CACI 2423 Breach of Implied Covenant of Good Faith and Fair Dealing—Employment Contract—Essential Factual Elements

California Civil Jury Instructions CACI

2423 Breach of Implied Covenant of Good Faith and Fair Dealing—Employment Contract—Essential Factual Elements

In every employment [contract/agreement] there is an implied promise of good faith and fair dealing. This implied promise means that neither the employer nor the employee will do anything to unfairly interfere with the right of the other to receive the benefits of the employment relationship. Good faith means honesty of purpose without any intention to mislead or to take unfair advantage of another. Generally speaking, it means being faithful to one’s duty or obligation. However, the implied promise of good faith and fair dealing cannot create obligations that are inconsistent with the terms of the contract.

[Name of plaintiff] claims that [name of defendant] violated the duty implied in their employment [contract/agreement] to act fairly and in good faith. To establish this claim, [name of plaintiff] must prove all of the following:

1.That [name of plaintiff] and [name of defendant] entered into an employment relationship;

[2.That [name of plaintiff] substantially performed [his/her/nonbinary pronoun] job duties [unless [name of plaintiff]’s performance was excused [or prevented]];]

[3.That all conditions required for [name of defendant]’s performance [had occurred/ [or] were excused];]

4.That [name of defendant] [specify conduct that the plaintiff claims prevented plaintiff from receiving the benefits under the contract];

5.That by doing so, [name of defendant] did not act fairly and in good faith; and

6.That [name of plaintiff] was harmed by [name of defendant]’s conduct.

Directions for Use

In every contract, there is an implied promise that each party will not do anything to unfairly interfere with the right of any other party to receive the benefits of the contract. (Comunale v. Traders & General Ins. Co. (1958) 50 Cal.2d 654, 658 [328 P.2d 198].) Give this instruction if the employee asserts a claim that the employee’s termination or other adverse employment action was in breach of this implied covenant. If the existence of a contract is at issue, see instructions on contract formation in the 300 series.

Include element 2 if the employee’s substantial performance of the employee’s required job duties is at issue. Include element 3 if there are conditions precedent that the employee must fulfill before the employer is required to perform. In element 4, insert an explanation of the employer’s conduct that violated the duty to act in good faith.

Do not give this instruction if the alleged breach is only the termination of an at-will contract. (See Eisenberg v. Alameda Newspapers (1999) 74 Cal.App.4th 1359, 1391 [88 Cal.Rptr.2d 802].)

See also the Sources and Authority to CACI No. 325, Breach of Implied Covenant of Good Faith and Fair Dealing—Essential Factual Elements, for more authorities on the implied covenant outside of employment law.

Sources and Authority

Contractual Conditions Precedent. Civil Code section 1439.

“We therefore conclude that the employment relationship is not sufficiently similar to that of insurer and insured to warrant judicial extension of the proposed additional tort remedies in view of the countervailing concerns about economic policy and stability, the traditional separation of tort and contract law, and finally, the numerous protections against improper terminations already afforded employees.” (Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 693 [254 Cal.Rptr. 211, 765 P.2d 373].)

“A breach of the contract may also constitute a breach of the implied covenant of good faith and fair dealing. But insofar as the employer’s acts are directly actionable as a breach of an implied-in-fact contract term, a claim that merely realleges that breach as a violation of the covenant is superfluous. This is because, as we explained at length in Foley, the remedy for breach of an employment agreement, including the covenant of good faith and fair dealing implied by law therein, is solely contractual. In the employment context, an implied covenant theory affords no separate measure of recovery, such as tort damages.” (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 352 [100 Cal.Rptr.2d 352, 8 P.3d 1089], internal citation omitted.)

“We do not suggest the covenant of good faith and fair dealing has no function whatever in the interpretation and enforcement of employment contracts. As indicated above, the covenant prevents a party from acting in bad faith to frustrate the contract’s actual benefits. Thus, for example, the covenant might be violated if termination of an at-will employee was a mere pretext to cheat the worker out of another contract benefit to which the employee was clearly entitled, such as compensation already earned.” (Guz, supra, 24 Cal.4th at p. 353, fn. 18.)

“The reason for an employee’s dismissal and whether that reason constitutes bad faith are evidentiary questions most properly resolved by the trier of fact.” (Luck v. Southern Pacific Transportation Co. (1990) 218 Cal.App.3d 1, 26 [267 Cal.Rptr. 618], internal citations omitted.)

Secondary Sources

Chin et al., California Practice Guide: Employment Litigation, Ch. 4-D, Implied Covenant of Good Faith and Fair Dealing, ¶¶ 4:330, 4:331, 4:340, 4:343, 4:346 (The Rutter Group)
1 Wrongful Employment Termination Practice (Cont.Ed.Bar 2d ed.) Contract Actions, §§ 8.27–8.28
4 Wilcox, California Employment Law, Ch. 60, Liability for Wrongful Termination and Discipline, §§ 60.02[2][c], 60.06 (Matthew Bender)
21 California Forms of Pleading and Practice, Ch. 249, Employment Law: Termination and Discipline, § 249.14 (Matthew Bender)
California Civil Practice: Employment Litigation §§ 6:21–6:22 (Thomson Reuters)