Wrongful Termination Settlements: What Employees Should Know

Getting fired sucks.

Getting illegally fired? Yeah, that’s way worse. Luckily, wrongful termination law is here to help employees who get terminated for illegal reasons — and provide a way to get some financial compensation in return.

The problem is…

Most people have no idea what their case is actually worth. They don’t know what to expect from a settlement, how to prove their claim, or where to even start. That’s exactly what this article is going to help you figure out.

Here’s what we’ll cover:

• What is Wrongful Termination Anyway?
• Average Settlement Amounts (The Real Numbers)
• Why Lawyers Make All The Difference
• Types Of Compensation Available
• How To Make A Case Bulletproof

What is Wrongful Termination Anyway?

Wrongful termination means that an employer illegally fired an employee.

Termination is usually at the employer’s discretion, even in at-will states like California. But there are still certain protected reasons that it’s illegal to fire someone. These include:

• Discrimination based on a protected characteristic (race, gender, age, disability, etc.)
• Retaliation for whistleblowing or reporting illegal activity
• Violating the terms of an employment contract
• Firing someone for taking protected leave (FMLA, etc.)
• Termination that violates public policy

Here’s the misunderstanding…

Just because someone was fired in an “unfair” way doesn’t mean they were also fired in an “illegal” way. Understanding the nuances of wrongful termination law is important — because many “bad” firings are not illegal (or considered wrongful terminations). Did the boss hate the employee’s attitude and take it out in the performance reviews? Tough luck — that’s not illegal.

BUT did the employee report harassment and then get fired as a result? That’s retaliation, and it is against the law.

Wrongful termination lawyers know the ins and outs of wrongful termination law — and can evaluate in minutes whether someone has a claim worth filing. Without a lawyer, employees often overlook key evidence or let critical deadlines for filing claims pass.

Average Settlement Amounts (The Real Numbers)

How much are wrongful termination settlements these days?

The answer: It depends.

There’s a huge range, but most California wrongful termination settlements are somewhere between $5,000 and $80,000. But that’s just the middle range — some cases settle for much less, and others for several million dollars.

But here’s the really important part…

The presence or absence of legal representation is a major factor in settlement outcomes. Studies show that 64% of employees with legal representation received some form of compensation, compared to just 30% who went it alone.

Even more telling? The average payoffs differ dramatically by representation status. The average settlement for represented employees was $48,800, while the average for unrepresented employees was just $19,200.

That’s more than double.

Put it another way… Even after paying attorney fees (around 33-40% on contingency), represented employees still end up with far more compensation than if they tried to pursue a claim on their own.

Why Lawyers Make All The Difference

Employers take legal claims more seriously when a lawyer is involved.

Here’s why…

Attorneys know how to collect the right evidence, meet all of the procedural requirements, and negotiate effectively. Employment lawyers understand which documentation is most important and how to present it in a persuasive way.

Lawyers are also effective negotiators. Overall, 43% of wrongful termination plaintiffs receive compensation. But when you break the numbers down further, wrongful termination cases that had both witness testimony and written evidence had a 63% success rate.

Bottom line: Lawyers know exactly what evidence matters most, and how to get it.

But here’s another key reason legal representation is so important… Employers would rather settle a claim than go to trial. When an attorney gets involved, the employer knows the claim is serious and prepared to take all the way to trial if necessary.

This often leads to better settlement offers.

Types Of Compensation Available

Wrongful termination settlements can provide a variety of types of compensation.

There are economic damages, which cover the tangible financial losses of the employee. This includes:

• Back pay, or the salary and wages that the employee lost from the time of the termination until the time of the settlement (or new employment)
• Front pay, or the money they’re expected to lose in the future if they can’t find comparable work
• Lost benefits, including health insurance, retirement contributions, and stock options

Then there are non-economic damages, which address the intangible emotional effects of the termination:

• Emotional distress and mental anguish
• Damage to professional reputation

Finally, punitive damages apply in some cases.

Punitive damages are intended to punish the employer for illegal or wrongful conduct. The purpose is to deter the employer from repeating the behavior and to deter others in the industry from similar behavior. Punitive damages can significantly increase the size of a settlement, but only apply in egregious cases.

Punitive damages are rarely awarded, and only applied in cases where the employer’s conduct was especially malicious or reckless. That said, just the threat of punitive damages often helps in settlement negotiations. Employers would rather pay a higher settlement than risk a jury awarding huge punitive damages at trial.

How To Make A Case Bulletproof

Building a strong wrongful termination case starts when the first sign of trouble.

Here’s what to do:

• Document everything! Keep copies of performance reviews, emails, termination letters, and any communication with the employer regarding the termination. Written evidence is key.
• Keep a detailed journal of events leading up to the firing, including dates, times, names of witnesses, and specific things that were said or done. This contemporaneous record can be extremely helpful later.
• Keep track of job search efforts and any financial losses caused by the termination. Lawyers know about filing deadlines, and make sure everything gets filed correctly and on time.

The Settlement Process

Wrongful termination cases usually settle before trial.

This is in both the employee’s and the employer’s interest. Employees get some compensation faster, and without the stress and uncertainty of a trial. Employers want to avoid the expense and public scrutiny of defending their actions in court.

The attorney will file a complaint or charge with the relevant government agency (such as the EEOC for federal discrimination claims). Settlement negotiations typically begin at this stage.

Smart negotiation is key. Employees who accept the first settlement offer made are almost always leaving money on the table. Employers usually start with a lowball offer and try to negotiate up from there.

The Final Word

Wrongful termination settlements are a real option for employees who have been illegally terminated.

The average amount varies a lot depending on the circumstances, the strength of the evidence, and whether the employee has legal representation. Understanding wrongful termination law and employee rights is the first step towards obtaining deserved compensation.

Here’s a quick recap of the most important points:

• Having a lawyer more than doubles the chances of a positive outcome, and the average amount of compensation
• Written documentation is absolutely key
• There are strict deadlines for filing claims — consult with an attorney right away

The bottom line is this: If someone believes they have been wrongfully terminated, it’s important to take action now. The longer you wait, the more difficult it becomes to collect evidence and meet filing deadlines.