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Wrongful Termination Laws: Illegal Reasons

Wrongful Termination Laws: Illegal Reasons

Employers should be aware of wrongful termination laws. Wrongful termination means firing an employee for reasons unrelated to their job performance. Wrongful termination claims can cost a small business more money than they want to spend.

Most workers in the U.S. are "at will" employees. At-will employment, the employer or the employee can end the working relationship without cause. State and federal laws state employers may not fire employees for discriminatory or retaliatory reasons.

Wrongful termination laws apply to all employees, regardless of the business size. Firing employees for improper reasons violates federal laws and leads to severe penalties.


Workplace discrimination means hiring or firing workers based on race, gender, or other traits. Title VII of the Civil Rights Act of 1964 makes it illegal for any employer to fire an employee because of their:

  • Race
  • Gender (includes sex, gender identity, pregnancy, and sexual orientation)
  • National origin
  • Disability
  • Religion
  • Age

This law applies to all workers, with or without an employment contract. Layoffs must be by seniority only. Any other method may be considered discrimination. Discriminatory reasons include but are not limited to:

  • Pregnancy or maternity leave. The Family and Medical Leave Act (FMLA) allows employees 12 weeks of unpaid pregnancy or maternity leave.
  • Mental or physical disability requiring accommodation. The Americans with Disabilities Act (ADA) requires employers and employees with disabilities to find reasonable working accommodations for the employee's condition.
  • Age. The Age Discrimination Act (ADA) prohibits the selective firing of workers over 40 based on age.
  • Sexual orientation. Gender preference and sexual identity are protected classes in some states.

The U.S. Department of Labor oversees all employment discrimination laws. Business owners should review its website regularly for updates to employment law.


Employees have the right to file a complaint for discrimination. The Equal Employment Opportunity Commission (EEOC) is the agency that handles discrimination claims.

Under state labor laws, retaliatory termination occurs when an employer fires an employee for filing a complaint under anti-discrimination laws.

Employers can avoid a retaliation claim by working with employees during a discrimination investigation. If an employee has a valid complaint, it is in the employer's interest to correct the matter. If the retaliation claim stems from other actions of the employee, other laws may come into play.

An employer's best defense against legal action is a good record establishing the reasons for the employee's termination.

Refusing to Take a Lie Detector Test

Under the federal Employee Polygraph Protection Act (EPPA), employers cannot fire employees because they refuse to take a lie detector test. The law prohibits employers from firing employees or refusing to hire applicants because they refused a polygraph test. There are few businesses whose employment policies demand a polygraph. Employee rights almost always trump any benefits an employer might get from such a test.

Complaints About OSHA Violations

Under the federal Occupational Safety and Health Act (OSHA), employers may not retaliate against employees because they make complaints about OSHA violations. These complaints are often made about an employer not meeting state or federal health and safety standards.

Whistleblower Statutes

"Whistleblowing" occurs when workers report their employer for violating a federal or state regulation. Under the Whistleblower Protection Act, federal and state laws protect whistleblowers from retaliatory termination, even in at-will states. Firing an employee for doing the right thing violates public policy. This led to the enactment of whistleblower statutes. Whistleblowers can still suffer retaliation following their reports, including:

  • Hostile work environments (bullying and threats from coworkers)
  • Physical and sexual harassment
  • Poor job reviews and forced relocation
  • Pressure to resign or retire

If they continue, any of these can become grounds for another lawsuit against an employer. If you've been the target of a whistleblower complaint, you should discuss options with your attorney. Avoid the urge to retaliate against valid employee concerns.

Avoiding Wrongful Termination Lawsuits

The easiest way for small business owners to avoid wrongful termination lawsuits is to have clear company policies against discrimination and follow them. Refrain from illegal activity, and give all workers fair treatment and equal pay. You cannot always avoid terminating an employee, but when you do, have good documentation. If an employee is always late, clearly record their tardiness. Show that you have counseled or disciplined them according to your guidelines. This won't remove all your worries about a wrongful termination suit, but it may make your chances of beating one easier.

Get Legal Help With Defending Against a Wrongful Termination Case

Defending against a wrongful termination lawsuit is never at the top of an employer's list. The time and energy spent fighting a lawsuit can detract from your most important goal: running your business. If a former employee files a wrongful termination case against you, contact an experienced employment law attorney.

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