What is the test for an employee to sue their employer for breach of a covenant of good faith and fair dealing?

California, United States of America


The following excerpt is from Foley v. Interactive Data Corp., 254 Cal.Rptr. 211, 47 Cal.3d 654, 765 P.2d 373 (Cal. 1988):

[47 Cal.3d 719] Financial security? Can anyone seriously dispute that employment is generally sought, at least in part, for financial security and all that that implies: food on the table, shelter, clothing, medical care, education for one's children. Clearly, no action for breach of the covenant of good faith and fair dealing will lie unless it has first been proved that, expressly or by implication, the employer has given the employee a reasonable expectation of continued employment so long as the employee performs satisfactorily. (Koehrer v. Superior Court, supra, 181 Cal.App.3d at p. 1171, 226 Cal.Rptr. 820.) And that expectation constitutes a far greater and graver security interest than any which inheres in the insurance context. Most of us can live without insurance. Few of us could live without a job.

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