In California, a corporate restructuring is often framed as a tough but necessary step to stay competitive. However, for executives, that can feel like a smokescreen for a decision that is far more personal or even discriminatory. While it is easy to think a high-level title offers more job security, executives are often the first to go during a reorganization. If you were let go and believe it was less about strategy and more about you, it is worth talking to a San Francisco wrongful termination attorney to see if the company crossed a legal line.
The Untouchable Executive Myth
It is easy to assume that a senior title, a high salary, and a solid employment contract make an executive untouchable. The reality is often the opposite. During a restructuring, executive roles are suddenly under a microscope. They are visible, expensive, and tied to internal power dynamics. Instead of being insulated, an executive can become a prime target when leadership wants to cut costs or clean house.
Restructuring as a Legitimate Business Decision
To be clear, companies do have the right to restructure. Eliminating departments, consolidating roles, and reducing headcount are all legitimate business decisions. However, that right is not a blank check. A company cannot use a reorganization as a shield for discrimination, retaliation, or to get out of its contractual obligations.
California law is clear. You cannot be fired because of your age, gender, race, disability, or religion. You are also protected from being fired in retaliation for doing the right thing, like reporting harassment or financial wrongdoing. A corporate reshuffle does not suddenly make those laws disappear.
When Restructuring Becomes a Pretext
The legal core of many wrongful termination claims arising from restructuring is the concept of pretext. Pretext occurs when an employer offers a legitimate-sounding explanation, like a reorganization or downsizing, to conceal an unlawful motive.
Courts and employment lawyers look beyond organizational charts to assess whether a restructuring was genuine. Key questions include whether the executive’s duties were actually eliminated, whether the role was quietly reassigned under a new title, and whether the restructuring was applied consistently across similarly situated employees. Disproportionate impact on protected groups, sudden changes in justification, or inconsistent explanations can all undermine an employer’s stated rationale.
Age discrimination is a frequent issue in executive terminations. Because executive positions often correlate with experience and tenure, restructurings that disproportionately affect older executives while retaining or hiring younger replacements may raise red flags under federal and California law.
Contracts, Severance, and Position Elimination
Executives often operate under written employment agreements that modify California’s default at-will employment rules. These contracts may limit termination to situations involving cause or guarantee severance if employment ends without cause. During restructuring, some employers attempt to sidestep these obligations by claiming they eliminated the position, rather than the individual.
If an employer uses restructuring to avoid paying severance, equity compensation, or other negotiated benefits without eliminating responsibilities, it may constitute a breach of contract or wrongful termination. The label applied by the company is less important than what really happened.
The High Stakes for Executives
For executives, termination is more than just losing a paycheck. Equity, compensation, incentives, and professional reputation may all be at risk. Because so much is at stake, periods of restructuring can provide a convenient opportunity to remove “expensive” or inconvenient leaders under the guise of corporate change. Still, California law requires that executive terminations be free from discriminatory bias, retaliatory motives, and contractual violations, regardless of how an employer labels the decision.