10.1 Wrongful termination and constructive discharge
12 min read•august 20, 2024
occurs when an employer illegally fires an employee, violating laws, public policy, or contract terms. This can include , , or breaching good faith. Understanding these concepts is crucial for both employers and employees to navigate workplace rights and responsibilities.
happens when an employer creates such unbearable working conditions that a reasonable employee would feel forced to quit. This is treated as a firing, allowing wrongful termination claims even without formal termination. Both concepts highlight the importance of fair employment practices and legal protections for workers.
Definition of wrongful termination
Wrongful termination is a legal term that refers to the unlawful firing of an employee by an employer
Occurs when an employer terminates an employee for reasons that violate state or federal law, public policy, or the terms of an employment contract
Can also happen when an employer fires an employee in retaliation for engaging in legally protected activities (filing a complaint, participating in an investigation)
Reasons for wrongful termination
Discrimination based on protected classes
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Terminating an employee based on their race, color, religion, sex, national origin, age, disability, or genetic information violates federal anti-discrimination laws (Title VII, ADA, ADEA)
Employers cannot fire employees because of their membership in a protected class or due to stereotypes associated with that class
Examples: firing an employee because of their skin color, refusing to promote older workers, terminating someone after learning of their disability
Retaliation for protected activities
Employers are prohibited from firing employees in retaliation for engaging in legally protected activities
Protected activities include filing a discrimination complaint, participating in an investigation, reporting safety violations, or taking protected leave (FMLA)
Retaliation claims require showing a causal connection between the protected activity and the adverse employment action
Example: terminating an employee shortly after they filed a sexual harassment complaint against a supervisor
Violation of employment contracts
If an employee has a written employment contract, the employer must follow the terms of that contract when terminating the employee
Firing an employee in violation of the contract terms (without cause, before the end of the contract term) can constitute wrongful termination
Implied contracts based on employee handbooks, policies, or oral promises may also give rise to wrongful termination claims
Example: firing an employee with a three-year contract after one year without the required cause
Breach of good faith and fair dealing
Some states recognize an and fair dealing in employment relationships
Employers violate this covenant by acting in bad faith or unfairly when terminating employees
Examples: firing an employee to avoid paying earned commissions, misleading an employee about job security, or terminating someone just before their pension vests
Not all states recognize this cause of action, and its scope varies by jurisdiction
Constructive discharge
Definition of constructive discharge
Constructive discharge occurs when an employer creates such intolerable working conditions that a reasonable employee would feel compelled to resign
Treats the employee's resignation as a firing because the employer's actions forced the employee to quit
Allows employees to pursue wrongful termination claims even if they were not formally fired
Elements of constructive discharge claim
Employee must prove that the employer deliberately created intolerable working conditions with the intent to force the employee to resign
Intolerable conditions must be sufficiently severe or pervasive to alter the terms and conditions of employment
Employee must show that a reasonable person in their position would have felt compelled to resign
Employee must actually resign in response to the intolerable conditions
Intolerable working conditions
Intolerable conditions can include harassment, discrimination, retaliation, or other severe mistreatment
Single incidents are generally insufficient unless extremely egregious (sexual assault)
Conditions must be more than minor inconveniences or typical workplace stress
Examples: pervasive sexual harassment, demotion with significant pay cut, dangerous working conditions
Reasonable employee standard
Courts apply an objective standard of whether a reasonable employee in the plaintiff's position would have felt compelled to resign
Factors include the severity and duration of the conditions, whether the employer was notified of the issues, and any attempts to resolve the problem
Employee's subjective feelings are not enough; conditions must be objectively intolerable
Reasonable employee standard prevents constructive discharge claims based on an employee's unreasonable sensitivity or overreaction
Remedies for wrongful termination
Reinstatement of employment
Courts may order the employer to reinstate the wrongfully terminated employee to their former position
Reinstatement is not always practical or desirable, especially if there is hostility or mistrust between the parties
Alternative remedies include front pay (compensation for future lost wages) or a court-ordered severance package
Back pay and lost benefits
Wrongfully terminated employees can recover the wages and benefits they lost due to the termination
Back pay includes the salary, commissions, bonuses, and other compensation the employee would have earned from the date of termination to the date of judgment
