2404 . Breach of Employment Contract - Unspecified T erm - “Good
Cause” Defined
Good cause exists when an employer’s decision to discharge an employee
is made in good faith and based on a fair and honest r eason. An
employer has substantial but not unlimited discr etion regarding
personnel decisions[, particularly with respect to an employee in a
sensitive or confidential managerial position]. However , good cause does
not exist if the employer’s r easons for the discharge ar e trivial, arbitrary ,
inconsistent with usual practices, or unr elated to business needs or goals,
or if the stated r easons conceal the employer’s true r easons.
In deciding whether [ name of defendant ] had good cause to discharge
[ name of plaintiff ], you must balance [ name of defendant ]’ s interest in
operating the business ef f iciently and profitably against the inter est of
[ name of plaintiff ] in maintaining employment.
New September 2003; Revised November 2018
Directions for Use
This instruction may not be appropriate in the context of an implied employment
contract where the parties have agreed to a particular meaning of “good cause” (e.g.,
a written employment agreement specifically defining “good cause” for discharge).
If so, the instruction should be modified accordingly .
Include the bracketed language in the opening paragraph if the defense alleges that
the plaintif f was in a sensitive or confidential managerial position.
When the reason given for the discharge is misconduct, and there is a factual
dispute whether the misconduct occurred, then the court should give CACI
No. 2405, Br each of Implied Employment Contract - Unspecified T erm - “Good
Cause” Defined - Misconduct , instead of this instruction. (See Cotran v . Rollins
Hudig Hall International, Inc. (1998) 17 Cal.4th 93, 107 [69 Cal.Rptr .2d 900, 948
Sources and Authority
• “Three factual determinations are relevant to the question of employer liability:
(1) did the employer act with good faith in making the decision to terminate; (2)
did the decision follow an investigation that was appropriate under the
circumstances; and (3) did the employer have reasonable grounds for believing
the employee had engaged in the misconduct.” ( Jameson v . Pacific Gas &
Electric Co. (2017) 16 Cal.App.5th 901, 910 [225 Cal.Rptr .3d 171].)
• “ ‘Good cause’ in the context of implied employment contracts is defined as:
‘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 pretextual.’ ” ( Serri v . Santa Clara University (2014) 226 Cal.App.4th 830,
872 [172 Cal.Rptr .3d 732], internal citations omitted.)
• “It is the employer ’ s honest belief in the stated reasons for firing an employee
and not the objective truth or falsity of the underlying facts that is at
issue . . . .” ( Jameson , supra , 16 Cal.App.5th at p. 91 1.)
• “The term is relative. Whether good cause exists is dependent upon the
particular circumstances of each case. In deciding whether good cause exists,
there must be a balance between the employer ’ s interest in operating its business
ef ficiently and profitably and the employee’ s interest in continued employment.
Care must be exercised so as not to interfere with the employer ’ s legitimate
exercise of managerial discretion. . . . Where there is a contract to terminate
only for good cause, the employer has no right to terminate for an arbitrary or
unreasonable decision.” ( W alker v . Blue Cr oss of California (1992) 4
Cal.App.4th 985, 994 [6 Cal.Rptr .2d 184], internal citations omitted, abrogated
on another ground in Guz v . Bechtel National, Inc. (2000) 24 Cal.4th 317, 351
[100 Cal.Rptr .2d 352, 8 P .3d 1089].)
• “ ‘ Cotran did not delineate the earmarks of an appropriate investigation but
noted that investigative fairness contemplates listening to both sides and
providing employees a fair opportunity to present their position and to correct or
contradict relevant statements prejudicial to their case, without the procedural
formalities of a trial.’ [Citation] [¶] . . . Although the elements of the Cotran
standard are triable to the jury , ‘if the facts are undisputed or admit of only one
conclusion, then summary judgment may be entered . . . .’ ” ( Jameson , supra ,
16 Cal.App.5th at p. 910.)
• “[W]here, as here, the employee occupies a sensitive managerial or confidential
position, the employer must of necessity be allowed substantial scope for the
exercise of subjective judgment.” ( Pugh v . See’ s Candies, Inc. (Pugh I) (1981)
1 16 Cal.App.3d 31 1, 330 [171 Cal.Rptr . 917], disapproved on other grounds in
Guz, supra, 24 Cal.4th at pp. 350-351.)
• “[G]ood cause” in [the context of wrongful termination based on an implied
contract] “is quite dif ferent from the standard applicable in determining the
propriety of an employee’ s termination under a contract for a specified term.”
( Pugh, supra, 1 16 Cal.App.3d at p. 330.)
• “W e have held that appellant has demonstrated a prima facie case of wrongful
termination in violation of his contract of employment. The burden of coming
forward with evidence as to the reason for appellant’ s termination now shifts to
the employer . Appellant may attack the employer ’ s of fered explanation, either on
the ground that it is pretextual (and that the real reason is one prohibited by
contract or public policy , or on the ground that it is insuf f icient to meet the
employer ’ s obligations under contract or applicable legal principles. Appellant
bears, however , the ultimate burden of proving that he was terminated
wrongfully .” ( Pugh, supra, 1 16 Cal.App.3d at pp. 329-330, internal citation
WRONGFUL TERMINA TION CACI No. 2404
Secondary Sources
3 W itkin, Summary of California Law (1 1th ed. 2017) Agency and Employment,
§§ 219-221, 244
Chin et al., California Practice Guide: Employment Litigation, Ch.4-C, “Good
Cause” for T ermination , ¶¶ 4:270-4:273, 4:300 (The Rutter Group)
1 W rongful Employment T ermination Practice (Cont.Ed.Bar 2d ed.) Contract
Actions, §§ 8.22-8.25
4 W ilcox, California Employment Law , Ch. 60, Liability for W r ongful T ermination
and Discipline , § 60.09[2] (Matthew Bender)
21 California Forms of Pleading and Practice, Ch. 249, Employment Law:
T ermination and Discipline , §§ 249.21[14][c], 249.63 (Matthew Bender)
10 California Points and Authorities, Ch. 100, Employer and Employee: W rongful
T ermination and Discipline , §§ 100.22, 100.27, 100.29, 100.34 (Matthew Bender)
California Civil Practice: Employment Litigation, § 6:19 (Thomson Reuters)
CACI No. 2404 WRONGFUL TERMINA TION
Page last reviewed May 2024
UC Davis Law professor Vikram David Amar analyzes a recent Eighth Circuit ruling on Missouri’s Second Amendment Preservation Act (SAPA), which seeks to protect gun rights by limiting state cooperation with federal firearm laws.
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