What Is Wrongful Termination? - Definition & Conditions

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  • 0:07 What Is Wrongful Termination?
  • 1:07 Illegal Firings
  • 3:28 Case Example
  • 5:45 Lesson Summary
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Lesson Transcript
Instructor: Ashley Dugger

Ashley has a JD degree and is an attorney. She has taught and written various law courses.

Wrongful termination happens when an employee is fired for illegal reasons or for reasons that violate company policy. This lesson explains wrongful termination and takes a look at a case example.

What is Wrongful Termination?

Wrongful termination happens when an employee is fired for illegal reasons or for reasons that violate company policy.

Wrongful termination is difficult to prove because most employees are at-will employees. This means that the employee can quit at any time, for any reason, and the employer can terminate the employee at any time, for any reason. Employees are considered to be at-will unless the employee has an employment agreement that states otherwise. For example, the employee might have an employment contract stating that the employee can only be terminated for specific reasons. Or, sometimes an employee handbook sets forth a company policy regarding how employee terminations will be handled. When a company sets out a particular policy, then that policy must be followed.

Illegal Firings

It's important to note, though, that even at-will employees can be wrongfully terminated. When an employee is terminated in violation of the law, it's known as an illegal firing, which is considered wrongful termination. There are many laws that limit the reasons why an employee can legally be fired. For instance, no employee can be fired because of race, color, religion, sex, or national origin. These firings are violations of Title VII of the Civil Rights Act of 1964.

Employers are also prohibited from terminating an employee because of his or her legally protected actions. This is known as retaliation. For example, let's say that Frank feels he's being forced to work overtime without pay and so he files a complaint with his state labor commission. After his employer finds out about the complaint, Frank is fired. Frank had a legal right to file the complaint, so this is retaliation and is a wrongful termination.

Many employers face wrongful termination lawsuits due to whistleblowing violations. There are various state and federal laws that prohibit employers from firing an employee because the employee reported that the employer violated a law, rule, or regulation. For example, let's say that Kristy works at a burger restaurant where she sees that the meat isn't kept properly chilled before it's cooked. She's warned the manager before and is afraid someone is going to get sick. She finally files a complaint with the health department. After the health department comes to inspect the restaurant, the manager fires Kristy for filing the complaint. If Kristy's state has a whistleblowing law, then this is likely a wrongful termination.

Wrongful termination is a civil cause of action, meaning that the fired employee can sue the employer for any damages the employee suffered as a result of his or her wrongful termination. Sometimes the employee can even get his or her job back. Wrongful termination cases can result in large damage awards.

Case Example

Let's take a look at a real case example. The plaintiff in this case was awarded more than $2.5 million in damages in her wrongful termination lawsuit against Oracle, a computer hardware and software company based in California. Sandy Baratta was a vice president with the company when she was fired. The company told her she was being fired for 'inappropriate behavior,' even though she'd always received very positive reviews and hadn't received any feedback regarding improper conduct. Baratta claimed she'd been wrongfully terminated due to her internal whistleblowing activities and because she complained about pregnancy discrimination.

Just prior to being fired, Baratta expressed concern over comments from a high-level executive regarding his disdain for pregnancy leave. Baratta was in the early stages of pregnancy herself and found the comments troubling.

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