Employees are entitled to the value of lost benefits like health insurance, retirement contributions, and vacation time
Compensatory damages
aim to make the employee whole for the harm caused by the wrongful termination
Include economic damages like job search expenses, medical bills, and other out-of-pocket costs resulting from the termination
Also include non-economic damages for emotional distress, humiliation, and reputational harm
Amounts vary based on the severity of the harm and the strength of the evidence
Punitive damages
In cases of particularly egregious or malicious conduct, courts may award to punish the employer and deter future wrongdoing
Punitive damages are not available in all cases and are subject to constitutional limits
Factors include the reprehensibility of the employer's conduct, the ratio of punitive to compensatory damages, and the employer's financial condition
Punitive damages can significantly increase the potential liability for employers in wrongful termination cases
Defenses against wrongful termination claims
At-will employment doctrine
Most employment relationships in the US are at-will, meaning the employer can terminate the employee at any time for any reason (except illegal reasons)
At-will doctrine creates a presumption that the termination was lawful unless the employee can prove an exception applies
Exceptions to at-will employment include discrimination, retaliation, violation of public policy, or breach of contract
Employers often raise the at-will doctrine as a defense to argue that the termination was not wrongful
Legitimate non-discriminatory reasons
If an employee claims discrimination, the employer can defend by showing that it had a legitimate, non-discriminatory reason for the termination
Legitimate reasons can include poor performance, misconduct, layoffs due to economic conditions, or elimination of the employee's position
Employer must provide evidence to support the legitimate reason and show that it was the true reason for the termination
Employee can still prevail by proving that the stated reason is a pretext for discrimination
Employee misconduct or poor performance
Employers can defend wrongful termination claims by showing that the employee engaged in misconduct or had poor job performance
Misconduct can include violating company policies, insubordination, theft, or other unacceptable behavior
Poor performance includes failing to meet job requirements, making errors, or not achieving goals
Employer must have documentation of the misconduct or poor performance and show that it was the reason for the termination
Consistent enforcement of policies and can strengthen this defense
Statute of limitations
Wrongful termination claims are subject to statutes of limitations that set deadlines for filing lawsuits
Limitations periods vary by state and by the type of claim (discrimination vs. breach of contract)
Employees must file claims with the EEOC or state agency within 180/300 days of the termination for discrimination claims
Failure to file within the applicable deadline can bar the claim, providing a complete defense for the employer
Employers should raise the statute of limitations defense early in the case to avoid waiving it
Proving wrongful termination
Burden of proof on employee
In a wrongful termination lawsuit, the employee has the burden of proving that the termination was unlawful
Employee must provide evidence to support each element of their claim (discrimination, retaliation, breach of contract)
Burden of proof is typically "preponderance of the evidence" - more likely than not that the termination was wrongful
If the employee cannot meet their burden, the employer will prevail without having to present any evidence
Direct vs circumstantial evidence
Employees can prove wrongful termination using direct or circumstantial evidence
Direct evidence includes statements or actions by the employer that directly show discriminatory intent or other unlawful motive
Circumstantial evidence includes patterns of treatment, timing of events, or other facts that suggest an unlawful motive
Most cases rely on circumstantial evidence because direct evidence of discrimination or retaliation is rare
Role of documentation and witnesses
Documentation and witness testimony play a crucial role in proving wrongful termination claims
Employees should gather documents like performance reviews, disciplinary notices, emails, or other records that support their claim
Witnesses can provide testimony about the employee's job performance, the employer's statements or actions, or other relevant events
Employers should maintain accurate and consistent documentation of performance issues, disciplinary actions, and termination decisions
Importance of consistent policies and practices
Consistent application of employment policies and practices can help employers defend against wrongful termination claims
Treating similarly situated employees differently can be evidence of discrimination or retaliation
Applying policies inconsistently or deviating from established practices can undermine the employer's legitimate reasons for the termination
Employers should have clear, written policies and train managers to apply them consistently to all employees
Preventing wrongful termination
Clear employment policies and procedures
Employers should have clear, written policies and procedures for hiring, performance management, discipline, and termination
Policies should be communicated to all employees and applied consistently across the organization
Having clear policies helps ensure fair treatment of employees and provides a roadmap for managers to follow
