have an employment claim against your employer, that you consult with your attorney immediately, and do not hesitate as you may lose certain rights forever by delaying presentation of your claims.


In many circumstances when an employer lays an employee off, he or she may be offered a severance' package. While there is no law that mandates that an employer must give a severance package to an employee, if the employer has adopted a severance policy, then they must be held to that policy.

Many times an employer lays off or terminates an employee and offers them a severance package because they want the employee to sign a release agreement, so the employee cannot sue them for a termination. After signing a release agreement, and giving up the right to sue the employer, oftentimes, the employee then learns for the first time that they had a cause of action against the employer for such claims as age discrimination, race discrimination, sex discrimination, or sexual harassment to name a few.

Therefore, if an employer is proposing a layoff or a termination, along with a severance package, it is imperative that the employee immediately consults with an attorney concerning any rights that they may have against the employer. Usually, an employer uses pressure to force the employee into a quick severance package with a release agreement, so the employee cannot later sue the employer for wrongful termination because the employee made a quick decision and did not get a consultation regarding their rights.

In addition, based upon the language in many severance agreements, it is possible that you are also giving up the right to unemployment insurance benefits as well. Therefore, when you look at the amount the employer is giving you, which is also subject to income tax, and the absence of unemployment insurance benefits and the right to sue the employer, often times, the amount the employer is proposing is extremely small in relation to what rights the employee may be giving away.

Therefore, if you are presented with a severance package, you should consult with an attorney immediately concerning the rights that you may have and the rights that you may be giving up. In many instances, an attorney negotiating on the employee's behalf will then negotiate with the employer to increase the amount of the severance package, if the employee is willing to give up the right to sue the employer. This fact alone, can convince the employers to agree to a much higher amount than the couple of weeks of severance pay that they are initially offering. Thus, an attorney should be consulted.


While employment claims can be costly, time-consuming and hotly contested, in many instances with the use of a skilled attorney, the employee may be able to negotiate a more favorable termination. For example, many employers fearing termination lawsuits, will be willing to negotiate an out of court settlement, without the filing of a lawsuit, in order to spare themselves the legal fees that are associated with employment litigation. Often times, an employer can spend up to $100,000.00 defending an employment litigation lawsuit through trial. Therefore, the employer may consider an out of court settlement to avoid the adverse expense and time-consumption that litigation demands.

While it is impossible to address every single issue that arises in employment related claims in this book, you should now have a basic understanding of how employment claims generally evolve against an employer when an employee's rights are violated.

If you desire further information concerning your own particular case, you may attend one of our weekly seminars or arrange for a private consultation.

I personally wish you the best of luck in your stride for employees' justice and your own particular goals.

If you or a loved one has been the victim of a breach of employment contract, please contact a California breach of contract lawyer today at the Law Offices of Terry Davis.
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