There is no way for me to detail every possible legal theory under which this employee might sue. In general California Labor Code § 2922 permits an employer or employee to terminate an employment contract "at will" (i.e., at any time, for any reason or for no reason at all). California law recognizes the following exceptions to the "at will" employment doctrine:
- Breach of Contract (see, e.g., Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 675-676). This can occur where an employer creates an implied contract based upon a written employment policy or handbook entry, and which grants or appears to grant an employee some specific right concerning protection from termination. Most boilerplate employee handbooks have a blanket "at will" termination policy. Regardless, courts will sometimes refuse to enforce the policy where other terms and conditions of the handbook. or other written policies of the employer demonstrate a contrary intent. Because of the uncertainty of these situations, and the need to analyze the actual facts and circumstances, this area can be a minefield. However, unless the handbook or policy complained of is a veritable "smoking gun," an employment law attorney will generally decline to represent an employee, because attorney's fees are not recoverable against the employer, and if the employee loses the lawsuit, the employment attorney is left "holding the bag." This factor generally limits breach of contract actions to only very highly compensated corporate officers, whose cases justify the risk of large legal fees in trying to resolve a dispute.
- Violation of Public Policy (see Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167, 172). This claim arises where the employee is terminated for acts such as attending jury duty, testifying as a witness under subpoena, reporting an employer's criminal activities to law enforcement, filing a workers compensation claim, etc.). Where a well-established public policy exists, the law will protect the employee from termination. However, not all public policies qualify. For example, an employee who exercises free speech rights outside of work and in doing so, acts in a manner that causes actual injury to an employer, such as transmitting confidential information to a competitor, the employee has no protection from termination.
- Discrimination under both federal and state law (42 U.S.C. § 2000e et. seq.; 29 USCA §§ 623(a)(1), 631(a)); Ca Govt § 12940(a)). This is the "big ticket" for most employment law actions, and it is the one most likely to be asserted by your employee, so I will address the relevant possibilities.
First, if you have 5 or more employees (apart from the independent contractors/agents), then you are subject to the discrimination laws. An employee with a known disability, which affects a major life function and is either permanent or reasonably likely to last a "long time" (e.g., 90+ days), can claim disability discrimination -- unless the employer provides reasonable accommodations for the employee's disabilities so that the employee can perform the essential functions of the job. The employer has a defense to providing reasonable accommodations if it can show that it will suffer an undue hardship by having to maintain the employee's status as an employee.
On your facts, you have an employee who is apparently trying to work, but is having difficulties doing so, and it is affecting your business. Each side has a legitimate claim for protection under the law, and that makes for a litigation risk, because no one is certain who would prevail in court. The gravity of the employee's illness favors the employee, especially where a jury is giving the verdict, and the employer's small size favors the employer, at least with the court, if not with the jury, because it may not be reasonable to expect an employee of 7-9 employees to protect the job of an ill employee who cannot perform adequately, without providing substantial rather than merely reasonable accommodations. See this link for information concerning disability discrimination.
If I were representing you, I would probably say that you have the right to terminate the employee without continuing to accomodate her. However, I would also suggest that you have documented the entire history of the circumstances and exactly how it has adversely affected your business. Otherwise, your termination could be viewed as merely arbitrary, and that would indicate that there was little or no attempt to reasonably accommodate the employee's disability.
Hope this helps.
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