Policies can also serve as evidence of the employer's legitimate expectations and reasons for termination
Regular performance evaluations and feedback
Conducting regular performance evaluations and providing feedback to employees can prevent wrongful termination claims
Evaluations document the employee's strengths, weaknesses, and areas for improvement
Providing feedback helps employees understand the employer's expectations and gives them an opportunity to address issues
If termination becomes necessary, the employer can point to the evaluations as evidence of the employee's poor performance
Consistent discipline and termination processes
Employers should have a consistent process for disciplining and terminating employees
Progressive discipline policies that use verbal warnings, written warnings, and suspensions before termination can demonstrate fairness
Documenting each step of the disciplinary process creates a record of the employee's issues and the employer's attempts to address them
Following a consistent termination process (notice, reason for termination, opportunity to respond) can reduce the risk of wrongful termination claims
Training for managers and supervisors
Training managers and supervisors on employment laws, company policies, and best practices can prevent wrongful termination
Managers should understand the protected classes, prohibited reasons for termination, and the importance of consistency
Training on how to document performance issues, provide feedback, and follow disciplinary procedures is essential
Managers should also be trained on how to handle complaints of discrimination, harassment, or retaliation to avoid retaliatory terminations
Wrongful termination vs lawful termination
Distinguishing between lawful and unlawful reasons
Not all terminations are wrongful, even if they seem unfair or unjustified to the employee
Lawful reasons for termination include poor performance, misconduct, layoffs, or other legitimate business reasons
Unlawful reasons for termination include discrimination, retaliation, violation of public policy, or breach of contract
Employers must be able to articulate a clear, lawful reason for the termination and provide supporting evidence
Importance of documentation and communication
Proper documentation and communication can help distinguish between lawful and wrongful terminations
Documenting performance issues, disciplinary actions, and the reason for termination creates a record of the employer's legitimate reasons
Communicating the reason for termination to the employee can prevent misunderstandings or allegations of unlawful motives
Lack of documentation or inconsistent communication can create the appearance of a wrongful termination
Consulting with legal counsel
Employers should consult with legal counsel before terminating employees to ensure compliance with applicable laws
Attorneys can review the reasons for termination, assess the risk of a wrongful termination claim, and recommend best practices
Legal counsel can also help investigate complaints of discrimination or retaliation and advise on how to handle them
Involving attorneys in the termination process can demonstrate the employer's good faith efforts to comply with the law
State laws on wrongful termination
Variations in state employment laws
While federal laws set minimum standards for wrongful termination, states can provide greater protections for employees
Some states have broader anti-discrimination laws that cover additional protected classes (sexual orientation, marital status)
States may have different statutes of limitations, remedies, or procedural requirements for wrongful termination claims
Employers must comply with both federal and state laws in the states where they operate
Common law vs statutory protections
Some states recognize common law claims for wrongful termination based on public policy or implied contracts
Common law claims are based on court decisions and legal principles rather than specific statutes
Statutory protections are created by state legislatures and provide specific rights and remedies for employees
Examples of statutory protections include whistleblower laws, family and medical leave laws, or anti-retaliation provisions
Preemption by federal laws
In some cases, federal laws may preempt or supersede state laws on wrongful termination
Federal preemption occurs when a federal law conflicts with a state law or occupies the field of regulation
For example, the Employee Retirement Income Security Act (ERISA) preempts state laws that relate to employee benefit plans
Employers must be aware of potential preemption issues and ensure compliance with applicable federal laws
Famous wrongful termination cases
Significant court decisions and precedents
Several landmark court cases have shaped the development of wrongful termination law
Foley v. Interactive Data Corp. (1988): California Supreme Court recognized the implied covenant of good faith and fair dealing in employment contracts
Gantt v. Sentry Insurance (1992): California Supreme Court limited public policy wrongful termination claims to policies based on statutes or constitutional provisions
Burlington Industries, Inc. v. Ellerth (1998): US Supreme Court established the standard for employer liability in sexual harassment cases
Recent cases continue to refine the standards for proving discrimination, retaliation, and other wrongful termination claims
Impact on employment law and practices
Significant wrongful termination cases have had a profound impact on employment law and HR practices
Cases have clarified the scope of protected classes, the elements of discrimination and retaliation claims, and the defenses available to employers
