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    Employment Law Divison

    Damages in California Wrongful Termination Cases

    When a California employee prevails in a wrongful termination lawsuit against a former employer, s/he will be awarded monetary damages. These wrongful termination damages may include:

    • Lost wages and benefits;
    • Compensation for emotional distress, physical pain, and/or loss of professional reputation;
    • Attorney’s fees; and/or
    • Punitive damages designed to punish the employer for severe wrongdoing.

    The type of damages you may receive in a wrongful termination suit against your employer depends on

    1. the legal basis for your wrongful termination suit, and
    2. the specific facts of your case.

    For example, damages in a case against your employer for breach of implied contract will be somewhat different from those in a public policy wrongful termination case.1

    Below, our California labor and employment law attorneys address the following topics:

    If you have further questions after reading this article, we invite you to contact us at Shouse Law Group.

    1. Damages for lost wages and benefits

    The most basic form of damages in California wrongful termination cases is compensatory damages for lost wages and benefits.

    In almost all cases where an employee is able to convince a jury that s/he was wrongfully terminated or experienced wrongful constructive termination, s/he should be able to recover some amount for lost wages and benefits.

    Calculating damages

    Damages for lost wages and employment benefits are calculated as follows:

    1. The value (adjusted for inflation) of wages/salary and the value of any benefits (such as health insurance) that an employee-plaintiff would have earned from their employer, starting from the date of wrongful termination up until the date of the court verdict (for example, past lost wages); PLUS
    2. The value (adjusted for inflation) of wages/salary and the value of any benefits that the employee-plaintiff would have received from the employer, starting from the date of the court verdict and continuing for as long as his/her job would reasonably have been expected to continue (for example, future lost wages); PLUS
    3. The value of any other contract damages caused by the defendant-employer’s behavior.2

    The second item on this list–future lost wages and benefits–can be challenging to calculate because there is no way to know with certainty how long an employee would have kept working for an employer if s/he had not been wrongfully terminated. But factors that can be used to guess at this include:

    1. The employee’s age, work performance and intent regarding his/her job with the employer; and
    2. The odds that the employer would continue the operations that included the employee’s job.3

    Example

    Tracey is a teacher at a private school. After several decades at the school, and as she is approaching retirement age, she is suddenly fired for no reason.

    Tracey contacts an employment lawyer who helps her sue for wrongful termination. A jury finds that Tracey and the school had an implied contract for Tracey’s continued employment.

    The jury awards Tracey the value of pay and benefits for the period since her wrongful termination. Tracey is about three years younger than the average retirement age for teachers. Therefore, the jury also awards her the value of pay and benefits for three additional years–on the assumption that that is probably how much longer she would have worked if she had not been wrongfully terminated.

    Mitigating damages

    Mitigation of damages in employment lawsuits basically means looking for and accepting alternative employment in order to make up some of the financial loss from being wrongfully terminated.

    In any California wrongful termination lawsuit in which an employee is awarded lost wages and benefits, the court will take into account the extent to which the employee could or did “mitigate damages.”

    This means that the damages you receive in a wrongful termination suit will be reduced by the amount that you actually earned OR could have earned in a job that was substantially similar to the one you lost.4

    Job-application-online

    California employment law requires you to “mitigate damages” by seeking similar employment to the job you lost.

    Test for mitigation

    The damages you receive in a wrongful termination case will only be reduced if the employer can show that all of the following are true:

    1. Employment substantially similar to your former job was available to you;
    2. You failed to make reasonable efforts to seek and retain such employment; and
    3. The amount you could have earned from such employment.5

    Moreover, the burden is on the employer to make the case for a mitigation-of-damages requirement–not on you to prove that you were unable to mitigate damages.6

    Considerations that are relevant to determining whether a given job is “substantially similar” to your old one include:

    • The nature of the work;
    • Whether the new position is substantially inferior to the old one;
    • The salary, benefits and hours of the new job;
    • The skills, background and experience required for the new job;
    • The job responsibilities of the old and new jobs; and
    • Whether the new job is in the same geographical area.7

    Example

    Let’s return to Tracey from our example above. Let’s say that she does not get a new job after she is wrongfully terminated from her teaching position.

    The school she worked for argues that her damages should be reduced because there were jobs available as assistant teachers at similar schools. The school argues that Tracey was qualified for those jobs and should have accepted one to mitigate her damages.

    But Tracey and her employment lawyer argue that these assistant teacher jobs are not substantially similar to her old job. They do not require the education and experience level that Tracey had. They also pay considerably less and tend to be part-time.

    Therefore, the jury finds that Tracey was not required to mitigate damages by taking one of these positions–and does not reduce her damages award by the amount she could have earned at one of them.

