If you violate company policy or law when you dismiss an employee, it means the employee has been wrongly terminated. When wrongful termination occurs, the employee can legally challenge the decision and file for damages. Therefore, as an employer, you need to know what could happen because of wrongfully ending an employee’s contract.
What Is Considered Wrongful Termination?
The words “wrongful termination” mean you fire or lay off an employee illegally. For example, you could violate federal and state anti-discrimination laws or oral or written employment agreements.
Firing a whistleblower as a form of retaliation could also be considered wrongful termination, as could firing an employee who has complained of sexual harassment. On the other hand, if you let an employee go because of things like poor performance, a reduction in the workforce, or you are going out of business, they are all legally sound reasons for terminating employee contracts.
What Can Employees Do About Wrongful Termination?
Employees have protection against wrongful termination thanks to employment law. If an employee believes he or she has been unfairly fired or laid off, the employee will probably seek advice from an experienced lawyer to determine available courses of action.
There are a number of legal remedies available to employees who are wrongfully terminated, but all result in the employee seeking damages. Employers may need to pay damages not only for an employee’s loss of wages but also for things like the emotional distress the termination has caused the employee.
What Can Employers Do About Wrongful Termination?
If you are being held accountable for an employee’s wrongful termination, you may be able to negotiate a severance package in return for the employee promising to waive legal claims. However, if you are taken to court, you could have to pay economic damages, compensatory damages, and punitive damages. You should seek advice from a skillful attorney to discuss your options and reach the best possible outcome.
What Damages Could You Pay in a Wrongful Termination Case?
The largest component of wrongful termination damages is economic damages. That can include the repayment of lost wages, which could include both back pay and front pay.
Back pay refers to the amount of money an employee lost due to being wrongfully let go and is calculated from the date of termination to the date of the trial. In addition to being entitled to lost wages, back pay covers overtime, bonuses, and benefits.
Front pay is awarded to employees who are reinstated at work. It covers the period between the court judgment and the date of reinstatement.
You could also have to pay compensatory damages to wrongfully terminated employees who are victorious in their cases. Compensatory damages cover a range of potential losses that wrongfully terminated employees have experienced, such as the expenses involved with looking for new employment.
Lastly, employers who are found to be responsible for wrongfully terminating employees could have to pay punitive damages. However, punitive damages are rare. They are awarded to wrongfully terminated employees when employers have engaged in discriminatory actions that are especially malicious or reckless. For an employee to be awarded punitive damages, it must be proved that the employer consciously discriminated or retaliated against the employee or the employer displayed outrageous conduct.
The Takeaway
The exact damages and the precise cost of those damages will depend on the specific case. However, one thing is for sure: If you are found to have wrongfully terminated an employee, you will have to pay costly penalties. Furthermore, your business’s reputation could suffer greatly. Become more familiar with best employment practices and precisely what constitutes wrongful employment to help you avoid getting into the messy situation in the first place.
