Wrongful Termination

What Is Wrongful Termination?

Wrongful termination occurs when an employer fires an employee in violation of law, public policy, or contractual obligations. While California is an "at-will" employment state, meaning employers can generally terminate employees for any reason or no reason, numerous exceptions protect employees from illegal termination.

Understanding wrongful termination is critical for California employers, as violations can result in substantial liability including back pay, emotional distress damages, punitive damages, and attorney's fees.

At-Will Employment and Its Exceptions

The At-Will Doctrine

California Labor Code Section 2922 establishes at-will employment as the default:

Either party can end the employment relationship at any time
No advance notice is required
No specific reason is needed

Major Exceptions to At-Will Employment

Exception Type	Description
Public Policy Violations	Termination for exercising legal rights or reporting violations
Implied Contract	Employer's conduct or statements created job security expectations
Implied Covenant	Employer acted in bad faith to deprive employee of benefits
Statutory Protections	Termination violates specific employment laws
Contractual Limitations	Written contracts restrict termination rights

Wrongful Termination in Violation of Public Policy

Elements of a Public Policy Claim

To prove wrongful termination in violation of public policy, an employee must establish:

Employment Relationship: Employee was employed by the defendant
Termination: The employment was terminated
Public Policy Violation: The termination violated a fundamental public policy
Causation: The policy violation was a substantial factor in causing the termination

Sources of Public Policy

California courts recognize public policies established by:

Source	Examples
California Constitution	Right to privacy, right to safe workplace
Statutes	Labor Code, FEHA, workers' compensation laws
Regulations	Administrative rules with force of law
Administrative Orders	IWC Wage Orders

Common Public Policy Violations

Exercising Legal Rights

Filing a workers' compensation claim
Taking protected leave (CFRA, pregnancy disability)
Refusing to commit illegal acts
Exercising rest break and meal break rights

Performing Legal Duties

Serving on jury duty
Testifying as a witness
Responding to subpoenas
Voting in elections

Reporting Violations

Whistleblower disclosures
Cal/OSHA safety complaints
Wage and hour violations
Discrimination or harassment complaints

Statutory Wrongful Termination Claims

FEHA-Protected Terminations

The California Fair Employment and Housing Act prohibits termination based on:

Protected Characteristic	Description
Race, Color, National Origin	Including ancestry and ethnicity
Religion	Beliefs and practices
Sex, Gender, Gender Identity	Including pregnancy and gender expression
Sexual Orientation	Actual or perceived
Disability	Physical or mental
Age	40 years and older
Marital Status	Married, single, divorced
Military/Veteran Status	Active duty or veteran
Medical Condition	Cancer, genetic characteristics

Labor Code Violations

Termination is wrongful if based on:

Filing wage claims (Labor Code 98.6)
Discussing wages with coworkers (Labor Code 232)
Using sick leave (Labor Code 233)
Lactation accommodation requests (Labor Code 1030)
Taking domestic violence or crime victim leave (Labor Code 230)

Other Protected Activities

Activity	Governing Law
Workers' compensation claims	Labor Code 132a
CFRA/FMLA leave	Government Code 12945.2, 29 USC 2615
Pregnancy disability leave	Government Code 12945
Military leave	USERRA, Military & Veterans Code
Voting leave	Elections Code 14000

Constructive Discharge

What Is Constructive Discharge?

Constructive discharge occurs when working conditions become so intolerable that a reasonable person would feel compelled to resign. The resignation is treated as a termination for legal purposes.

Elements of Constructive Discharge

Element	Description
Intolerable Conditions	Working conditions were so adverse that resignation was reasonable
Employer Knowledge	Employer knew or should have known about the conditions
No Reasonable Alternative	Employee had no reasonable option other than resignation
Causation	Employer's actions created the intolerable conditions

Examples of Constructive Discharge

Severe and ongoing harassment
Drastic demotion or pay cut without cause
Requiring employee to violate the law
Retaliatory schedule changes making work impossible
Creating hostile work environment after protected complaint

Damages in Wrongful Termination Cases

Economic Damages

Type	Description
Back Pay	Lost wages from termination to judgment
Front Pay	Future lost earnings if reinstatement is impractical
Lost Benefits	Health insurance, retirement contributions, stock options
Job Search Costs	Expenses incurred finding new employment

Non-Economic Damages

Type	Description
Emotional Distress	Anxiety, depression, humiliation
Reputational Harm	Damage to professional standing
Physical Manifestations	Health issues caused by termination
Loss of Enjoyment	Impact on quality of life

Punitive Damages

Available when employer acted with:

Malice: Intent to cause harm
Oppression: Despicable conduct causing injury
Fraud: Intentional misrepresentation

Punitive damages can significantly exceed compensatory damages.