    2. Non-economic damages

    Plaintiffs in certain kinds of wrongful termination suits may also receive damages for non-economic harm resulting from their wrongful termination or workplace retaliation.

    The most common forms of non-economic damages in employment lawsuits are

    In addition, you may also be able to receive damages for physical symptoms caused by the mental suffering or stress created by your wrongful termination.9

    Availability of non-economic damages

    Non-economic damages for emotional distress, etc., are not available in wrongful termination cases that are based on a contract theory–such as an implied oral contract (a common exception to at-will employment in California).10

    But they are available in many other kinds of wrongful termination cases–such as

    Example

    Dave experiences sexual orientation harassment at his job. He reports the harassment to superiors and files a complaint with the California Civil Rights Department (CRD).

    While the CRD is investigating his complaint, Dave is suddenly fired, with no explanation given.

    Dave is able to find a new job at a comparable salary a few months later. But the stress and trauma of his sudden job loss leads him into a bout of depression that causes him to suffer from severe migraines. He is also concerned about how the job loss will look on his resume for the remainder of his career.

    Dave sues his former employer for FEHA retaliation and public policy wrongful termination. His suit is successful. His economic damages from the job loss are minimal because he was able to replace his earnings with his new job–but he is also awarded substantial noneconomic damages for his emotional suffering and damage to his reputation.

    3. Attorney’s fees and litigation costs

    In a few types of California wrongful termination cases, a successful plaintiff may also be eligible to have their attorney’s fees and other litigation costs (such as court fees and expert witness fees) reimbursed by their employer.

    Most plaintiffs in California employment lawsuits must pay attorney’s fees and litigation costs themselves, out of the settlement or damages they eventually receive from the defendant. But employees who sue their employers under certain statutes are able to collect attorney’s fees/litigation costs from their employer in addition to any other damages.

    Eligibility for attorney’s fees

    Wrongful termination laws that make an employee eligible to receive attorney’s fees include:

    • The whistleblower provisions of the federal Sarbanes-Oxley Act, which protect employees of publicly-traded companies from termination or retaliation if they report shareholder fraud;11
    • California’s Fair Employment and Housing Act (“FEHA”) retaliation law, which prevents employers from firing employees for opposing or reporting harassment or discrimination;12
    • Labor Code 98.6 and 6310 LC, which protect employees from wrongful discharge for reporting wage/hour law violations or occupational health and safety violations;13 and
    • The California False Claims Act, which protects employees who are wrongfully terminated for reporting theft or fraud by their employer involving state or local government funds.14

    4. Punitive damages

    The last form of damages that is commonly awarded in California wrongful termination suits is so-called “punitive damages.”

    Unlike the other forms of damages we discuss above, punitive damages are not designed to compensate the wrongfully discharged employee for any harms or expenses. Instead, they are designed solely to punish the employer for egregious wrongdoing.15

    What this means is that your employer’s wrongful termination of you needs to rise to the level of “oppression, fraud or malice” in order for you to receive punitive damages.16

    Example

    Let’s return to our example of Dave from Section 2, above. Dave is wrongfully terminated from his job after reporting sexual orientation harassment.

    Let’s say that Dave’s boss doesn’t just fire him for his complaint to the Department of Fair Employment and Housing. He also lets all Dave’s coworkers know that a complaint has been filed and reveals details about the allegations in the complaint that are highly personal and potentially embarrassing to Dave.

    Dave’s boss also says negative–and untrue–things about Dave’s job performance to other people in their industry.

    Dave’s employer’s behavior in this situation can be characterized as malice. Therefore, in his FEHA wrongful termination lawsuit, Dave may be eligible to receive punitive damages as well as compensatory damages.

    Additional reading

    For more in-depth information, refer to these scholarly articles:

    Legal References:

    1. Compare Judicial Council of California Civil Jury Instructions (“CACI”) 2406 — Breach of Employment Contract [form of wrongful termination] —Unspecified Term—Damages, with CACI 2433 — Wrongful Discharge [wrongful termination] in Violation of Public Policy—Damages.
    2. CACI 2406 — Breach of Employment Contract [form of wrongful termination]—Unspecified Term—Damages. (“If you find that [name of defendant] [discharged/demoted] [name of plaintiff] in breach of an employment contract, then you must decide the amount of damages, if any, that [name of plaintiff] has proved [he/she] is entitled to recover. To make that decision, you must: 1. Decide the amount that [name of plaintiff] would have earned from [name of defendant] up to today, including any benefits and pay increases; [and] 2. Add the present cash value of any future wages and benefits that [he/she] would have earned after today for the length of time the employment with [name of defendant] was reasonably certain to continue; [and] 3. [Describe any other contract damages that were allegedly caused by defendant’s conduct.]”)
    3. CACI 2406 — Breach of Employment Contract [form of wrongful termination]—Unspecified Term—Damages. (“In determining the period that [name of plaintiff]’s employment was reasonably certain to have continued, you should consider, among other factors, the following: (a) [Name of plaintiff]’s age, work performance, and intent regarding continuing employment with [name of defendant]; (b) [Name of defendant]’s prospects for continuing the operations involving [name of plaintiff]; and (c) Any other factor that bears on how long [name of plaintiff] would have continued to work.”)
    4. Parker v. Twentieth Century-Fox Film Corp. (1970) 3 Cal.3d 176, 181-182. (“The general rule is that the measure of recovery by a wrongfully discharged employee is the amount of salary agreed upon for the period of service, less the amount which the employer affirmatively proves the employee has earned or with reasonable effort might have earned from other employment. However, before projected earnings from other employment opportunities not sought or accepted by the discharged employee can be applied in mitigation, the employer must show that the other employment was comparable, or substantially similar, to that of which the employee has been deprived; the employee’s rejection of or failure to seek other available employment of a different or inferior kind may not be resorted to in order to mitigate damages.”)
    5. CACI 2407 — Breach of Employment Contract – Unspecified Term— Employee’s Duty to Mitigate Damages. (“[Name of defendant] claims that if [name of plaintiff] is entitled to any damages, they should be reduced by the amount that [he/ she] could have earned from other employment. To succeed, [name of defendant] must prove all of the following: 1. That employment substantially similar to [name of plaintiff]’s former job was available to [him/her]; 2. That [name of plaintiff] failed to make reasonable efforts to seek [and retain] such employment; and 3. The amount that [name of plaintiff] could have earned from such employment.”)
    6. Chyten v. Lawrence & Howell Investments (1993) 23 Cal.App.4th 607, 616. (“The burden is on the employer to prove that substantially similar employment was available which the wrongfully discharged employee could have obtained with reasonable effort.”)
    7. CACI 2407 — Breach of Employment Contract – Unspecified Term— Employee’s Duty to Mitigate Damages. (“In deciding whether the employment was substantially similar, you should consider, among other factors, whether (a) The nature of the work was different from [name of plaintiff]’s employment with [name of defendant]; (b) The new position was substantially inferior to [name of plaintiff]’s former position; (c) The salary, benefits, and hours of the job were similar to [name of plaintiff]’s former job; (d) The new position required similar skills, background, and experience; (e) The job responsibilities were similar; [and] (f) The job was in the same locality; [and] (g) [insert other relevant factor(s)].”)
    8. See CACI 2433 — Wrongful Discharge in Violation of Public Policy – Damages. (“If you find that [name of defendant] [discharged/constructively discharged] [name of plaintiff] in violation of public policy, then you must decide the amount of damages that [name of plaintiff] has proven [he/she] is entitled to recover, if any. To make that decision, you must: 1. Decide the amount that [name of plaintiff] would have earned up to today, including any benefits and pay increases; [and] 2. Add the present cash value of any future wages and benefits that [he/she] would have earned for the length of time the employment with [name of defendant] was reasonably certain to continue; [and] 3. [Add damages for [describe any other damages that were allegedly caused by defendant’s conduct, e.g., “emotional distress”] if you find that [name of defendant]’s conduct was a substantial factor in causing that harm.]”)
    9. See CACI 3905A. Physical Pain, Mental Suffering, and Emotional Distress (Noneconomic Damage [in wrongful termination cases]). (“[Insert number, e.g., “1.”] [Past] [and] [future] [physical pain/ mental suffering/loss of enjoyment of life/disfigurement/physical impairment/inconvenience/grief/anxiety/humiliation/emotional distress [insert other damages]]. [To recover for future [insert item of pain and suffering], [name of plaintiff] must prove that [he/she] is reasonably certain to suffer that harm.] No fixed standard exists for deciding the amount of these damages. You must use your judgment to decide a reasonable amount based on the evidence and your common sense.”)
    10. CACI 2406 — Breach of Employment Contract [form of wrongful termination]—Unspecified Term—Damages, endnote 2 above.
    11. 18 United States Code 1514A(c)(2)(C) — Sarbanes-Oxley whistleblower protections.
    12. Government Code 12965(b) GC [attorney’s fees for FEHA wrongful termination suit].
    13. Labor Code 98.7 LC — Persons allegedly discharged [wrongfully terminated] or otherwise discriminated against in violation of [whistleblower protection] law.
    14. Government Code 12653 GC — California False Claims Act protection against wrongful termination.
    15. Civil Code 3294 — Exemplary damages; when allowable; definitions. (“(a) In an action for the breach of an obligation not arising from contract [such as certain wrongful discharge lawsuits], where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.”)

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