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Wrongful Demotion Laws in California

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California is an “at-will” employment state. That means that employers can generally terminate any employee for nearly any reason, so long as the reason itself is not illegal (unlawful discrimination, retaliation for exercising a legal right, etc.), the termination does not fall within certain protected time periods (such as protected medical or family leave), and the termination does not violate an employment contract. What if instead of terminating an employee, an employer chooses to demote an employee? Are there fewer restrictions? Are there any forms of illegal demotion? Must an employer give a reason for the demotion? Below, we discuss how “wrongful demotion” operates under California law.

“At-will” applies to termination and demotion

As a general rule, California’s at-will employment scheme allows employers to fire employees for just about any reason, or for no reason at all. The same applies to demotions or other alterations of an employee’s position. Employers can demote an employee after a poor performance review, due to budgetary constraints, to hire someone with more education or experience, or for any other lawful reason.

Unless employees are protected by contract, employers are not required to give a specific reason for a demotion or alteration of an employee’s position. Employers can demote or fire their workers at will, so long as they comply with other worker protection laws. In practice, employers will usually only demote an employee for a specific reason and will document their reasons. Employers will often collect bad write-ups or poor performance reviews prior to demotion, for example, in order to protect themselves against future lawsuits alleging wrongful demotion.

When is demotion wrongful?

A demotion may be wrongful in any circumstance under which termination would be wrongful. Anti-discrimination and anti-retaliation protections cover more than full-on termination; they cover any adverse employment action, including demotion, reduction in pay, denial of benefits, etc. Workers in California are protected by the California Fair Employment and Housing Act as well as federal protections including Title VII of the Civil Rights Act, the Americans with Disabilities Act (ADA), and the Age Discrimination in Employment Act (ADEA).

An employer cannot, for example, demote an employee because of that employee’s membership in a protected class. Demotion based on an employee’s race, gender, sexual orientation, nationality, religion, etc., constitutes unlawful discrimination. Likewise, an employer cannot retaliate against an employee with a demotion after the employee engages in a protected activity, such as filing for workers’ compensation, taking protected medical leave, filing or supporting a harassment lawsuit, or reporting unlawful activity in the workplace.

Employers are also subject to any contractual agreements or company-wide policies in place. If an employee is told they will only be terminated or demoted for good cause, either in their own employment contract or based on the company’s policies, then they could have a claim for breach of contract if they are demoted without cause.

If you are an employee with discrimination or employee rights concerns in Orange, Riverside, San Bernardino, Los Angeles, or San Diego counties, or a California employer dealing with wrongful termination, harassment, employee contract disputes, or other employment law issues, contact the dedicated and detail-oriented California employment law attorneys at Coast Employment Law at 714-551-9930 for a free consultation.

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