Wrongful Termination Settlements: What Can I Expect?

Sometimes, an employee files a wrongful termination lawsuit because they want their job back. It all depends on the facts of the case. If the employer's behavior is extreme, the employee can even demand punitive damages. But a judge rarely awards punitive damages in a wrongful termination case.

Wrongful termination claims allege that a company fired an employee violating state or federal law. Sometimes, the employee may argue that their employer breached their employment contract.

Wrongful termination claims can be challenging to prove, so many claims settle out of court. The value of your wrongful termination settlement depends on several factors that vary from case to case. You can better understand the factors in your case by speaking with an attorney.

Why Wrongful Termination Settlements Are Common

Most wrongful termination claims don't reach a courtroom. Many settle before they go to trial. According to the American Bar Association, more than 95% of all civil lawsuits settle out of court. This is because an out-of-court settlement is often the best option for both parties due to the unpredictable nature of jury trials.

One of the major obstacles at trial for the terminated employee is proving that the employer fired them for illegal reasons. For example, they must show that their company fired them because of race, gender, whistleblowing, or reporting harassment.

When the employee alleges whistleblowing or discrimination, the employer usually responds with evidence of supposedly valid reasons for the firing, such as poor performance or attendance problems.

Employers often have good reasons to settle as well. Even when employers successfully defend firing someone, wrongful termination trials can reveal potentially damaging information about a company. These lawsuits can also have a domino effect. Not only that, trials take time and are expensive.

How Wrongful Termination Claims Are Valued

Most people file an employment lawsuit primarily because they want damages. Some want their job back by asking for reinstatement. But few people want to work for a company with unfair employment practices. Usually, the goal is to get fair compensation for the negative effects of the termination.

What Affects the Award or Settlement Amount?

The monetary value of your wrongful termination claim depends on several factors. Factors impacting the amount of compensation you receive include the following:

• The length of time you worked for the company
• Your position, title, and job duties
• Your salary or hourly rate
• The number of hours you typically worked
• Whether you routinely earned commission, bonuses, etc.
• The fringe benefits you received while working for the defendant
• Any expenses you suffered as a result of losing your job
• Damage to your reputation

Types of Damages in Wrongful Termination Cases

Depending on the facts of your case, your wrongful termination attorney will demand some (or all) of the following types of damages:

• Lost wages
• Medical expenses
• Loss of professional credibility
• Emotional distress
• Job search expenses
• Punitive damages
• Attorney fees

Sometimes, your new employment will pay much less than you earned while working for the defendant. If so, your employment lawyer will also demand damages for lost future income.

Wage Loss Damages

When your wrongful termination lawyer files your initial complaint, they must list your damages. They must also attach evidence proving each type of loss you claim.

When calculating your lost wages, your attorney will consider the following:

• Base pay or salary
• Bonuses and commissions
• Income lost from the date of termination through the present

For example, suppose a written or implied contract shows that you should have been employed for at least six more months. Your financial losses would include the income you would have received during those six months. Yet, many wrongful termination cases don’t have a specific period of lost wages.

When you file a wrongful termination lawsuit, you must mitigate your damages. You can't sit back waiting for your case to go to trial before you look for a new job. Start looking for a new job immediately.

The defendant will investigate to see if you refused any employment. They will also check if you withdrew money from a 401K or retirement account.

Your attorney will have to reduce your damages by any money you receive during the interim. You must deduct wages from your new job and any unemployment benefits.

Lost Benefits

Your attorney will also demand that your former employer compensate you for lost benefits. For example, if a claimant had to pay for health insurance after termination, their employer may be liable for these out-of-pocket expenses.

Benefits can also include fringe benefits, such as the loss of stock options or profit sharing.

Emotional Distress Damages

Most plaintiffs demand damages for mental anguish. Losing your job can be devastating. Many workers experience anxiety, depression, and other emotional problems as a result of their termination.

If this is the case, your lawyer can demand compensation for distress. Recovering damages for emotional distress is more likely in cases where your employer's actions were especially egregious, as in claims of sexual harassment or Title VII violations. Damages for emotional distress are also common in cases involving a hostile work environment.

What To Expect in the Settlement Process

After an employee loses their job for an unlawful reason, they can explore their legal options. Informally resolving the issue with the employer is possible. Yet, some people can’t get a fair outcome until they take a few more steps. These next steps can depend on the reason for termination.

Agency Claims for Wrongful Termination

Sometimes, a worker can only proceed through a federal or state agency. For example, retaliatory or discriminatory job losses concern the U.S. Equal Employment Opportunity Commission (EEOC). Termination due to other protected activities, such as unionizing, can involve the National Labor Relations Board (NLRB). 

The former employee must first file a complaint with the agency, such as the EEOC for discrimination cases. The EEOC will investigate whether discrimination was a factor in the termination.

If the EEOC finds discrimination, it will first try conciliation. This step can include negotiating a settlement offer.

If conciliation fails, the EEOC will decide whether to sue the employer on the worker’s behalf. Often, the EEOC will sue when it believes a favorable ruling for the employee is likely. If the EEOC doesn’t sue, it will give the former employee the right to sue independently. Both parties still have a chance to settle on their own before the lawsuit ends.

Individual Claims for Wrongful Termination

For other types of wrongful termination cases, such as breach of contract, the process generally doesn’t involve a government agency. The former employee can proceed with an attorney.

They begin by reviewing the case and gathering evidence. Even in a settlement, evidence can encourage the employer to negotiate to avoid court. Evidence can also help you assess what amount would be fair. 

Typically, the next step is to send the employer a demand letter. The parties may begin negotiation or mediation. Your attorney can help you weigh the benefits and drawbacks of a settlement offer.

Sometimes the employer and worker can’t agree on settlement terms. The worker can continue with a lawsuit unless mandatory arbitration applies.

Get Legal Help With Your Wrongful Termination Settlement

If you believe your employer wrongfully terminated you, review your employee rights. Having an attorney who understands your state's employment laws can be beneficial. They'll evaluate your claim and advise you on how best to proceed.

Their legal advice can help you avoid costly errors and guide you through the complexities of negotiating a fair settlement. Contact a local employment law attorney today.