What is a Wrongful Termination Claim?

A wrongful termination claim is filed in a court of law by someone who believes they were unjustly or illegally fired from their job. Wrongful termination claims involve an alleged violation of federal or state anti-discrimination laws, oral and written employment agreements/contracts, or labor laws, including collective bargaining laws or whistleblower laws. Employees who feel their termination was a form of sexual harassment or in retaliation for having filed a complaint against the employer may also file a wrongful termination claim.

Key Takeaways

  • A wrongful termination claim is a lawsuit-like action an employee files against an employer they feel has fired them illegally.
  • Most wrongful termination claims are based on a violation of state or federal law, but they can also represent a breach of an employment contract.
  • Types of wrongful termination claims can include dismissal due to discrimination, medical history, retaliation for whistleblowing/complaint filing, organizing a union, or without contractual cause.
  • Compensation for wrongful termination can include monetary damages and/or the restoration of employment.

Understanding a Wrongful Termination Claim

In the United States, employment in most states is considered "at will," meaning that employers do not need to have a reason to fire a worker, and they do not need to give advance notice of termination (though many do issue formal notices, to allow workers to obtain Consolidated Omnibus Benefits Reconciliation Act (COBRA) health benefits and unemployment insurance benefits). Still, employment-at-will doesn't mean businesses can discharge employees completely at their discretion: Firing people for certain reasons or motives is not permitted, especially if it's in violation of state or federal laws, or is a breach of contract of some sort.

Individuals who feel their involuntary dismissal represents such a violation can file a wrongful termination claim against their employer. A wrongful termination claim is like a lawsuit: The employee is bringing an action against their former company and seeking compensation for being unfairly fired.

If the employee prevails, the compensation for wrongful termination can include monetary damages, based on lost wages, job-hunting costs, and other expenses. An employee could also ask to have their job restored or be given a comparable position. Depending on the grounds of the claim (see below), the employer might also face statutory penalties.

Types of Wrongful Termination Claims

Employees can file wrongful termination claims on several grounds. Some of the most common include:

Discrimination

Someone fired because of their gender, race, religion, or citizenship status may file a wrongful termination claim. Such protections extend to sexual orientation and pregnant women in some states. These laws fall under the purview of the U.S. Equal Employment Opportunity Commission (EEOC). On its website, the EEOC outlines how to file a charge of employment discrimination.

The EEOC requires you to file a charge of discrimination with the agency before you can file a job discrimination lawsuit against your employer.

Retaliation

Employers cannot legally punish workers for reporting wrongful activities, such as criminal activity, at work. This is known as whistleblower protection. Also, it is not lawful to terminate a worker simply for filing a workers compensation claim, though anyone asserting that this has happened will have to prove that the measure was retaliatory and not based on work performance or another permitted reason.

Medical history

Under the Genetic Information Nondiscrimination Act (GINA), employers may not use genetic information in dealing with employees, or when making employment decisions, including hiring and firing. "Using genetic information" includes testing for whether a candidate or employee is at greater risk than average of developing certain diseases or inquiring about family medical history.

Organizing

While an employer may have grounds to fire an individual for complaining or venting about an employer or boss, under the National Labor Relations Act (NRLA), workers are permitted to engage in "concerted activity" to improve wages or working conditions, such as organizing a labor union or conducting a campaign to bring an existing union into their workplace. Workers need not already be in a union to be covered by this protection.

Lack of cause

Individuals engaged under a contract that requires a cause for their termination but do not receive one may be eligible to file a wrongful termination claim. Unlike the other types of claims, this is a contractual breach, rather than a violation of a law or statute. The contract must stipulate that the person can only be fired "for cause," meaning a reason for the dismissal must be noted, and it must fall under certain sorts of behavior or action, such as willful misconduct, deliberate neglect of job duties, deliberate sabotage or destruction of company property, or divulging company secrets.

How to File a Wrongful Termination Claim 

First, it's essential for an employee to read their original agreement letter or employment contract to find out what rights and resources they have available (and to check if all conditions and promises were met, surrounding their term of employment and their dismissal).

They may also want to hold off on signing any sort of severance agreement with their employer, especially if it specifically demands they waive any rights to filing a claim or seeking legal redress.

Workers who believe that they have been dismissed unlawfully should consult with an attorney—a labor lawyer or an employment law/employees' rights lawyer—for advice on whether they have a claim and for possible representation. The sooner the better: There are different deadlines for filing claims under state and federal laws.

If possible, individuals should try to obtain a copy of their personnel file, to discover who was responsible for their firing; who approved it; and any documents, such as warning letters, status reports, or performance reviews, referring or relating to it. Such information will be helpful to an attorney reviewing a potential case.