Does an implied covenant of good faith and fair dealing between an employer and employee constitute a tortious cause of action?

California, United States of America


The following excerpt is from Hannon Engineering, Inc. v. Reim, 126 Cal.App.3d 415, 179 Cal.Rptr. 78 (Cal. App. 1981):

We do not hold that in each and every contractual arrangement between employer and employee, an implied covenant of good faith and fair dealing arises the breach of which gives rise to a tortious cause of [126 Cal.App.3d 427] action. We do hold that where the relationship of employer-employee has "matured into that of pensioner and administrators," then the "courts must be vigilant in protecting the rights of the pensioner against powerful ... administrators" and a fiduciary duty of good faith and fair dealing is owed (Symington v. City of Albany (1971) 5 Cal.3d 23, 33, 95 Cal.Rptr. 206, 485 P.2d 270), the breach of which gives rise to a tortious cause of action of the breach of implied covenant of good faith and fair dealing, for which a wronged party may recover all damages proximately caused thereby, including punitive damages in a proper case.

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