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What Is Considered Wrongful Termination?

Skye Schooley
Skye Schooley

Learn what wrongful termination is and what laws protect employees from illegal termination.

As an employer, you may find yourself in the uncomfortable position of terminating an employee. Although most states allow at-will employment – meaning technically, you can fire an employee at any time regardless of the cause – employers must be diligent about their process and reason for termination. There are several illegal reasons for which even at-will employers can't fire employees.

If an employee feels they have been a victim of wrongful termination, they may attempt to file a lawsuit against you. To prevent this from happening, employers should understand the illegal reasons to fire someone.

What is wrongful termination?

Wrongful termination is when an employer fires an employee for an illegal reason. Although most terminated employees probably feel as though they were wrongfully let go, there are federal and state laws that determine which reasons are illegal. For example, it may be legal to terminate an employee for poor performance in a state that allows at-will termination, whereas anti-discrimination laws make it illegal to terminate an employee based on their disability.

What laws apply to firing an employee?

Federal agencies, like the U.S. Department of Labor and the U.S. Equal Employment Opportunity Commission, create and enforce laws to improve workplace conditions and protect employees. Although you and your HR department should be familiar with all of the laws that govern your business and employees, here are a few primary federal laws you should pay special attention to when handling an employee termination:

  • Title VII of the Civil Rights Act of 1964 (Title VII) – This act prohibits employment discrimination based on "race, religion, color, sex or national origin." It is illegal to terminate an employee based on any of these characteristics.
  • The Americans with Disabilities Act (ADA) – This act protects individuals with disabilities against discrimination in all areas of public life, including employment and termination. It would be illegal to terminate an employee due to their disability instead of providing reasonable accommodation.
  • The Family and Medical Leave Act (FMLA) – This act allows certain employees to take up to 12 weeks of unpaid leave for medical or family reasons, given that both the employer and the employee meet certain requirements. Although this act doesn't apply to everyone, it is illegal to terminate a qualified employee for taking their qualified medical leave.
  • The Occupational Safety and Health (OSH) Act of 1970 – This act serves to protect private-sector and federal government employees from the health and safety risks of business activities. For example, it would be illegal to retaliate against an employee for reporting a workplace health hazard to the Occupational Safety and Health Administration (OSHA).

"Should an employer's decision to fire an employee be motivated by the protected class of that employee as set forth in any of the above-referenced statutes or others, a court would likely find the termination to be discriminatory and illegal," Andrew Zelman, partner and employment law expert at Berger Singerman, told business.com.

Many of the federal laws listed above dictate why you can and cannot terminate an employee, but some laws, like the Worker Adjustment and Retraining Notification Act of 1988 (WARN Act), dictate how you must terminate certain employees.

"When an employer institutes a mass layoff or closes a division of its operations, it may be required to provide advance notice to employees of the impending layoff in compliance with the WARN Act," Zelman said. "In jurisdictions where employees have additional rights by statute, compliance is required by the employer, including notice periods."

In addition to abiding by federal laws, employers must pay special attention to local and state laws, since local and state laws are often stricter than federal law. For example, Zelman said, the Florida Civil Rights Act expands upon Title VII to include additional protected classes, including prohibiting discrimination based on a disability or marital status. 

5 illegal reasons to fire an employee

Several actions can lead to wrongful termination, most of which have to do with violating the employment laws and regulations set forth by federal and state governments. If you are considering terminating an employee, ensure it is not for any of the following reasons:

1. Discrimination

A common action that leads to many wrongful-discharge claims is when an employee is (or believes they have been) fired due to an illegal discriminatory reason. There are several federal and state laws that make it illegal to discriminate and terminate an employee based on a protected category, such as race, religion, color, sex, gender, national origin, age or disability.

2. Retaliation

Andrew Russell, labor and employment partner at Fox Rothschild, said another common basis for wrongful-termination claims occurs when an employer illegally retaliates against an employee for a protected activity that an employee might take.

"For example, an employee may report a potential safety violation, file a complaint about an underpayment of wages or report that they have been illegally harassed by a supervisor," Russell said. "This is all protected activity, and an employer may not fire an employee in retaliation for engaging in such activity."

3. Whistleblowing

Another illegal reason to terminate an employee is for whistleblowing. If your workplace is responsible for violating a health or safety regulation as mandated by OSHA, you can't terminate an employee for reporting you. Employees have a right to a safe work environment and can't be fired for reporting hazardous workspaces.

4. Law violations

In most states, it is illegal to fire an employee because of your illegal activity. For example, it would be illegal to terminate an employee for refusing to be complicit in breaking a law or reporting you for breaking said law.

5. Employment contract violations

It is illegal to fire an employee for any reason against what is dictated in their contract. For example, written contracts may list details on why or how the employee may be terminated. Employees with implied contracts may be fired only for "good cause." It is important to review any employment contracts with a lawyer before terminating an employee.

What happens if an employer illegally terminates someone?

If an employee believes they have been wrongfully terminated, they may be able to file a lawsuit against you. If this is the case, the first thing to do is to seek legal guidance from your attorney.

According to Zelman, an employer that terminates an employee in violation of federal, state or local laws, or in breach of an agreement with the employee, exposes itself to liability in the form of civil lawsuits, statutory penalties and potentially equitable or injunctive relief enjoining the employer from continuing to violate the laws.

"In many cases, an employee will file an administrative claim and an employer may be subject to an administrative investigation or potential administrative hearing," Russell said. "However, in many cases, an employee may be able to pursue his or her claims by filing a lawsuit against their employer in court."

If the wrongfully terminated employee chooses to seek litigation, it can cost you in legal fees, back-pay damages, future wages, liquidated damages, emotional distress damages and/or punitive damages.

"Federal and state-level agencies may also seek to enforce the respective workplace laws, including criminal penalties and, possibly, imprisonment," Zelman said.

To reduce the possibility of unlawful termination, it is wise to seek guidance from your employment attorney before firing an employee. Additionally, if you have made the error of wrongfully terminating an employee and are facing a wrongful-termination lawsuit, contact your attorney as soon as possible.

Image Credit: yacobchuk / Getty Images
Skye Schooley
Skye Schooley,
business.com Writer
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Skye Schooley is an Arizona native, based in New York City. She received a business communication degree from Arizona State University and spent a few years traveling internationally, before finally settling down in the greater New York City area. She currently writes for business.com and Business News Daily, primarily contributing articles about business technology and the workplace, and reviewing categories such as remote PC access software, collection agencies, background check services, web hosting, reputation management services, cloud storage, and website design software and services.