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How much compensation can you get for wrongful termination?

By on August 14, 2019

Employers may be the subject of discrimination charges based on alleged violations of several civil rights laws, including the Fair Employment and Housing Act, Title VII, the Americans with Disabilities Act, and the Age Discrimination in Employment Act. Almost all California employers with 15 or more employees are covered by these laws. 

Various remedies may be imposed against employers who have engaged in unlawful discrimination. The most common approach to determining an appropriate remedy is to “make whole” the individual who is the victim of unlawful discrimination. However, remedies available under certain state and federal civil rights laws are not restricted to make whole relief. Punitive and compensatory damages may also be awarded in appropriate cases. Examples of the types of “make whole” and other forms of relief that may be provided under these laws include the following: 

  • Back Pay
  • Fringe Benefits
  • Front Pay
  • Other Forms of Equitable Relief
  • Punitive and Compensatory Damages

Back Pay

The most obvious loss sustained by many victims of discrimination consists of lost wages. Accordingly, the Equal Employment Opportunity Commission and the Fair Employment in Housing Commission have authority to award back pay to victims of unlawful discrimination. In determining the amount of back pay that is awarded, mitigating circumstances, such as interim earnings received from another employer and amounts earnable with reasonable diligence, should operate to reduce the amount of the back pay award. Similarly, a voluntary withdrawal from the work force will bar recovery as of the date of the withdrawal. However, unemployment insurance benefits are not utilized to reduce back pay awards in California. Its clear that employers bear the burden of proving that an employee has failed to mitigate damages in an employment discrimination suit. To satisfy this burden, an employer must establish that: 

  1. The damage suffered by the employee could have been avoided (i.e., that suitable positions were available that the employee could have discovered and was qualified to fill), and 
  2. The employee failed to use reasonable care and diligence in seeking such a position. Moreover, the decision suggests that back pay will be limited if an employee finds suitable employment after his or her separation, but is then legitimately discharged from the new position for misconduct.

Fringe Benefits

The victim of unlawful discrimination can also be awarded fringe benefits that were lost due to the unlawful conduct or their monetary equivalent as part of the back pay award. For example, courts have been willing to award health, welfare, pension, sick leave, and dental benefits that the employee would have earned in the absence of unlawful discrimination.

Front Pay

Front pay occasionally functions as compensation for an employee’s training or relocating to another position, and may be made in lieu of reinstatement when the antagonism between the employee and employer is so great that reinstatement is not appropriate. Front pay may also be awarded under Title VII and the Fair Employment in Housing Act where discriminatory barriers to promotional opportunities, positions or lines of progression are eliminated and an employee is restored to his or her “rightful place” in the work force. 

Other Forms of Equitable Relief

Additional forms of equitable relief that may be provided include awards of “constructive seniority” that would have accrued but for the unlawful practice, and setting goals and timetables for correcting past discriminatory actions. “Red circling” rates of pay represents another form of relief. It provides an individual who starts at a lower-paid position than that which he or she would have occupied in the absence of discrimination the higher (“red-circled”) rate of compensation that he or she would have earned.

Punitive and Compensatory Damages

The remedies available under Title VII, the Americans with Disabilities Act, and the Fair Employment in Housing Act can include punitive and compensatory damages. However, the State and federal laws differ considerably in this area. Employers should therefore understand and assess their exposure to liability under the law by contacting an attorney. 

Fair Employment in Housing Commission’s Authority: 

The California Legislature amended the Fair Employment in Housing Act, effective January 1, 1993, to authorize the Commission to award compensatory damages and administrative fines. When the Commission was abolished, the authority to impose administrative damages and fines ended.

The Fair Employment and Housing Act is of major significance to California employers since its often the main statute that victims of alleged discrimination base their claims. It also allows greater remedies, and it provides a different enforcement procedure and statute of limitations than exist under federal law. For example, punitive damages and other forms of relief generally available in noncontractual actions under California law may be recovered for certain Fair Employment and Housing Act violations. Notably, in 2013, the California Supreme Court addressed the standards and remedies that apply under the Fair Employment in Housing Act in mixed motive cases. It held that the proper standard of causation in a Fair Employment in Housing Act discrimination or retaliation claim is “a substantial motivating reason.” 

