Most employees in the United States work at will, which means they may be fired at any time, for any reason that is not illegal. It is perfectly legal for an employer to fire an at-will employee for poor performance, to cut costs, to make room for a more qualified candidate, or even for personal reasons.
However, not all employees work at will: If you have an employment contract, whether written, oral, or implied, it may limit your employer’s right to fire you. And even at-will employees may have grounds for a wrongful termination lawsuit if they are fired for discriminatory reasons, in retaliation for reporting workplace problems, or in violation of public policy.
If you have a written employment agreement that limits your employer’s right to fire you, then you are not an at-will employee. For example, your contract might say that you can be fired only for good cause or only for certain types of misconduct (such as criminal activity or financial misdealings). Or, your contract may spell out procedural safeguards that must be observed before you can be fired, such as progressive discipline or an internal dispute resolution process. If your employer fires you for reasons that are not allowed by the agreement, you have a legal claim for breach of contract.
Not all employment agreements are written: You may have an oral or implied contract with your employer, too. An oral contract is simply an agreement that is stated aloud rather than put in writing. If your employer promised you that you would not be fired as long as you performed well, for example, you may have a claim for breach of contract if you are fired for reasons unrelated to performance.
An implied contract is an agreement that is created by the words and actions of both parties. In the employment relationship, some courts have found implied contracts to exist when, for example, the employee handbook includes statements about firing only for good cause or promises that employees will have the benefit of progressive discipline before being fired, managers have made statements promising continued employment, and so on. If it was fair for you to understand, based on all of the circumstances, that you would be fired only for good cause, you may have grounds to sue for breach of an implied contract.
Even at-will employees may not be fired for reasons that are discriminatory. Under federal law, employers may not fire employees because of their race, color, national origin, religion, sex, age, disability, or genetic information. Almost all states have their own laws prohibiting discrimination, and some of them include more protected categories. In California, for example, employees may not be fired based on their sexual orientation; Illinois prohibits employers from discriminating based on employee credit history.
It is also illegal for employers to fire employees for complaining about harassment or discrimination. An employer may not retaliate against an employee who makes an internal complaint, files a charge of discrimination with the Equal Employment Opportunity Commission or a state fair employment practices agency, or files a lawsuit against the employer
Retaliation and Whistleblowing
Employees are protected from termination for complaining about other types of illegal behavior, as well. For example, you may not be fired for asserting your rights under the Family and Medical Leave Act, making a complaint about hazardous working conditions to the Occupational Safety and Health Administration, filing a wage claim for unpaid overtime, or filing for workers’ compensation benefits.
Many states also protect whistleblowers. Generally speaking, a whistleblower is someone who reports illegal conduct by the employer to law enforcement or a government agency. If, for example, you report to the Food and Drug Administration that your employer has substandard food safety procedures or you inform the Internal Revenue Service that your employer’s tax returns are fraudulent, you may be protected from termination.
Violation of Public Policy
In many states, an employee may sue for wrongful termination in violation of public policy if the employer’s reason for firing goes against what society deems fair and legitimate. States differ on whether they allow these claims and, if so, what types of public policies qualify as the sort that will support a legal claim. Generally, you may have a claim for violation of public policy if you are fired for:
- refusing to break the law (by, for example, lying to government auditors or filing false paperwork with the Securities and Exchange Commission)
- exercising a legal right (for example, voting, serving on a jury, filing for workers’ compensation benefits, or taking time off guaranteed by the Family and Medical Leave Act), or
- reporting illegal employer conduct (for example, truthfully testifying in court that your employer has engaged in deceptive advertising).
Implied Covenant of Good Faith and Fair Dealing
Some states allow fired employees to sue for breaching the implied covenant of good faith and fair dealing. In these cases, the employees claim, essentially, that the employer acted unfairly or cheated the employees by firing them.
A court might allow this type of claim when, for example, an employer has fired employees to avoid paying them commissions they have already earned or to get out of pension obligations about to fall due. Not all states allow these claims, and those that do often limit the circumstances to truly egregious employer actions.
Questions for Your Attorney
- Can I sue for wrongful termination if I was forced to quit?
- My employer didn’t give a reason for firing me, but I think it was illegal discrimination. Can I still sue?
- I was told that I was laid off, but my manager added me to the layoff list after I reported wage violations. Is this illegal?