Wrongful dismissal

Wrongful dismissal is the act of illegally terminating the employment of an employee. Originally, in the United States, all employment contracts that were not a specified length were assumed to be “at will.” This meant that employment could be terminated by either the employer or the employee at any time.

The first restrictions on employee termination came as the result of the civil rights movement. The Civil Rights Act of 1964 made it illegal for employers to discriminate against employees by race or sex. This meant that employers could not fire an employee because of their dislike against the employee’s race or sex. Over time, additional protected classes were added.

Employers who wrongfully dismiss employees may face steep penalties. In most cases, wrongful dismissal suits must be settled in a court of law. If the employer is found guilty of wrongfully dismissing an employee, the company is often required to pay penalties to the employee. These penalties may include compensation for lost pay, compensation for lost stock options, compensation for emotional distress, and punitive financial penalties.

Background

Wrongful dismissal, also called wrongful termination, is best understood within the context of employment law. During the colonial period in England, many employment contracts were treated as a contract between a master and a servant. Contracts were assumed to exist for one year at a time. At the end of that year, the contract could be renewed, altered, or terminated. If the employee committed no grievance against the employer, then the employer could only fire the employee by refusing to renew his or her contract.

Consequentially, employees were required to fulfill their end of the yearly contract. They were not allowed to quit for most purposes, and were legally bound to perform their agreed-upon obligation to their employer. After the black plague greatly reduced the number of available workers in Europe, many workers realized that they had more bargaining power than they did before. They began to bargain for higher wages and better working conditions. Both British and colonial governments then criminalized refusing to work in an effort to increase the number of available workers. Some areas also criminalized asking for an unreasonable rate for services.

By the late nineteenth century, British ideas about employees having a right to work, or a right to notice before dismissal, had failed to take hold. In 1877, a treatise written by Horace G. Wood asserted that any employment contract not specifying a specific duration should be interpreted as “at will” employment. This meant that the employee could be dismissed at any moment, for any reason.

Overview

Wrongful dismissal refers to an employer illegally firing an employee. In the United States, most states still utilize “at will” employment. In 1908, the US Supreme Court held that just as an employee may quit a job at any time, the employer may fire an employee at any time. The court argued that it was unconstitutional to force an employer to accept or retain the services of an employee against his or her will. However, years later, the Supreme Court upheld the Wagner Act’s law against firing employees for union activity, including the requirements for reinstatement with back pay if such a reason were shown.

The civil rights movement of the 1960s also had a significant effect on wrongful termination law. Prior to the civil rights movement, employers were usually able to dismiss employees for any reason. There were little to no protected classes, meaning no reasons that an individual could not be fired. The civil rights movement pushed for societal protections for minorities. Many activists and politicians believed minorities needed protections in place to protect them from racial- or gender-based discrimination.

In 1964, Congress passed the Civil Rights Act. This act made it illegal for employers to discriminate based on race and sex when hiring, promoting, or firing employees. After its passage, employers could not fire employees for their “race, color, religion, sex, or national origin.” It created the first classes protected from at will employment laws. Over time, these classes were expanded. The Age Discrimination in Employment Act of 1967 prohibited discrimination against employees forty years of age or older. The Pregnancy Discrimination Act of 1978 made it illegal to discriminate against women because of childbirth, medical conditions relating to childbirth, or pregnancy. The Americans with Disabilities Act of 1990 prohibited discrimination on the basis of disability.

In many areas, employees are also protected from termination for whistleblowing. Whistleblowing refers to occasions when an employee reports violations of laws or regulations carried out by his or her employer. Firing the employee in retribution for bringing crimes to light is often illegal. Similarly, firing an employee for refusing to carry out a crime is also illegal.

Some states have created other protected classes in addition to those required by the federal government. In these states, employers are required to adhere to both the regulations from the federal government and the regulations from the state government. For example, some states have added sexual orientation as a protected class.

Committing wrongful termination can result in steep penalties for employers. Employees who believe they may have been terminated for illegal reasons should contact an employment attorney. Most wrongful termination cases are simple breaches of contract. In these instances, the employer broke some of the rules or regulations agreed upon when hiring the employee, such as a notice period before termination. In many cases, wrongfully terminated employees are awarded compensation for their pay and damages incurred. However, they may also be awarded punitive damages and compensation for lost stock options and emotional distress.

Bibliography

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