Wrongful Termination in California – Top 7 Grounds for a Claim

Wrongful termination is when you are fired or laid off for an improper or illegal reason. In California, the most common grounds for wrongful termination claims are when the termination is based on:

1. Discrimination or for reporting FEHA violations,
2. Whistleblower activities,
3. Implied contract violations by the employer,
4. Public policy violations by the employer,
5. Filing a workers’ compensation claim or reporting a work injury,
6. WARN Act violations by the employer (in cases involving mass layoffs), and
7. Taking employee leave or making wage and hour complaints.

The damages a terminated employee may recover for a wrongful discharge lawsuit in California depend on the case. Though generally, they will include one or more of the following:

1. Lost wages and benefits;
2. Back pay and wages;
3. Compensation for emotional distress / pain and suffering arising from the loss of the job;
4. Attorney’s fees; and/or
5. Punitive damages designed to punish willful wrongdoing by the employer.

In this article, our California labor and employment lawyers answer the following frequently asked questions:

• 1. Grounds for lawsuit
• 2. How to file
• 3. Proof
• 4. When to sue
• 5. Damages
• 6. Average settlement

1. Grounds for lawsuit

California is an at-will employment state, which means that employers – in general – can terminate you for any reason or for no reason at all. In short, you do not have to be fired “for cause.”¹

However, if an employer fires you for an unlawful reason, then you can sue for wrongful termination. The seven primary grounds for wrongful termination claims are discussed below:

1) I was fired for being black/gay/pregnant/old/disabled/politically active

California’s Fair Employment and Housing Act – the main state law prohibiting workplace harassment and employment discrimination – makes it illegal for employers to retaliate against you for:

• Opposing harassment or discrimination,
• Filing a complaint about harassment (including sexual harassment) or discrimination, or
• Testifying or assisting in any investigation or lawsuit over harassment or discrimination.

Furthermore, employers may not fire you based on your being part of a protected class – which includes:

• Race,
• Color,
• National origin,
• Ancestry,
• Sex,
• Pregnancy,
• Pumping breast milk at work or asking for lactation accommodation,
• Religion,
• Age (if over 40),
• Disability,
• Genetic information,
• Marital status,
• Sexual orientation,
• Gender identity (including transgender or non-binary),
• AIDS/HIV positive status,
• Medical condition,
• Political activities or affiliations,
• Military or veteran status,
• Being a victim of domestic violence, assault or stalking,
• Citizenship status,
• In some cities such as San Francisco, height and weight.

Note that California employers may not fire you for any lawful conduct you engage in during your off-hours and away from the office. California employers also cannot fire you for

• joining a labor union or
• participating in union activities.²

Also note that you may be able to sue the employer for wrongful termination if you lose your job due to protected political activities or speech. Although the First Amendment to the U.S. Constitution does not apply to terminations by private employers, California labor law provides that employers cannot control or direct your political activities or speech: Thus, if you are fired for political activity, you have the right to sue for wrongful discharge.³

Learn more about FEHA violations by employers. See our page on examples of wrongful termination.

2) I was fired for being a whistleblower

Whistleblower termination occurs when an employer fires you for reporting a potential violation of law by the employer to a government agency or law enforcement agency. An example is you reporting a workplace safety or health hazard to OSHA, and your boss fires you in retaliation.

California’s main whistleblower protection law is Labor Code 1102.5 LC. This law provides that employers may not retaliate against you for reporting a suspected violation of law by your employer to:

• a government or law enforcement agency, or
• a supervisor or other employee who has the authority to investigate or correct the violation.⁴

Employers may try to get around this law by claiming you were insubordinate. Though absent other facts, merely exercising your rights under Labor Code 1102.5 is not insubordination.

Sarbanes-Oxley Act and Qui Tam

Other statutes provide more specific forms of whistleblower protection.

The Sarbanes-Oxley Act of 2002 is a federal law designed to protect investors from fraudulent accounting by public companies. If you work for a publicly-traded company, you have the right to sue for wrongful termination if your employer fires you for reporting suspected securities fraud to the federal government or a supervisor.⁵

Another important whistleblower law is the “qui tam” section of the California False Claims Act. California’s qui tam law allows you to sue your employer on behalf of the state government. This applies if the employer has committed

• fraud or
• embezzlement with respect to government funds.

If your employer then terminates or otherwise retaliates against you for bringing a qui tam suit, you have the right to sue for wrongful discharge/qui tam retaliation.⁶

3) I was fired in violation of an implied contract

An “implied contract” is an agreement that is understood by both parties, even if they have not signed a written contract memorializing this.

