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Are layoffs ever considered wrongful termination under CA law?

On Behalf of | Jan 27, 2025 | Wrongful Termination

Layoffs happen for many reasons, such as economic downturns, company restructuring, or budget cuts. While these are usually legal, there are situations where a layoff could cross the line into wrongful termination under California law. 

Understanding the distinction can help you determine whether your layoff was lawful or if your rights may have been violated.

Discrimination and retaliation in layoffs

Employers cannot make layoff decisions based on discriminatory grounds. California law prohibits layoffs that target employees based on race, gender, age, religion, disability, sexual orientation, or other protected characteristics.

Additionally, employers cannot use layoffs to retaliate against employees for reporting workplace misconduct, filing harassment claims, or participating in investigations. If your layoff seems tied to these factors, it could be wrongful termination.

Breach of implied or written contracts

In some cases, layoffs may violate employment agreements. California follows the at-will employment rule, meaning employers can terminate workers for almost any reason, but exceptions exist. 

If you have a written contract promising job security or an implied agreement based on company policies or statements, a layoff might breach those terms. Courts often examine company policies, employee handbooks, or oral promises when evaluating wrongful termination claims.

Violations of public policy

Employers cannot lay off workers for reasons that violate public policy. For example, if a layoff occurs because an employee refused to engage in illegal activities or reported a legal violation, it could be wrongful termination. California’s whistleblower protection laws safeguard employees who report safety concerns, fraud, or other illegal conduct.

WARN Act requirements

California’s Worker Adjustment and Retraining Notification (WARN) Act requires companies with 75 or more employees to provide 60 days’ notice before a mass layoff. Failure to meet these requirements could lead to legal consequences for the employer. If you were part of a mass layoff and your employer did not provide proper notice, it might constitute wrongful termination.

Even though layoffs are common, they must follow California laws designed to protect employees. When employers disregard these rules, employees may have the right to challenge the layoff in court.

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