On a federal level, Title VII of the Civil Rights of 1991 provides that an unlawful employment practice is established when the complaining party demonstrates that race, color, religion, sex or national origin was a motivating factor for any employment practice, even though other factors also motivated the practice. The employer may then have a limited affirmative defense that does not absolve it of liability, but restricts the remedies available to the plaintiff. If the employer establishes that it would have taken the same action in the absence of the impermissible motivating factor, a court may not order the employer to hire, reinstate, promote or provide back pay to the complainant. In such cases, a court may grant relief only for the harm that actually results from the unlawful practice. Such relief can include injunctive or declaratory relief, attorney’s fees, and costs.

Undocumented Workers

A person’s status as an undocumented worker does not bar that person from the protections of the employment laws. The courts and enforcement agencies recognize the right of undocumented workers to some remedies available under the federal and state civil rights statutes. The Equal Employment Opportunity Commission takes the position that awarding some forms of monetary remedies to undocumented workers who are victims of discrimination promotes the goal of deterring unlawful discrimination without undermining the purposes of the immigration laws. California Legislation declares: “All protections, rights and remedies available under state law, except any reinstatement remedy prohibited by federal law, are available to all individuals regardless of immigration status, who have applied for employment, or who are or who have been employed, in this state.” (SB 1818).

Personal Liability

Supervisors cannot generally be held personally liable for employment discrimination under Title VII, the Age Discrimination in Employment, the Americans with Disabilities Act, or the Fair Employment in Housing Act. 

However, the Fair Employment in Housing Act establishes a basis to impose personal liability against any employee found guilty of unlawful harassment. Such liability may be found whether the employer knows or should have known of the conduct and fails to take immediate and appropriate corrective action. Consequently, a person may be held liable even if his or her employer is not liable. Authority also exists to impose personal liability for unlawful retaliation.

Constructive Discharge Standards

Circumstances may arise where an employee resigns and claims that he or she was constructively discharged. If an employee is able to demonstrate that a constructive discharge did occur and that it violated a legal obligation of the employer, the employee can pursue the same rights and remedies as would be available if the employee were simply fired. The standard could be applied, for example, if an employee demonstrates that he or she has been constructively discharged in violation of a contractual or statutory obligation, such as the obligations imposed by the state or federal anti-discrimination laws. Constructive discharge claims are quite common and can form the basis of substantial damages where the applicable standards are met. To meet the standards, an employee must prove: 

  • That his or her working conditions at the time of the resignation were so intolerable or aggravated that a reasonable person in his or her position would have been compelled to resign, and
  • That the employer either intentionally created or knowingly permitted the intolerable working conditions. 

Discipline and Termination of Employees

Union Employees

An employer who is a party to a collective bargaining agreement must comply with the express and implied provisions of that agreement pertaining to discipline and termination of employees. Under most union agreements, employees can be discharged only for “just cause” or “good cause,” and disputes over what constitutes just cause for discipline are typically decided by arbitrators selected by the parties in grievance resolution proceedings. Accordingly, the concept of “at will employment,” which allows employers to terminate employees at any time without “just cause,” is usually inapplicable to employees covered by a collective bargaining agreement.

Non-Union Employees

Employees Covered by Employment Agreements: 

Relatively few non-union employees have written or unwritten employment agreements that guarantee employment for a specified duration. Where employment agreements exist, however, individuals who are parties to such agreements may enjoy protections against discharge that are otherwise unavailable. These protections arise primarily from two sources: 

  1. The employment agreement itself
  2. Labor Code Sections 2920 through 2927.

The employment agreement itself.

Where an employment agreement restricts the employer’s right to discharge, the employer may be liable if it breaches its contractual obligations. Therefore, the agreement itself affords direct protection to the employee in such instances. Even if an agreement does not explicitly restrict termination by the employer, the Labor Code confers protections to some employees under certain circumstances. Where a written or oral agreement specifies a period of employment greater than one month, Labor Code Section 2924 limits the employer’s ability to terminate the employee before the expiration of the period specified in the agreement to situations involving (1) the employee’s willful breach of duty in the course of his or her employment, or (2) the employee’s habitual neglect of his or her duty or continued incapacity to perform it. Discipline short of actual or constructive termination is not specifically addressed by the Labor Code in the absence of unlawful retaliation or discrimination. 

