Wrongful Termination: Strategies to Consider If You Were Fired Unjustly

by Don D. Sessions
Employee Rights Attorney
Mission Viejo, California

Originally Published in WALL STREET JOURNAL's NATIONAL BUSINESS EMPLOYMENT WEEKLY, Sep - Oct, 1994

• A 57-year-old civil engineer, who was discharged for "lack of work" following 12 years of employment, recovered $652,500 from his employer after it later hired younger, less-qualified engineers.
• An insurance company sales manager recovered $1,340,000 after he was forced to resign because he complained on behalf of a co-worker who was being sexually harassed, then refused to testify falsely in connection with his company's administrative investigation of the claim.
• An oil company supervisor recovered $17,887,000 after her employer breached a promise to promote her if she agreed to be relocated. When she complained that several males were wrongfully promoted instead of her, she was threatened with violence.

The right of a company to unilaterally terminate an employee at will, with or without cause, was confirmed by the courts in the late 1800s. This at‑will doctrine has been reinforced through the years by statutes and court rulings, and remains the main defense employers use against disgruntled employees who've been terminated.

Yet companies often believe that they can excuse any wrongful action on their part because of at‑will employment. They can't, since the at‑will doctrine has some important exceptions. First, a company simply can't discriminate against any employee in the workplace. Second, it can't retaliate against an employee for doing things he or shehas a legal right to do. Third, the company must abide by its own contractual promises, which may be inconsistent with this doctrine.

No Discrimination

As you probably know, employers can't discriminate against employees because of race, skin color, gender, religious believe, national origin, physical handicap or age (if the person is 40 or older). They may not use these factors as a basis for decisions in hiring, promotions, dismissals, pay raises, benefits or other aspects of employment.

Some of the most widely publicized examples in this category (especially on the television talk‑show circuit) concern sex discrimination. In one recent case, afemale office manager of a successful business was subjected to outrageous, offensive and sexist conduct by the owner of the business. To keep her job, she had to tolerate inappropriate and vulgar jokes and gestures, as well as involuntary touching and forced review of inappropriate literature. Even though she desperately needed the money, she was finally forced to quit because of the stress. She appropriately recovered a sizable amount because of the injustices she endured.

Age discrimination can be devastating as well. Many employees work for companies for decades with good reviews. But as they approach retirement, they're laid off or terminated on a pretext and replaced by someone younger, who isn't as capable. Although its understandable that a company might want to lower expenses in a tight economy, there's no justification for deliberately discriminating against someone because of age and salary level. The truth is that many of these employees may never find comparable jobs elsewhere. Damages from such discriminatory action can be astronomical if they're extended through the balance of the employee's anticipated work life.

The benefits of a discrimination claim include both out‑of‑pocket and "punitive" damages. This compensation is based on the wrongfulness of the acts committed and the relative wealth of the employer. Even if you find a comparable job soon after being wrongfully terminated, a court award can be substantial if a jury decides to teach the employer a lesson.

No Retaliation

Companies also can't retaliate against employees for doing something they have a legal right to do, such as complain about workplace safety or the company's illegal acts (or refuse to participate in those acts). Claims for improper retaliation often result in high recoveries. Juries tend to decide for the lowly employee who's simply trying to do his or her duty as a citizen and obey the law of the land (in contrast to the rich employer trying to save money by taking shortcuts or avoiding the law). Little mercy typically is shown to such employers.

No Breach of Contract

Many companies make the mistake of believing that employees can be terminated at‑will, with or without cause. Even when at‑will language is in the employment application, handbook or other policy statements, it may not excuse the employer from violating promises given to an employee during a term of employment. All the language in the handbook must be consistent with such at‑will representation. Any contrary language or absence of other legal clauses may show that the employer was required to have sufficient cause prior to an employee's layoff or termination. Other important factors are longevity of employment, actions or communications by the company reflecting assurances of continued employment, industry practices and other personnel policies.

The advantage of claiming breach of contract is that the statute of limitations for making a claim is usually longer than under other claims. Although the damage recovery may be lower under this claim because of the absence of punitive damages, the claim itself may be easier to prove because it can be supported by actually written or oral representations and witnesses. In fact, many employee manuals, after being analyzed by an attorney, are found to contain language that supports an employee more than an employer.

One employee, who was terminated 1 1/2 years into a five‑year written contract, recovered the full 3 1/2 year balance of the contract, plus additional damages.

The rule of at‑will employment (with the three exceptions noted) constitutes the law of wrongful termination, yet there are many other claims available that may or may not be stronger. These others provide the extra incentive to encourage an employer to resolve the entire list of claims.

Proving a Case

If you're worried about the success rate of such cases, be assured that it isn't as difficult to prove a case of wrongful termination as you may think. Of course, it's easy to prove a case when a company states that an employee was fired because of religion, say, and the firing manager is overheard by witnesses who will verify the statement. However, cases with clear‑cut proof seldom exist. So, just like Perry Mason, one needs to look at circumstantial evidence. In such cases, earlier statements by the employer or its agents regarding the wrong reason for a termination would be relevant.