An employer may create an implied contract not to terminate you without good cause by:

• issuing an employee handbook listing specific reasons why employees may be fired, and/or
• telling you in person that your job is safe as long as you do not do certain things in violation of company policy.⁷

Employers violate the implied covenant of good faith and fair dealing by interference, evasiveness, inaction, non-communication, obstruction, or deliberate lies, fraud, and misrepresentation.⁸

4) I was fired in violation of public policy

Wrongful termination in violation of public policy typically happens when you are fired for refusing to follow your employer’s order to break the law. For example, if you are fired for refusing to help your employer violate criminal fraud laws, you will have a valid case for public policy wrongful termination.⁹

5) I was fired for filing a workers’ comp claim

California employers are required to carry workers’ compensation insurance, and if you are injured on the job, you are entitled to file a claim for benefits.

If your employer retaliated against you for exercising your right to report your work injury and file for workers’ comp, you have grounds for wrongful termination.¹⁰

6) I was in a mass layoff with insufficient notice

Another variation on wrongful termination is the failure of an employer to comply with California’s Worker Retraining and Notification (WARN) Act.

California’s WARN Act requires employers to provide you with sixty (60) days’ notice

• before conducting a mass layoff of fifty (50) or more employees, or
• before closing or relocating a facility.

The law applies to all employers with at least seventy-five (75) employees.

If the employer fails to provide 60 days notice, you may sue for wages and benefits for the amount of time by which the notice fell short of 60 days.¹¹

7) I was fired for taking leave or making wage and hour complaints

It is wrongful termination for employers to fire you for asking about or taking family medical leave that you are legally entitled to under the Family and Medical Leave Act (FMLA). Wrongful termination is presumed if an employer fires you:

• within 30 days after you request to use paid sick leave; or
• within 90 days of returning from FMLA leave.

Then the employer would have the burden to demonstrate that the firing had to do with something other than leave-taking.

Note that employers also may not fire you for serving on a jury or serving as a volunteer firefighter during an emergency. Nor may employers fire you for taking time off work if you have been a victim of specific crimes and are seeking help.¹²

It is also wrongful termination for employers to fire you if you complain about – or file a claim with the Department of Industrial Relations regarding – wage and hour violations. Examples include complaints about unpaid overtime pay, rest or meal breaks, or vacation pay.

Also note that in an emergency, employers may not take or threaten adverse action against you for refusing to come or stay at work because you have a reasonable belief the work site is not safe.¹³

2. How to file

If you lose your job and think you may have a wrongful termination claim against your former employer, we recommend that you take the following two steps immediately:

1. Contact an experienced California wrongful termination lawyer to discuss creating an attorney-client relationship; and
2. Gather and preserve all available evidence related to your case.

Gathering evidence, of course, consists of obtaining and preserving all written documents your employer has given you related to your termination and your job performance prior to termination (for example, your termination letter and copies of all past performance reviews).

You may need to request some of these documents from your former employer if you have not saved them yourself. (If they do not respond to these requests, an attorney can help you make them more forcefully.)

A California employment attorney can play an important role in the gathering of evidence for a lawsuit and help you determine what evidence will be important as the case proceeds.

3. Proof

Typical evidence that can help demonstrate that you were fired illegally includes:

• Recorded communications such as emails or voicemails from managers that show harassing or prejudiced behavior. Other materials that could work include handwritten notes, memos, or social media posts.
• Eyewitness accounts from fellow co-workers who can back up your side of the story. An example would be a colleague who saw the boss harass you.
• Company employment data that shows the company is systemically prejudiced. For example, a lack of people of color in management positions indicates that the hiring partners may be discriminating in favor of white employees.

Oral conversations may also be important evidence in a wrongful discharge lawsuit. Conversations about your termination itself, conversations about your job performance, and any conversation that led you to form certain expectations about your job security are all potentially relevant under California law.

Therefore, it is important to write down and store in a secure place your recollections of all conversations with supervisors or other employees that may be relevant to your termination. These written records should note the

• date,
• place and
• all participants for all of these conversations.

Note that some employers have a “mixed-motivation” ground for termination: The employer has both a nondiscriminatory reason and discriminatory reason to fire you. If the discriminatory reason was a substantial reason for the firing, then the firing constitutes wrongful termination.

Constructive termination

Under California’s “wrongful constructive termination” / “constructive discharge” laws, you can sue your employer for wrongful termination even if you are not actually fired. Constructive termination occurs when an employer makes working conditions so intolerable that you have no choice but to quit.¹⁴

You can sue for wrongful constructive termination if:

1. The employer intentionally created – or knowingly permitted – working environments that were so intolerable that a reasonable employer would expect a reasonable employee to resign because of them; and
2. The employer would not have been within the employer’s rights to terminate you outright (due to an implied oral contract or because termination would have been against public policy).¹⁵

Note that California workplace retaliation laws also prohibit employers from retaliating against you in ways other than termination or constructive termination. Examples include demotions, denying you a promotion, etc.

