Good Faith But Erroneous Employee Claims of Wrongdoing Cannot Form Basis for Employment Termination

If an employee wrongly claims he is entitled to overtime compensation, can the employer fire him? The short answer is no. The California Court of Appeal held in Barbosa v. IMPCO Technologies, Inc. that as long as the employee makes the claim in good faith, even if it proves unfounded, the claim cannot form the basis for a termination of employment. The reason for this rule is that employees have the right to raise issues – especially if the issues involve a contention that the employer has violated the law. Even if the claim ultimately proves unfounded, as long as the employee had a good faith basis for asserting it, the mere raising of the claim will not support termination. On the other hand, if the employer has a legitimate reason – apart from the claim raised by the employee – for terminating employment, the fact that the employee has raised a claim does not insulate the employee from adverse action. The issue in every case will be what the judge or jury concludes was the real reason was for the adverse action. A full copy of the court’s ruling is attached.

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