It's important to determine if there was a double standard among company employees. If the firm has treated a particular worker differently, then the challenge is to determine why such disparate treatment occurred. If it was for a discriminatory or retaliatory reason, then the employee may have a claim regardless of any at‑will status. If it was for a reason in violation of a company promises, then a claim for breach of contract could be pursued.

Often a case can be prove simply by looking at a company's documents and sections of the employees' manual. Manuals often contain many promises on behalf of a company and serve to establish the employee's case.

Evaluating the Facts

When presented with a case, attorneys look at three main factors in evaluating its value. First, they determine if they can establish a case of liability against the employer. Unless the case can be won, it does little good to sue. Second, they consider the injury to the employee. The greater the harm, the more tears will flow from jurors' eyes (and the greater the damage award). Third, they evaluate the employer's financial situation. It does no good to establish high liability and damages if the judgment can't be collected against a bankrupt defendant. Of course, the best case is one with liability damages and collectability. Potential awards include:

• Money: An employee who has been wronged usually desires monetary compensation. Although no amount of cash can make up for the emotional trauma and devastation from certain types of workplace abuses, money can certainly help. Some employees with excellent cases settle for less than could otherwise be obtained through trial because of personal pressures and demands. This way, uncertainty and delay of trial is avoided.
• Reinstatement: Make a realistic evaluation of the job market before deciding against reinstatement. Too often, discharged employees unreasonably assume they'll be able to find comparable jobs quickly. To be sure, associating with the same people who wronged you isn't desirable, but often you may choose another department, division or location upon your reinstatement. Returning simply needs to be realistically compared with the alternatives.
• Improved Settlement Package: Seek the advice of an attorney if a settlement offer is made, since the terms of the offer can almost always be improved. If nothing more, the settlement often can be structured so it's non-taxable. Non‑competition clauses and other unfavorable terms that are buried in many settlement agreements can be eliminated as well.
• Letter of Recommendation: If your main concern is finding another job, a letter of recommendation will be helpful. Even if the company doesn't voluntarily provide it, there are other ways to gain the verbal equivalent of such a recommendation.
• Changes in Company Employment Practices/Policies: If your main goal is to "teach them a lesson," expect most attorneys to insist on working on an hourly basis. Few would be willing to spend a tremendous amount of time trying to solve the world's problems without the hope of a monetary recovery. Some exceptions apply, especially when a lesson can be taught and money obtained at the same time.

Deadlines

There are many statute‑of‑limitations deadlines for filing a lawsuit concerning wrongful termination. Unless a suit or other administrative filing is made on a timely basis, your rights may be lost forever. The deadline typically is one year from the wrongful act, which may be sooner than the date of notice of termination. This is especially true when there were prior acts of harassment or discrimination. So if you're seriously considering taking action, do so now. You may lose your opportunity by waiting too long.

The Best Methods

Once you decide on what you want to accomplish you must evaluate the methods available to get there:

1. Do nothing. To avoid the negative factors of other methods and the stress and uncertainty of a fight, sometimes the best approach is to waive your rights, do nothing and get on with your life.
2. Informal negotiation. It doesn't hurt to ask for money to compensate for your loss of rights. The worst an employer can do is turn you down. The problem is that few people know how much to ask for and how to argue for legal rights convincingly. And without the perceived threat of an attorney, you may not be taken seriously.
   Before enlisting the help of an attorney, realize thatthey charge in many different ways. Some attorneys bill on an hourly basis with no promised limit, while others offer a set fee. In most cases, attorneys offer to work on a "contingency‑fee basis" of a percentage of the total recovery, plus a good‑faith advance up front.
   Most cases can be settled, since the employer has a great incentive to avoid the publicity and potential liability that arises from litigation. The primary factor when determining whether a case can be settled or not often is the extent to which liability and damages can be proven. So, be reasonable when asking for a settlement. The more you demand, the less likely it is a settlement will occur.
3. Lawsuit. The advantage of a lawsuit is that, hopefully, justice will be done and you'll have your day in court. The major drawback is the uncertainty, expense, stress and extraordinary amount of time it takes to receive a judgment in court.
4. Internal Grievance Procedure. If the employer has an established method for negotiating grievances, then pursue such methods. Unfortunately, most companies use a biased company arbitrator, not an independent party. Still, it may be worth a try.
5. Union Procedure. If you're a member of a union, then the established procedure of the union must be followed before any other method.
6. Governmental Agencies. There are many state and federal agencies that exist to help employees solve problems of discrimination. The advantage is that they're free, the disadvantages are that it often takes a year or more for these agencies to really get started, since most are overworked and can't give personal attention to each claim. Also, their recoveries often are limited.
7. Small‑Claims Lawsuit. A small‑claims lawsuit is quick and inexpensive, but the amount of money that can be recovered is low. In many courts, the limit is $5,000, and even if the employee prevails, the company has the right to appeal to a higher court with attorneys present. Then you face the problem of hiring an attorney with the accompanying costs, even though you're now limited to a low amount of recovery.

Don D. Sessions, a Mission Viejo attorney, author and law school professor, helps employees enforce their rights. For questions, call (800) 774-7494 or access job-law.com. © Sessions & Kimball LLP.