Wrongful termination: Examples and cases

When employers have to make the difficult decision to fire employees, they need to make sure that they do not act in an unlawful manner — they need to avoid wrongful termination.

Generally, employment in the U.S. is “at will,” meaning that employees can be let go for any reason – or for no reason at all – unless the reason for the termination is specifically banned by law.

There are a number of federal laws that prohibit covered employers from terminating employees based on their membership in what are known as “protected classes” in the law.

For example, a federal law generally known as Title VII prohibits employers from terminating employees based on their race, color, religion, sex or national origin.

Other federal laws separately ban terminations based on disability or advanced age (40 or older). In addition, employers may not terminate employees because they exercise rights granted to them by federal law, such as taking a leave of absence under the Family and Medical Leave Act. This is known as retaliation, and it is unlawful.

Other examples of unlawfully retaliatory terminations include terminations that are made because an employee filed a sexual harassment complaint, filed a workers’ compensation claim, or “blew the whistle” on an unsafe condition in the workplace.

What’s considered wrongful termination?

A wrongful termination is a termination that is made for a reason that the law prohibits.

Examples include terminations that are made based on an employee’s race, disability or national origin.

The law also prohibits terminations that are made to retaliate against an employee who has exercised a legal right, such as by filing a complaint about alleged sexual harassment in the workplace.

When it comes to wrongful termination in violation of federal law, a federal agency known as the Equal Employment Opportunity Commission, or EEOC, has the authority to enforce and interpret federal laws prohibiting wrongful termination.

Wrongful termination occurs when an employee is terminated because they are a member of a protected class or because they exercised a right that the law gives them.

Employers must make terminations in good faith, such as by terminating an employee due to a serious violation of an employee handbook provision. Let’s say, for example, that your handbook strictly prohibits workplace violence and says serious violations are grounds for termination. If an employee seriously injures a co-worker in an unprovoked attack, this behavior would be solid grounds for terminating the employee – with or without a handbook provision that specifically prohibits it.

Remember: A termination is wrongful – meaning, for purposes of our discussion, illegal — if it is made for a reason that the law prohibits. Remember also that in addition to federal laws, which are enforced by the Equal Employment Opportunity Commission, state laws such as California law have their own rules banning wrongful termination. Many of these state laws closely track corresponding federal laws.

Later, we will provide examples of wrongful termination cases – that is, cases where an employer fired an employee and later had to defend its decision in a lawsuit.

Age discrimination

Age discrimination happens when an employer takes what is called an “adverse action” against an employee based on their advanced age. Adverse actions include more than just job terminations. They also include things like denying a promotion and demoting an employee.

Federal law protects employees age 40 or older from age discrimination. The protection is provided by a federal law called the Age Discrimination in Employment Act, which was enacted in 1967.

Under this statute, discharging someone because they are 40 or older is considered wrongful termination because advanced age, by itself, is almost never a legally justifiable reason to terminate an employee.

For example, an employer cannot fire all its warehouse workers when they reach age 40 based on its belief that they will no longer be able to meet the job’s lifting requirements based on their age. This is illegal age discrimination. 

An exception to this rule applies when employers can show that age is what is known as a “bona fide occupational qualification,” or BFOQ. For example, commercial pilots who work for certain airlines cannot fly after they reach the age of 65. But most of the time, terminating someone’s employment just because they are 40 or older violates the law.

Discrimination against those with a disability

Disability discrimination is taking an adverse action against an applicant or employee because they have a disability.

Adverse actions include refusal to hire, termination, denial of promotion, and denial of job benefits.

Under federal law, disability discrimination is prohibited by the Americans with Disabilities Act, which was enacted in 1990.

Terminating someone’s employment based on their disability is considered wrongful termination if the disability does not prevent them from performing the job. People are often qualified for jobs despite their disability.

Here is a common workplace example of a wrongful termination based on disability.

An employee informs his employer that he has been diagnosed with cancer and may need a short leave of absence to undergo treatment. Instead of allowing the leave or even considering the request, the employer immediately terminates the worker’s employment because it does not want a worker with cancer to be a part of its workforce. This is an example of wrongful termination based on disability.

Racial discrimination

Race discrimination happens when an employer treats an applicant or employee less favorably based on their membership in a certain race. It is also race discrimination to treat someone less favorably based on personal characteristics that are associated with that race, such as skin color or hair texture.

A federal law known as Title VII prohibits employers from discriminating against employees based on their race. This law was passed in 1964.

Terminating someone based solely on their race is considered wrongful termination because race has nothing to do with whether an employee is qualified for the job or should be terminated.

Here is an obvious workplace example of a wrongful termination that is based on race.

An employer is an open and avowed racist and strives to maintain a workforce consisting entirely of members of one race. The employer learns that one of its employees is a member of another race and fires him for that reason. This is an example of a wrongful termination that is based on race.

Sexual orientation discrimination

Sexual orientation discrimination occurs when an employer treats an applicant or employee less favorably based on their sexual orientation.

Title VII is a federal law that was passed in 1964 and prohibits employment discrimination based on sex.

In 2020, the U.S. Supreme Court decided that Title VII’s ban on sex discrimination encompasses a ban on discrimination that is based on sexual orientation or transgender status.

Terminating someone based on their sexual orientation is considered wrongful termination because a person’s sexual orientation does not render them unfit to perform their job and is not a valid reason to discharge an employee.

A workplace example of a wrongful termination based on sexual orientation is a situation in which an employer discharges an employee after finding out that the employee is homosexual and openly admitting that it discharged the employee solely for that reason.