Decisions have also influenced the development of HR best practices, such as anti-harassment policies, complaint procedures, and training programs
Employers must stay up-to-date on legal developments and adapt their policies and practices accordingly to minimize the risk of wrongful termination claims
Future developments in wrongful termination law
Emerging issues and trends
Wrongful termination law continues to evolve as new issues and trends emerge in the workplace
The #MeToo movement has brought renewed focus to sexual harassment and retaliation claims
The COVID-19 pandemic has raised questions about employee safety, remote work, and layoffs
Increasing use of artificial intelligence and algorithms in hiring and performance evaluations may lead to new forms of discrimination
Employers must be proactive in addressing these emerging issues and ensuring compliance with changing laws and regulations
Potential changes to laws and regulations
Federal and state lawmakers may propose changes to employment laws in response to emerging issues and trends
Possible changes could include expanding protected classes, strengthening anti-retaliation provisions, or limiting the use of non-disclosure agreements
Courts may also issue new decisions that clarify or modify existing legal standards for wrongful termination claims
Employers should monitor legislative and regulatory developments and be prepared to adapt their policies and practices as needed
Staying informed about potential changes can help employers minimize the risk of wrongful termination claims and maintain a fair and compliant workplace.
Key Terms to Review (19)
Age Discrimination in Employment Act (ADEA): The Age Discrimination in Employment Act (ADEA) is a federal law that prohibits discrimination against individuals aged 40 and older in various aspects of employment, including hiring, firing, promotions, compensation, and job training. This law was enacted to protect older workers from unfair treatment based on age and to promote their inclusion in the workforce. It reflects the recognition that age should not be a determining factor in employment opportunities or decisions.
Americans with Disabilities Act: The Americans with Disabilities Act (ADA) is a landmark piece of legislation enacted in 1990 that prohibits discrimination against individuals with disabilities in various aspects of public life, including employment, transportation, public accommodations, and telecommunications. This law ensures that people with disabilities have the same rights and opportunities as everyone else, impacting how employers must handle job applicants and employees with disabilities.
Burlington Northern & Santa Fe Railway Co. v. White: Burlington Northern & Santa Fe Railway Co. v. White is a landmark Supreme Court case from 2006 that clarified the scope of retaliation protections under Title VII of the Civil Rights Act. The ruling established that employees are protected from any employer actions that could deter a reasonable person from opposing discriminatory practices, emphasizing the broad interpretation of what constitutes retaliation in the workplace.
Compensatory Damages: Compensatory damages are a form of monetary compensation awarded to a plaintiff to cover the loss or injury they have suffered due to another party's actions or negligence. These damages are designed to restore the injured party to the position they would have been in had the harm not occurred, making them a key aspect of legal remedies in various employment-related disputes.
Constructive Discharge: Constructive discharge occurs when an employee resigns due to a work environment that has become intolerable, effectively forcing them to leave. This situation usually arises from severe harassment, discrimination, or other significant issues that the employer fails to address, making it clear that continuing employment is no longer viable. Understanding this concept is essential in analyzing employment rights and the conditions under which an employee may seek legal recourse for wrongful termination.
Discrimination: Discrimination refers to the unfair or prejudicial treatment of individuals based on characteristics such as race, gender, age, disability, or religion. This term encompasses various forms of bias and inequality that can occur in the workplace, affecting hiring practices, promotions, and overall work environment. Understanding discrimination is crucial as it relates to issues like creating a hostile work environment, wrongful termination, and the role of administrative agencies in enforcing anti-discrimination laws.
Employment-at-will doctrine: The employment-at-will doctrine is a legal principle that allows either the employer or the employee to terminate the employment relationship at any time, for any reason, or for no reason at all, as long as the reason is not illegal. This doctrine establishes that employees are generally hired for an indefinite duration and can be dismissed without cause, unless otherwise specified by an employment contract or specific laws protecting employees. Understanding this doctrine is crucial when considering wrongful termination and constructive discharge cases, as it sets the baseline for what constitutes lawful and unlawful dismissals.
Implied Contract: An implied contract is an agreement created by the actions, behavior, or circumstances of the parties involved, rather than through explicit verbal or written communication. These contracts often arise in employment situations where an employer's conduct or statements can lead an employee to reasonably believe they have job security or specific terms of employment that are not formally documented.