Other Remedies

Reinstatement to former position
Attorney's fees and costs
Interest on unpaid amounts
Injunctive relief (in some cases)

Calculating Damages: An Example

Scenario: Employee earning $80,000/year is wrongfully terminated. The case goes to trial two years later.

Damage Type	Calculation	Amount
Back Pay	2 years × $80,000	$160,000
Lost Benefits	2 years × $15,000	$30,000
Front Pay	3 years × $80,000	$240,000
Emotional Distress	Jury determination	$100,000
Punitive Damages	2× compensatory	$1,060,000
Attorney's Fees	400 hours × $500	$200,000
Total		$1,790,000

Employer Defenses to Wrongful Termination

Legitimate Business Reasons

Employers can defend by proving:

Documented Performance Issues: Progressive discipline, performance reviews
Policy Violations: Documented violations of company policy
Economic Necessity: Reduction in force with objective selection criteria
Misconduct: Evidence of workplace misconduct

After-Acquired Evidence

Evidence of misconduct discovered after termination may:

Limit damages to the date evidence was discovered
Not eliminate liability for the termination itself

Statute of Limitations Defense

Claim Type	Deadline
Public policy wrongful termination	2 years
FEHA discrimination	3 years (file with CRD within 3 years, then 1 year to sue)
Breach of contract	4 years (written), 2 years (oral)
Labor Code violations	Varies by section (often 3-4 years)

Preventing Wrongful Termination Claims

Documentation Best Practices

Before any termination:

Contemporaneous Records: Document performance issues as they occur
Progressive Discipline: Follow escalating discipline procedures
Consistent Treatment: Apply policies uniformly
Clear Communication: Ensure employee understands expectations and consequences
Opportunity to Improve: Provide reasonable time to correct issues

Pre-Termination Checklist

Item	Purpose
Review personnel file	Assess documentation of performance issues
Check for protected activity	Identify any complaints, leaves, or protected conduct
Verify consistent treatment	Confirm similar employees were treated the same
Consult with HR/Legal	Obtain guidance before proceeding
Prepare separation documents	Finalize pay, benefits, COBRA information
Plan the meeting	Determine who will attend and what will be said

Exit Interview Considerations

Have a witness present
Follow a prepared script
Provide required notices (COBRA, final pay, unemployment)
Avoid unnecessary explanations that could be used against you
Document what was said

High-Risk Termination Situations

When to Exercise Extra Caution

Situation	Risk Factor
Recent complaint filed	Retaliation claim
Protected leave taken	Leave interference claim
Pregnancy or disability	Discrimination claim
Over 40 years old	Age discrimination claim
Close to vesting benefits	Bad faith/covenant breach claim
Verbal promises made	Implied contract claim

Mitigation Strategies

Conduct thorough investigation before termination
Document legitimate business reasons extensively
Have legal review high-risk terminations
Consider whether issues can be resolved without termination
Offer voluntary separation agreements when appropriate

Final Pay Requirements

California has strict rules for final pay that, if violated, can add to wrongful termination claims:

Termination Type	When Final Pay Due
Involuntary termination	Immediately at time of termination
Voluntary resignation (72+ hours notice)	On the last day of work
Voluntary resignation (less than 72 hours)	Within 72 hours

What Must Be Included

All earned wages through the last day
Accrued, unused vacation time
All expense reimbursements owed
Commission payments (if calculable)

Waiting Time Penalties

Failure to pay final wages on time results in:

One day's wages for each day of delay
Maximum of 30 days' wages
Potential for bad faith finding

The Role of Employment Contracts

Written Contracts

Employment contracts may limit at-will termination by:

Requiring "cause" for termination
Specifying what constitutes cause
Mandating specific procedures before termination
Providing for arbitration of disputes

Implied Contracts

Courts may find implied contracts based on:

Oral promises of job security
Employee handbook language
Long tenure and consistent positive reviews
Employer's past practices

Protecting At-Will Status

To maintain at-will employment:

Include clear at-will language in offer letters
Avoid promises of job security
Include at-will disclaimers in handbooks
Train managers not to make employment guarantees