Violation of FMLA

FMLA stands for the Family and Medical Leave Act, which is a federal law that gives eligible employees the right to take up to 12 weeks of unpaid leave a year under specific circumstances related to medical and family issues. The FMLA was signed into law in 1993.

Under this law, employers may not interfere with their employees’ exercise of their rights under it. They may not discharge an employee because they exercised their rights under the law. And they may not discharge an employee because they opposed or complained about an unlawful practice under the law.

It is considered wrongful termination to discharge an employee for exercising their rights under the law because employees have a right to take FMLA leave and exercise their other rights under the law without suffering retaliation as a result.

A common workplace example of a wrongful termination under the FMLA is as follows. Suppose an employee is eligible for FMLA leave and takes it. As soon as the employee returns to work, the employer terminates the employee, telling them that they are being terminated because they took FMLA leave. This is an example of wrongful termination under the FMLA.

Retaliation for sexual harassment complaints

A federal law known as Title VII prohibits employers from discriminating against employees based on their sex. Title VII was passed in 1964, and its prohibition of sex discrimination includes a ban on sexual harassment. Any conduct that creates a hostile work environment is unlawful.

When employees complain of sexual harassment, this is called “protected activity.”

And when employers discharge employees because they engage in protected activity, this is unlawful retaliation.

This is why it is considered wrongful termination to discharge an employee for filing a complaint about sexual harassment.

Retaliation for filing workers’ compensation claims

Workers’ compensation is a type of insurance that provides medical and other benefits to employees who get hurt on the job or become ill because of it.

Employees have a right to claim benefits under the workers’ compensation system, and it counts as retaliation for employers to take a negative job action against an employee for doing so. Negative job actions include termination from employment.

Workers’ compensation is a creature of state law. In 1911, Wisconsin became the first state to pass a state workers’ compensation law. Since then, every other state has established its own framework for processing cases involving workers’ compensation benefits.

It is considered wrongful termination to discharge an employee for filing a workers’ compensation claim because employees have a right to pursue workers’ compensation benefits without getting discharged for doing so.

A common workplace example is as follows. An employee is injured on the job and files a claim for workers’ compensation benefits. The employer tells the employee it is terminating their employment because they filed a workers’ compensation claim, and it keeps that promise. This is an example of wrongful termination for seeking workers’ compensation benefits.

Retaliation against whistleblowers

A variety of federal laws protect employees from being discharged because they report issues relating to fraud, workplace safety and other topics.

These include the Occupational Safety and Health Act, which was passed in 1970, and the Clean Air Act, which was passed in 1977.

It is retaliation to discharge a whistleblower because they reported wrongdoing or unsafe conditions at work.

Terminating an employee for blowing the whistle on something like a dangerous workplace condition or fraud is considered wrongful termination because whistleblowers play an important role in preventing wrongdoing and keeping workplaces safe.

A simple example of wrongful termination for whistleblowing is of an employer that terminates an employee because the employee reported unsafe conditions at work.

Notable wrongful termination cases

Sometimes, cases involving wrongful termination end up in litigation. People who believe they have been wrongfully discharged often get angry – angry enough to seek out a lawyer to remedy what they view as a violation of their rights.

Wrongful termination happens at all kinds of companies, from small to large, and in all types of industries.

The following real-life wrongful termination cases serve as examples of what to avoid and provide insight on how companies can do better.

Equal Employment Opportunity Commission v. The Salvation Army

In this case, a former cashier alleged that he was terminated on the basis of his multiple disabilities, which included scoliosis and bipolar disorder.

With the help of a job coach, the man began working at a Salvation Army thrift store. His lawsuit alleged that things went downhill after a new supervisor was assigned to him. The new supervisor allegedly chastised the employee based on his tics and other involuntary movements, the suit said. The employee was eventually let go.

The EEOC sued on his behalf, alleging unlawful disability discrimination under the Americans with Disabilities Act. It asked the court to award multiple forms of relief, including punitive damages.

The takeaway for employers is that new managers must be properly trained to manage employees with disabilities.

Desert Palace Inc. v. Costa

In this case, a female casino employee alleged that she was disciplined and then fired because of her gender. She was the only woman who worked in the hotel and casino’s warehouse, and she said she was punished for infractions that male employees committed without punishment. The casino said it fired her due to disciplinary issues, but a jury returned a verdict in her favor. The Supreme Court upheld the verdict.

From this case, employers should remember that disciplining an employee differently based on their gender is illegal gender discrimination.

Kingston v. International Business Machines Corp.

This case involved a white employee who opposed what he said was race bias against a Black subordinate.

The white employee was a sales team manager who supervised a white subordinate and a Black subordinate. When the manager learned that the employer was capping sales commissions for the white subordinate but not the Black one, he complained to management. After he complained, his employment was terminated.

He alleged that he was terminated in retaliation for opposing the employer’s alleged race bias.

A jury returned a multimillion-dollar verdict in his favor, and an appeals court affirmed.

The takeaway for employers is that they may not retaliate against employees for opposing an unlawful practice.

How employers can avoid a wrongful termination lawsuit

There are several keys to avoiding wrongful termination lawsuits.

First, employers must be aware of what the law prohibits. We have outlined for you the types of discriminatory and retaliatory actions that can get employers in legal trouble. Employers must be sure to keep up to date on employment laws.

It is also very important to produce and disseminate a company policy that makes it clear that discrimination and retaliation in the workplace are strictly prohibited.

Those in management positions must be properly trained on the requirements of employment law so that they do not allow wrongful terminations to take place.

Finally, when in doubt, employers should consult with an employment attorney for advice.

In summary

Employees have legal rights that prohibit employers from wrongfully terminating their employment. By educating themselves on the law and providing proper training, employers can minimize the risk of legal liability for wrongful termination.