Implied Covenant of Good Faith: The implied covenant of good faith is a legal doctrine that requires parties to a contract to act honestly and fairly toward each other and not undermine the contract's intended benefits. This principle ensures that neither party will take actions that would unjustly interfere with the rights or expectations of the other party, particularly in employment relationships, where it can play a critical role in cases of wrongful termination and constructive discharge.
McDonnell Douglas Corp. v. Green: McDonnell Douglas Corp. v. Green is a landmark U.S. Supreme Court case from 1973 that established a legal framework for proving discrimination claims under Title VII of the Civil Rights Act. The case introduced the burden-shifting analysis used in disparate treatment claims, which allows a plaintiff to establish a prima facie case of discrimination and shifts the burden to the employer to provide legitimate, non-discriminatory reasons for their actions. This decision is pivotal in understanding both disparate treatment and the dynamics of wrongful termination and employment discrimination lawsuits.
Progressive Discipline: Progressive discipline is a structured approach used by employers to address employee performance or behavioral issues through a series of increasingly severe steps or penalties. This process typically begins with a verbal warning, followed by written warnings, suspension, and potentially termination. The goal of progressive discipline is to provide employees with opportunities to correct their behavior while ensuring fair treatment and avoiding wrongful termination claims.
Public policy exception: The public policy exception is a legal doctrine that provides an employee protection against termination that violates fundamental public policy principles. It serves as an important limitation to the at-will employment doctrine, ensuring that employees cannot be fired for reasons that contravene the basic interests of society or for engaging in activities that are encouraged by public policy, such as reporting illegal conduct or refusing to engage in unlawful actions.
Punitive Damages: Punitive damages are a type of compensation awarded in a lawsuit that go beyond simple reimbursement for losses, aiming to punish the wrongdoer and deter similar conduct in the future. These damages are often considered in cases where the defendant's behavior was especially egregious or reckless, making them relevant in various legal contexts, such as breaches of contract, exceptions to employment at-will, discrimination claims, and wrongful termination cases.
Reasonable accommodation: Reasonable accommodation refers to the adjustments or modifications made by an employer to enable individuals with disabilities or other protected statuses to perform their job duties effectively. This concept is crucial in various employment laws as it promotes inclusivity and ensures equal opportunity for all employees, regardless of age, disability, pregnancy, or other factors that might necessitate support in the workplace.
Retaliation: Retaliation refers to adverse actions taken against an individual for engaging in legally protected activities, such as filing a complaint or asserting rights under employment laws. This concept is crucial in protecting employees from punishment after they report misconduct, discrimination, or exercise their rights. Understanding retaliation helps safeguard workers’ rights and encourages them to speak out against unfair treatment without fear of losing their job or facing other negative consequences.
Right to Due Process: The right to due process is a legal principle that guarantees fair treatment through the normal judicial system, especially as a citizen's entitlement to receive notice and a hearing before being deprived of life, liberty, or property. This concept is fundamental in protecting individuals from arbitrary decisions by the government or employers, ensuring that any employment termination or significant changes are conducted fairly and justly.
Title VII of the Civil Rights Act: Title VII of the Civil Rights Act of 1964 is a landmark piece of legislation that prohibits employment discrimination based on race, color, religion, sex, or national origin. This law plays a crucial role in shaping workplace fairness and addressing issues such as unequal treatment and a hostile environment, impacting various aspects of employment law and protections against discriminatory practices.
Whistleblower protections: Whistleblower protections are legal safeguards designed to shield individuals who report misconduct, illegal activities, or unethical behavior within an organization from retaliation. These protections encourage employees to speak up without the fear of losing their jobs, being demoted, or facing harassment. They play a crucial role in promoting transparency and accountability within organizations by ensuring that those who expose wrongdoing are treated fairly.
Wrongful termination: Wrongful termination refers to the illegal firing of an employee in violation of contractual agreements or laws. This concept is closely tied to at-will employment, where employees can generally be dismissed without cause, but exceptions arise when terminations contravene specific legal protections or public policy. Recognizing these exceptions is crucial, as it helps delineate between lawful and unlawful dismissals.