Wrongful Termination Claims in California: Damages and Settlements
Wrongful termination is when an employee in California gets fired for an illegal or improper reason prohibited by law. California, like most states, is an at-will employment state. This means employers can generally fire workers for any reason or no reason at all.
However, exceptions exist where terminations violate public policy, an implied contract, or when discrimination, retaliation or other unlawful motives are involved. Employees who get discharged illegally have grounds to sue for wrongful termination and recover lost wages, emotional distress damages, attorney’s fees, reinstatement and other compensation.
This article provides a detailed overview of wrongful termination laws in California. Topics covered include:
The 7 main grounds for wrongful discharge claims
- Statutes of limitations
- Evidence needed to prove wrongful firing
- Constructive discharge
- Typical damages and settlements
- Average payouts in wrongful termination cases
- At-Will Employment and Wrongful Discharge Exceptions
Under California Labor Code 2922, employment is presumed to be “at will” unless there is an agreement establishing otherwise. At-will means the employment relationship can be terminated by either the employer or employee, at any time, for any reason or no reason at all.
However, numerous exceptions exist where terminating or laying off an employee would be unlawful. California’s public policy strongly favors protecting workers from firings that contradict fundamental principles of fairness and personal rights.
Below are the seven primary situations where terminating an at-will employee could constitute wrongful discharge and give rise to a lawsuit against the employer.
Discrimination
The California Fair Employment and Housing Act (FEHA) prohibits employers from terminating workers based on protected characteristics like race, religion, national origin, gender, sexual orientation, age, disability or veteran status.
It is also illegal under FEHA for companies to retaliate against employees who oppose workplace discrimination or harassment, file claims with the DFEH or participate in investigations.
Whistleblowing
California Labor Code 1102.5 makes it unlawful for employers to retaliate against workers who disclose reasonably believed violations of state or federal laws, rules, or regulations. This includes reporting illegal activities directly to supervisors or government agencies.
Other whistleblower laws like the Sarbanes-Oxley Act and California False Claims Act provide additional protections in certain situations.
Implied Contracts
Employers may inadvertently create “implied” contracts not to terminate except for good cause through oral assurances, employee handbooks or personnel policies spelling out termination protocols. Breaching implied contractual obligations can constitute wrongful discharge.
Public Policy
It is wrongful termination if an employer fires a worker for engaging in protected activities, exercising legal rights or refusing to break the law. For example, companies cannot terminate employees who perform jury duty, vote, seek workers’ compensation benefits, or oppose illegal directives.
Worker’s Compensation
California law prohibits employers from discharging or retaliating against employees for filing valid workers’ compensation claims for work-related injuries.
Mass Layoffs
The federal WARN Act and California’s Mini-WARN Act require larger employers to provide 60 days’ advance notice before mass layoffs or plant closures. Violations create liability for back pay.
Leave and Pay Complaints
Terminating workers for requesting or taking medical leave, paid sick days or complaining about wage/hour violations is presumptively retaliatory and illegal.
Burden of Proof in Wrongful Termination Cases
Since California presumes at-will employment, the initial burden lies with wrongly discharged employees to prove their terminations were improper. This requires showing:
An employer-employee relationship (not independent contractor)
Discharge or adverse employment action
The termination violated public policy or a specific law
Damages resulted
If the employee establishes a prima facie case of wrongful termination, the burden shifts to employers to prove there were legitimate, non-retaliatory grounds for discharge.
Employers often claim that after-acquired evidence of misconduct uncovered post-termination retroactively justifies the firing. However, this defense fails if the employer lacked knowledge of the misconduct when it occurred.
Damages in Wrongful Termination Lawsuits
Prevailing plaintiffs in wrongful discharge cases can recover:
Lost wages and benefits
Front pay
Emotional distress
Reinstatement or injunctive relief
Attorney’s fees, in some cases like discrimination claims
Punitive damages, where employers acted maliciously
However, employees have a duty to mitigate damages in wrongful termination cases. This means the compensation owed is reduced by actual earnings or the amount the employee could have earned through making reasonable efforts to find new employment.
Filing Deadlines and Statutes of Limitation
In California, employees must file wrongful termination lawsuits within the following time periods after discharge:
Two years for breach of oral or implied contract
Two years for wrongful discharge in violation of public policy
Three years for FEHA discrimination, harassment, and retaliation claims
And three years for whistleblowing claims under Labor Code 1102.5
Three years for California WARN Act violations
180 days under Sarbanes-Oxley
Constructive vs. Actual Discharge
Under the constructive discharge doctrine, employees may sue for wrongful termination if employers intentionally create or knowingly permit intolerable working conditions that any reasonable person would feel compelled to resign under.
Examples include reductions in pay or responsibilities, harassment, dangerous conditions, or sustained abuse.
Constructive discharge lawsuits have the same elements and remedies as if the employee was formally fired. The primary difference is constructive discharge is inferred rather than actual.
Proving Wrongful Termination
Wrongfully discharged employees can utilize several types of evidence to meet their burden of proof, including:
Company documents – Personnel files often contain incriminating performance reviews, disciplinary records, and derogatory emails or memos.
Witness statements – Eyewitness accounts from colleagues who observed unlawful behavior by decision-makers may corroborate unlawful motives.
Employment records – Statistics and documents showing patterns of discrimination or OSHA violations help show wrongdoing permeated the workplace.
Medical records – Doctor reports confirming the employee’s workplace injury or severe health condition necessitating leave make retaliation more evident.
Contemporaneous notes—Detailed records compiled by the employee memorializing unlawful statements or directives provide crucial evidence if they are made close to the events.
Admissions – Deposition testimony or statements made by the employer during DFEH interviews can constitute binding admissions if corroborated.
Expert testimony—Vocational experts, economists, physicians, and wrongful termination lawyers can analyze evidence and render opinions supporting lost income, emotional distress, and professional standards.
Average Settlement Amounts
Although precise statistics are lacking, knowledgeable California employment attorneys estimate the average wrongful termination settlement falls between $40,000-$60,000. However, verdicts and case values vary substantially based on:
Type of claim – Discrimination, whistleblowing, and public policy discharges typically yield higher payouts than breach of contract.
Desire to avoid publicity – Well-known companies often pay more for confidentiality.
Employer size – Larger entities pay more due to more excellent resources and exposure.
Damages – Employees with higher incomes and long tenures lose the most future income.
Location – Juries in urban areas like Los Angeles and San Francisco tend to award more significant damages.
Liability risks – Clear-cut evidence of outrageous employer misconduct increases potential liability.
Insurance coverage – EPLI policies boost employers’ ability to settle, sometimes over the objection of individual decision-makers.
Helpful Legal Resources
For additional information on pursuing potential wrongful termination claims in California, review the following resources:
DFEH – https://www.dfeh.ca.gov/complaintprocess/
EEOC – https://www.eeoc.gov/how-file-charge-employment-discrimination
California Labor Commissioner’s Office – https://www.dir.ca.gov/dlse/HowToFileWageClaim.htm
Nolo legal encyclopedia – https://www.nolo.com/legal-encyclopedia/wrongful-termination-was-firing-illegal-32282.html
In summary, most California employees serve at the will of their employers. However, numerous exceptions protect workers from terminations that contravene public policy or violate legal rights and protections. Employees unlawfully discharged can recover substantial damages if they act quickly to preserve evidence and assert claims. Most wrongful termination cases settle out of court, but jury verdicts can be significant in egregious cases.
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