Losing a job can be stressful, but not every termination is lawful. This guide on Wrongful Termination Explained helps employees understand when a firing may violate federal or state employment laws and what legal options may be available. While many U.S. workers are employed under at-will employment arrangements, employers cannot terminate employees for unlawful reasons.
Understanding the difference between a legal termination and a wrongful termination is essential for protecting workplace rights and pursuing appropriate remedies when necessary.
What Is Wrongful Termination?
Wrongful termination occurs when an employer fires an employee in violation of federal law, state law, an employment contract, or established public policy protections.
Although employers generally have broad authority to terminate employees, that authority is not unlimited. If a dismissal is based on discrimination, retaliation, or another unlawful reason, the employee may have grounds for a legal claim.
Employment Litigation Remains Common
According to the U.S. Equal Employment Opportunity Commission (EEOC), the agency received more than 81,000 new discrimination charges during fiscal year 2023, representing an increase of over 10% compared with the previous year. The figures illustrate that disputes involving discrimination and retaliation continue to be among the most common workplace legal issues.
Source
U.S. Equal Employment Opportunity Commission (EEOC)
How At-Will Employment Affects Termination
Most states in the United States follow the doctrine of at-will employment. Under this system, employers may generally terminate employees at any time and for almost any lawful reason.
However, at-will employment does not allow employers to terminate workers for reasons prohibited by law. Even in an at-will workplace, employees retain important legal protections.
Common Examples of Wrongful Termination
Discrimination
Federal laws prohibit employers from firing workers based on protected characteristics such as:
- Race.
- Color.
- Religion.
- Sex.
- National origin.
- Disability.
- Age (for eligible employees).
A termination motivated by discrimination may constitute wrongful termination.
Retaliation
Employees are protected when they engage in legally protected activities. An employer generally cannot fire an employee for:
- Reporting workplace harassment.
- Filing a discrimination complaint.
- Participating in an investigation.
- Reporting safety violations.
- Acting as a whistleblower.
Retaliatory firings are among the most common wrongful termination claims.
Supreme Court Strengthens Whistleblower Protections
On February 8, 2024, the U.S. Supreme Court unanimously ruled in Murray v. UBS Securities LLC that employees bringing whistleblower claims under the Sarbanes-Oxley Act are not required to prove retaliatory intent. The decision reinforced federal protections for workers who report suspected misconduct and clarified the legal standard applicable to retaliation claims.
Sources
Supreme Court Opinion
SCOTUSblog
Violation of Employment Contracts
If an employee has a written employment agreement that specifies termination procedures or job protections, an employer may breach the contract by failing to follow those terms.
Contract violations can lead to wrongful termination claims depending on the circumstances.
Taking Protected Leave
Employees may have legal protections when taking leave under applicable federal or state laws.
Terminating an employee solely because they exercised protected leave rights may violate employment laws.
Family and Medical Leave Act Protections
The U.S. Department of Labor administers the Family and Medical Leave Act (FMLA), which provides eligible employees with job-protected leave for certain medical and family reasons. Employers generally may not interfere with or retaliate against employees for exercising rights protected under the statute.
Source
U.S. Department of Labor
Refusal to Engage in Illegal Activity
An employer generally cannot lawfully terminate an employee for refusing to commit illegal acts.
For example, an employee who refuses to falsify records or participate in fraud may be protected under various laws and public policy exceptions.
Signs a Termination May Be Unlawful
Employees may wish to investigate further if:
- They were fired shortly after reporting misconduct.
- Supervisors made discriminatory remarks.
- The employer ignored established disciplinary procedures.
- Other employees were treated differently under similar circumstances.
- The termination occurred after requesting an accommodation or protected leave.
While these factors do not automatically prove wrongful termination, they may warrant legal review.
EEOC Guidance on Retaliation
According to the EEOC, retaliation has consistently been the most frequently alleged basis for discrimination charges filed with the agency. Employees who experience adverse actions after reporting discrimination or participating in investigations may have additional legal protections under federal law.
Source
EEOC Charge Statistics
What Employees Should Do After a Suspected Wrongful Termination
1. Gather Documentation
Important records may include:
- Employment contracts.
- Performance reviews.
- Emails and messages.
- Employee handbook provisions.
- Termination notices.
Documentation can play a critical role in establishing facts.
2. Create a Timeline
Employees should document significant events, including complaints, disciplinary actions, leave requests, and termination dates.
A clear timeline often helps attorneys and agencies evaluate claims.
3. File Administrative Complaints if Necessary
Some wrongful termination claims require filing with a government agency before pursuing a lawsuit.
Deadlines can be short, making prompt action important.
Important Filing Deadlines
Many federal employment claims require workers to file a charge with the EEOC before initiating a lawsuit. In most cases, employees have either 180 or 300 days to file, depending on the state and the applicable laws. Missing these deadlines may prevent an employee from pursuing legal remedies.
Source
EEOC
4. Consult an Employment Attorney
An attorney can evaluate whether the termination violated applicable laws and explain available remedies.
Potential Remedies for Wrongful Termination
Depending on the facts and applicable law, remedies may include:
- Back pay.
- Lost benefits.
- Reinstatement.
- Front pay.
- Compensatory damages.
- Attorney’s fees.
- Other court-ordered relief.
The specific remedies available vary by jurisdiction and legal claim.
Recent Enforcement Results
In fiscal year 2023, the EEOC secured nearly $665 million for victims of workplace discrimination through mediation, conciliation, and litigation. The recoveries represented the highest level of monetary relief obtained by the agency in recent years and demonstrated the significant remedies available in employment disputes.
Source
EEOC
Employer Best Practices
Employers can reduce the risk of wrongful termination claims by:
- Applying policies consistently.
- Maintaining detailed documentation.
- Training managers on employment laws.
- Investigating complaints thoroughly.
- Avoiding retaliatory actions.
- Following established termination procedures.
A proactive compliance strategy benefits both employers and employees.
State Laws May Provide Additional Protections
Employment laws differ significantly across the United States. Some states provide broader protections than federal law, including additional protected categories and stronger employee rights.
Employees should review the laws applicable in their state when evaluating a potential claim.
State Law Variations
Some states provide protections that extend beyond federal law. For example, Montana generally requires employers to show good cause for termination after an employee completes a probationary period under the Montana Wrongful Discharge from Employment Act. Other states recognize broader public policy exceptions or additional protected characteristics.
Source
Montana Legislature
Wrongful Termination Claims Continue to Be a Major Source of Employment Litigation
Federal agencies and courts continue to handle thousands of employment disputes involving discrimination, retaliation, and wrongful discharge. According to the EEOC, retaliation claims remained the most frequently alleged category of workplace discrimination charges in fiscal year 2023. Employers that maintain consistent policies, document employment decisions, and provide management training are generally better positioned to reduce legal risks.
Sources
EEOC Statistics
National Conference of State Legislatures
Conclusion
Understanding Wrongful Termination Explained is important for employees and employers alike. While at-will employment allows flexibility in many workplace relationships, employers cannot fire workers for discriminatory, retaliatory, or otherwise unlawful reasons.
Employees who believe they have been wrongfully terminated should preserve evidence, understand applicable deadlines, and seek qualified legal guidance. Knowing your rights is often the first step toward protecting them.