Unfair Termination of Contract: Everything You Need to Know
Dealing with the unfair termination of a contract can be very difficult for employees, depending on the nature of their employment.3 min read
2. Exemptions that Protect At-Will Employees
3. Wrongful Termination Damages
Dealing with the unfair termination of a contract can be very difficult for employees, depending on the nature of their employment. In some cases, you may be able to sue your employer for breach of contract, while in other circumstances, there may be no legal remedies available.
Suing for Unfair Termination
Wrongful termination, or unfair termination, occurs when someone is illegally fired. If you are an “at-will” employee, your employer can fire you at any time for virtually any reason with some exceptions. As an at-will employee, you can leave your job whenever you want, but your employer can end your employment whenever they want, even if they don't have a specific reason.
Just cause employment is different in that an employer is usually required to have a good reason for firing an employee. Although employee contracts can contain a just cause provision, it doesn't necessarily have to be in the contract to be enforceable. For instance, just cause employment may be a company-wide policy that's listed in your employment manual.
Exemptions that Protect At-Will Employees
Generally, employers can terminate at-will employees for little or no reason. Fortunately, there are some exceptions that protect at-will employees. If can prove you were fired for one of these reasons, you may be able to file a lawsuit against your former employer:
- Discrimination: At-will employees cannot be fired for discriminatory reasons. If you were fired because of your race, age, religion, gender, nationality, or physical/mental disability, this would constitute wrongful termination.
- Retaliation: Employers cannot fire at-will employees in retaliation for reporting a violation of employment law.
- Illegal Orders: If an employer directs an employee to commit an illegal act, and the employee refuses, he cannot be fired for his refusal.
- FMLA Leave: If an employee takes leave for a reason covered by the Family and Medical Leave Act (FMLA), their employer cannot terminate them for taking off work.
Wrongful Termination Damages
If you have been wrongfully terminated and want to file a lawsuit against your employer, you may be eligible for several different types of damages if you win your suit. First, you could receive direct damages, which would make up for the direct economic loss you suffered because of your termination. Second, you could receive consequential damages, which make up for losses indirectly resulting from your termination. Finally, you can receive damages meant to put you in the position you were in before getting fired.
Depending on your contract, there may be specific damages available for a breach of contract. The contract may also outline a specific time frame when you may pursue damages. If this time limit expires and you have not filed a lawsuit, you likely won't be able to receive any damages. It's possible to increase the damages you receive under common law termination rules. With these rules, you must demonstrate that the breach of contract was material and significant.
If you are able to prove a material breach under common law termination rules, your damages should be at least enough to put you in the position you would have attained had the contract been fully executed. To recover full damages, however, you must be able to show your lost income and other financial damage caused by the breach of contract.
Both parties in a contract can cause a breach, and the damages can be based on which person breached the agreement. For example, if you hire a contractor to help you with a project, and the contractor does not fulfill their responsibilities, you can receive damages for:
- The costs of finding a new contractor.
- Money lost because of the delayed project.
- Additional costs for administration and management of the project.
On the other hand, if you are a contractor and the person that hired you breaches the contract, you can pursue damages for:
- The work you completed before the termination of the contract, as well as any overhead costs you have assumed.
- Profits you have lost because of the termination.
- The entire amount of the contract minus remaining costs, if the project is nearly complete.
The differences between at-will and just cause employment can greatly impact the outcome of these cases.
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