4. When to sue

For most claims in California, you need to file a lawsuit within the “statute of limitations” time period set forth by California law.

The statute of limitations for a wrongful termination lawsuit depends on what kind of claim you are bringing. The following table sets out the different deadlines under California law:

Type of Wrongful Termination Lawsuit	Statute of Limitations
Implied oral contract (breach of contract)	Two (2) years16
Public policy	Two (2) years17
Whistleblower under Labor Code 1102.5	Three (3) years18
Whistleblower under Sarbanes-Oxley Act	180 days (to file complaint with US Department of Labor)19
Fair Employment and Housing Act	Three (3) years (to file complaint with California Dep’t of Fair Employment and Housing)20
WARN Act	Three (3) years21

With all of the cases listed above, the clock begins running on the date you are terminated or otherwise retaliated against. Once filed, wrongful termination cases can take anywhere from several weeks to several years to resolve.

(If you choose to file a federal discrimination lawsuit, you usually have 180 days after the termination to file a claim with the EEOC. You will then receive a notice of right to sue. At that point, you have 90 days to sue.)

5. Damages

There are several types of damages that are typically awarded to plaintiffs under California wrongful termination law. These are:

1. Lost wages and benefits plus interest. These compensatory damages are the back pay that you could reasonably have expected to earn had you not been wrongfully terminated, plus the value of any employee benefits. This includes healthcare benefits, unused vacation, etc.²² This amount of unpaid wages will be reduced (“mitigated”), however, by the wages and benefits that you actually earned, or could have earned, from substantially similar employment.²³
2. Job reinstatement. Plus, you would need to be granted the same level of seniority you had at the time of the unlawful discharge. Though in reality, most people do not want their job back following a contentious legal proceeding and would rather look for a new job.
3. Loss of future wages/front pay. The court calculates this by starting on the day of the verdict up until the projected end date of the job.
4. Emotional distress/pain and suffering.²⁴ This can include compensation for physical pain, mental suffering, loss of enjoyment of life, grief, anxiety, loss of professional reputation, or humiliation arising from the traumatic experience of losing the job unfairly.²⁵
5. Attorney’s fees and litigation costs. In some cases, you can collect attorney’s fees from the employer. This is only possible for a few types of wrongful termination cases, such as under the Fair Employment and Housing Act and Sarbanes-Oxley.²⁶
6. Punitive damages. These are designed to punish the employer for its behavior and do not need to be related to any economic or non-economic loss you suffered. Punitive damages are only awarded in cases where the employer is found to be guilty of oppression, fraud or malice. They are more common in discrimination cases. When they are awarded, punitive damages are often much higher than compensatory damages (which are about making you “whole”).²⁷
7. Declaratory and injunctive relief.

What kind of damages you may sue for depends on the basis for your illegal discharge lawsuit. The average settlement differs by the type of case.

For example, the compensation for wrongful discharge in violation of an implied contract is usually only lost wages and benefits. However, unlawful discharge in violation of public policy can yield emotional distress damages as well.²⁸

Out-of-court settlements may be less than what a jury would return should the case go to trial. Still, plaintiffs typically opt for settlements because they are quicker and easier. (Note that any attorneys’ fees and court costs come out of the settlement amount.)

Note that if the employer is covered by EPLI insurance, then the insurance company rather than the employer will be in charge of its defense.

6. Average settlement

$40,000 to $45,000 is the unofficial average for wrongful termination settlements in California. Though your settlement amount can be lower – or much, much higher – depending on the variables in the case.

Note that federal law caps the damages that you can recover depending on the size of your former employer:

Size of employer sued for wrongful termination case	Damages cap (compensatory and punitive damages combined)
15 to 100 employees	$50,000
101 to 200 employees	$100,000
202 to 500 employees	$200,000
501 or more employees	$300,00029

Learn more in our article, What is the average wrongful termination settlement?

Helpful Links:

• Title VII of the Federal Civil Rights Act of 1964
• California Fair Employment and Housing Act (FEHA)
• Age Discrimination in Employment Act (ADEA)
• Equal Pay Act
• Americans with Disabilities Act (ADA)
• California Family Rights Act (CFRA)
• Pregnancy Discrimination Act
• Healthy Workplaces, Healthy Family Act
• California Civil Rights Department (CRD)
• Equal Employment Opportunity Commission (EEOC)

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Legal References: