ABOUT THE AUTHOR
TERRY K. DAVIS
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.
I. THE NATURE OF THE RELATIONSHIP
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
5. Set their own work hours;
6. Do not have a continuing relationship with the hiring
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
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
18. Risking losing their own money;
19. Cannot be fired, so long as they meet contract specifications;
20. Cannot quit without liability.
II. PRIVATE EMPLOYER VS. GOVERNMENTAL
AGENCY OR UNION WORKER
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
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
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
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
III. PRIVATE EMPLOYEES
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
I. GENERAL AT-WILL PRESUMPTION
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.
II. EXCEPTIONS TO AT-WILL PRESUMPTION
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
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
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
IV. UNEMPLOYMENT APPEALS
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
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
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.
V. WAGE CLAIMS
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.
VI. OTHER RELATED CLAIMS
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
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.
VIII. SEVERANCE PACKAGES
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
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