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Long Time Employment Does Not Change Employment-at-Will Status
Description California high court held that a long-time employee with a good record had no cause of action based on breach of implied contract or breach of implied covenant of good faith when he was released as part of an organizational change.
Topic Employment Law
Key Words Employment-at-Will; Wrongful Discharge; Covenant of Good Faith and Fair Dealing
C A S E   S U M M A R Y
Facts Guz, a longtime employee of Bechtel, was released when his work unit was eliminated. He sued Bechtel for "breach of an implied contract to be terminated only for good cause, and breach of the implied covenant of good faith and fair dealing." The trial court dismissed the suit. The appeals court reversed, finding that Guz had an agreement, implied in fact, to be discharged only for good cause, which Bechtel had not shown. The court also found that Bechtel had a cause of breach of implied covenant of good faith and fair dealing. Bechtel appealed.
Decision Reversed. At-will employment may be ended by either party at any time without cause, unless restricted by statute or limited by contractual obligations. Here, the employer had an absolute right to eliminate the employee's work unit and to transfer the unit's responsibilities to another part of the company. The facts negated the existence of an implied-in-fact employment contract or the breach of the contract claimed, so summary judgment in favor of Bechtel was proper. Keeping an employee for twenty years does not create an implied-in-fact employment contract. A covenant of good faith and fair dealing is implied by law in every contract but does not impose substantive duties on the parties beyond those incorporated in their agreement.
Citation Buz v. Bechtel National Inc., 8 P.3d 1089 (Sup. Ct., Calif., 2000)

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