Remedies for Breach of an Employment Contract

A contract for employment may be either a written contract or an implied contract. If the written contract states that employment is “at will,” this means that either the employer or the employee has the ability to terminate the working relationship at any time without needing to have a reason.

An implied contract exists, for example, when every new employee is given a handbook, which states the company rules and procedures for discharging an employee. When a company has such rules and a particular employee does not follow them, this would be a breach of an implied employment contract even if there is not a specific written employment contract document for that employee.

When an Employee Can Bring a Wrongful Discharge Suit

An employee may bring a lawsuit for wrongful discharge if there is a written contract for employment or an implied contract.

In addition, under U.S. federal law, an employer is not permitted to terminate wrongfully any employee, of the “at will” type or otherwise, based on discrimination or other protections for special circumstances. Federal law against discrimination prohibits discharging employees based on race, color, national origin, age, disability, sex, religion or pregnancy. Some states extend these federal laws to include protection from discrimination based on sexual orientation.

Other causes of action for a wrongful discharge lawsuit include situations where an employee is terminated in retaliation for exercising a right supported by public policy, such as the “whistle-blower” protections for employees reporting illegal activities of their employers. In addition, a wrongful discharge occurs when an employee is terminated for refusing to perform an illegal act demanded by the employer. An employee may not be terminated for taking time off for voting, jury duty or military service.

Remedies for Wrongful Discharge

In some cases, such as a wrongful discharge case based on discrimination, an employee must first file a claim with either the federal Equal Employment Opportunity Commission or the designated state agency before suing the employer.

The remedy that is most commonly awarded for wrongful discharge is the payment by the employer to the employee of monetary damages.

Damages may be of the following types:

  • Compensatory: Monetary awards
  • Punitive: Awards given to punish the employer
  • Nominal: Token awards where no money was lost by the employee
  • Liquidated: Amounts specifically stated in a written employment contract
  • Specific performance orders

If a lawsuit is filed and the court of proper jurisdiction rules in favor of the employee, damages may include back pay, front pay, compensatory damages, required reasonable accommodations, injunctive relief, punitive damages, promotion, reinstatement and the reimbursement of court costs and legal fees.

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