In contrast to the rules applicable to employees with employment agreements for a period in excess of one month, an employer has broad discretion according to statute to terminate an employee who is hired either for an unspecified duration, or for a period of one month or less. Since most employees do not have employment contracts and are not hired for a specified term, the rules applicable to the termination of such employees are extremely important. Labor Code Section 2922 states that an employee who is not hired for a specified term in excess of one month “may be terminated at the will” of the employer. The statute also states that the employee enjoys an unfettered power to terminate the employment relationship at his or her will. Thus, such individuals are sometimes referred to as “at-will employees.”

Labor Code Sections 2920 through 2927.

Labor Code Section 2922 creates a presumption that either party is free to terminate the employment relationship at will, at any time and for any reason, as long as the termination does not offend principles of public policy or violate rights conferred by other statutes, such as the FEHA, Title VII, or the National Labor Relations Act. Accordingly, employers often assume they have the unrestricted right to discharge an at-will employee for any reason, as long as neither the basis for (nor the effect of) the termination breaks any law (e.g., a result of unlawful retaliation or discrimination based on such factors as sex, race, color, religion, national origin, or union affiliation) or public policy (e.g., a discharge based on a refusal to commit an unlawful act). However, it is imperative that employers understand that the presumption of at-will employment may be overcome by evidence of a contrary intent.

Unlike discrimination claims filed with an administrative agency, which investigates and attempts to resolve such claims without charge to the employee, actions in court usually necessitate engaging legal counsel at the employee’s personal expense. The availability of a jury trial and the potential recovery of substantial monetary damages, including punitive damages, back pay, and compensation for other losses, will provide the impetus for many employees to file suits. In fact, literally hundreds of wrongful termination suits have been filed against employers of virtually all sizes and in all industries.

Public Policy Limitations: 

An employer cannot discharge an employee, whether or not hired for a specified term, for reasons that contravene the dictates of public policy. The Supreme Court has recognized that public policy cases fall into one of four categories: 

  1. the employee refused to violate a statute
  2. the employee performed a statutory obligation
  3. the employee exercised a statutory right or privilege
  4. the employee reported a statutory violation for the public’s benefit

This includes situations where, as a condition of employment, an employer coerces an employee to commit an act that violates public policy or restrains an employee from exercising a fundamental right, privilege or obligation. Similarly, it would be unlawful to fire an employee for registering internal complaints regarding the safety of aircraft parts or for refusing either to commit an illegal act or to engage in nonconsensual sexual acts. It also would appear impermissible to terminate employees in violation of other statutes, e.g., for refusing to take a polygraph examination, for attending compulsory jury or witness duty, for disclosing information regarding an unlawful act to a government or law enforcement agency, or for asserting claims under the FEHA. A termination based on such unlawful reasons could result in the employer’s liability for wrongful termination of the employee. 

Expectations of Continued Employment

There is significant favor shown to the legitimate expectations of employees continued employment. This occurs where an employee’s longevity of employment has been accompanied by additional factors that further justify such expectations, such as written or verbal assurances of continued employment or policies and practices that preclude discharge without good cause. In such situations, courts have appeared willing to prohibit termination without good cause. Moreover, while it can be argued that the workers’ compensation law provides the exclusive remedy for emotional distress claims that are not tied to an alleged statutory violation, terminations that have been administered in a malicious manner have resulted in intentional infliction of emotional distress claims. When evaluating these issues, employers should remember that they may be held responsible for the acts of their agents and supervisors.

However, the presumption of at-will employment created by Labor Code Section 2922 can be overcome by evidence that the employer and employee had a contrary intent. In order to enforce the actual understanding of the parties to a contract, courts evaluate the parties’ conduct to determine if it demonstrates that an implied contract existed. Among the factors considered when determining whether an agreement exists include:

  • the personnel policies or practices of the employer, 
  • the employee’s longevity of service, 
  • actions or communications by the employer reflecting assurances of continued employment, and 
  • the practices of the employer’s industry. 

The true nature of the contract is determined based on the totality of the circumstances. 

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