Wrongful Termination and the Employee’s Duty to Mitigate Damages

In regard to employment laws, most states are considered “at-will” employment states. This means that either the employee or the employer may terminate an employee at any time and for any reason. However, regardless of a state being “at-will,” there are certain times in which the ending of an employment relationship by an employer will be considered “wrongful termination.” Wrongful termination occurs when an employee is unlawfully terminated, usually in breach of state or federal employment laws. The most common grounds for a wrongful termination claim include:

  • Breach of an employment contract,
  • Constructive termination, which is typically seen when an employer makes a work environment so unbearable that an employee has no option but to quit,
  • Discrimination based on race, gender, age, and other unlawful reasons,
  • The employee is asked to commit an illegal act,
  • Whistleblowing,
  • Violation of company or public policy.

When an employee claims wrongful termination, there is an expectation that the newly unemployed person will take the steps necessary to find a new job. State and federal laws place a duty on the terminated employee to mitigate his damages as a result of the termination. This means that unless the employee is fully disabled or otherwise wholly unable to work, he must diligently search for comparable employment.

What Damages Are Awarded in a Successful Wrongful Termination Claim?

Damages awarded in a wrongful termination case have the purpose of making the terminated employee whole again or putting the employee in the position he was or should have been in had he not been wrongfully terminated. These damages include the compensation and benefits which the employee expected to receive from employment, including those which he should have received if both parties performed as promised.

Damages that could be awarded in a successful termination case include:

  • Economic Damages: These are awarded to repay the employee for lost wages and include back pay and front pay.

Back pay includes wages lost from the date the employee was terminated through the date of trial. These damages will be offset according to any wages an employee has earned at a new job.

Front pay can include wages lost in the time between a judgment awarded in court and the employee’s reinstatement into his previous position or where there is no reasonable expectation that the employee will find a comparable job.

  • Compensatory Damages: These damages are awarded to compensate the employee for any losses and paid out-of-pocket expenses. This can be seen in employment discrimination cases where the discriminatory termination resulted in mental anguish or other emotional harm.
  • Punitive Damages: These can be awarded in certain wrongful termination cases in state court or where the employer has 15 or more employees and has violated Title VII of the Civil Rights Act. They are meant to punish the employer for any intentional or reckless discriminatory actions, including terminations based on race, color, national origin, sex, disability, or religion. However, the award of punitive damages under Title VII is limited based on the number of employees at a company. The amount of the award is limited to $50,000 where there are less than 100 employees, $100,000 where there are between 101 and 200 employees, $200,000 where there are between 201 and 500 employees, and $300,000 where there are over 500 employees.

What is the Duty to Mitigate Damages?

When an employee is wrongfully terminated from his position, he has the duty to mitigate his damages (generally lost wages) in order to avoid having the company pay damages for years of lost wages while a claim is pending and the employee is not working.

The duty to mitigate damages requires that employee do the following:

  1. Conduct a diligent and consistent search to find comparable work in the same field, and
  2. Keep records of the employee’s efforts in locating a comparable job.

When searching for comparable work, an employee does not have to take any job that comes up in his search. He is not required to take a job that is inherently different than the one from which he was terminated. The United States Supreme Court has indicated that an employee is not required to go into another line of work, accept any relegation to a lower position, or take a “demeaning” position. However, the employee will lose his right to back pay if he refuses a job that is “substantially equivalent” to the one from which he was wrongfully terminated.

Diligently search for comparable work may also be satisfied where an employee opts to pursue a degree or starts a business. Most cases have seen an award of back pay where an employee has pursued a degree after a job search ranging from 6 months to a year. Where employees choose to become self-employed, the decision to start a business must be made in good faith. Here, the employer will have to prove that establishing a business was not a good alternative to finding a comparable job to show that an employee failed to mitigate his damages.

Keeping notes of a job search and supporting documents will allow the wrongfully terminated employee to show a court that he is doing all he can in an attempt to gain employment and get his life back on track. Usually, the company will attempt to defend itself by asking the employee what he has done to mitigate his damages and by showing that he has not taken steps to find comparable work. It is important to remember, however, that the company will be entitled to all records of the search during the discovery process. This means that the employee should not write in his records anything that he does not want to be shown in open court.

Have You Been the Victim of Wrongful Termination? Call Us Today

If you have been unlawfully terminated from your job, call the trusted attorneys at Noble Law. Our attorneys provide superior legal counsel that will help you to understand whether your termination is in violation of the law and the damages to which you might be entitled. Consultations are offered in our offices in New York and North Carolina and remotely via video conferencing. Call our Charlotte office at 704.626.6648, our Triangle office at 919.251.6008, or our New York office at 212.662.6500, or visit our website to schedule your consultation.

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