When an employee is terminated, one of the riskiest factors that can affect a company’s reputation and resources is a wrongful termination claim. In California, wrongful termination lawsuits are particularly complex because the state has strong worker protections under both California employment law and federal law. Employers who terminate employees without following proper procedures or documentation risk facing significant liability. Understanding the types of wrongful termination and the defenses available under state or federal laws is critical for employers looking to protect their business.
What Qualifies as Wrongful Termination in California?
California is an at-will employment state, meaning an employer can generally terminate employees at any time and for any reason, so long as the reason does not violate the law or an employment agreement. However, a California wrongful termination case arises when an employer fires someone for reasons that, among other things, conflict with public policy, breach an employment contract, or violate laws that prohibit discrimination based on protected characteristics.
Examples of wrongful termination in California include discrimination-based firings under the California Fair Employment and Housing Act (FEHA) or federal laws such as Title VII and the ADA. It is also illegal to terminate an employee in retaliation for whistleblowing, filing a complaint about harassment or wage and hour violations, or reporting unsafe workplace conditions. Termination that violates public policy, such as firing an employee for serving on a jury or taking legally protected leave, can also give rise to a claim. In addition, a breach of contract where the termination goes against terms in an employment contract, collective bargaining agreement, or implied agreement may qualify as wrongful.
Not every termination is wrongful. Employers may lawfully terminate employees for misconduct, poor performance, or downsizing if the decision is supported by documentation and consistent with applicable employment laws.
Key Legal Defenses Employers Can Use in California Wrongful Termination Cases
There are key legal defenses businesses can use in California to respond to a wrongful termination claim. One of the most common is showing that the termination was based on legitimate, non-discriminatory business reasons. Documented performance reviews, disciplinary records, or violations of workplace policies can demonstrate lawful grounds for ending employment.
California’s at-will employment doctrine also provides employers with broad flexibility to terminate employees unless a contract or law provides otherwise. If the termination was carried out in accordance with the terms of an employment contract or handbook, employers may assert that no breach occurred, which is especially relevant in cases involving executives or union employees.
Another defense arises if the employee fails to exhaust administrative remedies before filing a lawsuit. In California, employees typically must file a complaint with the California Civil Rights Department (formerly DFEH) or the Equal Employment Opportunity Commission (EEOC). If they fail to do so, the claim can be dismissed if a subsequent court filing is made.
Employers can also demonstrate compliance with state or federal laws such as FEHA, Title VII, or wage and hour statutes, which undermines wrongful termination allegations. Even if liability is established, employers may argue that the employee did not take reasonable steps to find new employment, which can reduce or mitigate potential damages for lost wages.
Why Documentation and Policies Are Critical in a Legal Defense
If a business is accused of wrongful termination, documentation is often the strongest safeguard. Clear records of performance reviews, warnings, and internal communications can show that there were legitimate reasons for termination. This type of evidence is critical in disproving allegations and avoiding costly settlements.
Equally important are formal internal policies that demonstrate compliance with applicable employment laws. Anti-discrimination, harassment, and wage and hour policies not only show a commitment to legal compliance but also provide guidance for managers and supervisors. Applying these policies consistently across all employees helps prevent actions from being seen as discriminatory. Proactive recordkeeping and policy enforcement build a strong foundation for any employer defense.
How California Employers Can Prevent Wrongful Termination Claims
Preventive measures may require effort upfront, but are ultimately less costly than defending against a wrongful termination lawsuit. Employers in California should focus on transparent processes for hiring, evaluating, and terminating employees. Regular training for supervisors and HR staff on FEHA, retaliation, and discrimination laws helps ensure compliance at all levels.
At the core of many wrongful termination claims, employees report feeling unheard, mistreated, or confused. These risks can be reduced by providing fair and consistent performance reviews that include both positive feedback and clear steps for improvement. Establishing clear reporting channels where employees can raise concerns also helps resolve issues before they escalate into formal claims. Preventative steps not only protect against wrongful termination claims but also foster a stronger workplace culture.
What to Do If Your Business Is Facing a Wrongful Termination Claim
If your business is served with a wrongful termination claim, responding quickly and strategically is the best course of action. Consulting an employer defense attorney with experience in California wrongful termination cases should be a priority. Legal counsel can provide guidance on which documents to collect, how to analyze the claim, and what defenses are available.
It is also important to review whether the employee properly filed with the Civil Rights Department or EEOC before filing suit. With the guidance of counsel, employers can evaluate whether to negotiate a settlement or proceed with litigation based on the strength of the case. By following these steps, businesses can position themselves to build a strong defense while minimizing disruption to operations.
Conclusion
Wrongful termination lawsuits in California can be disruptive, costly, and damaging to a company’s reputation. However, employers have strong defenses available, especially when backed by proper documentation, fair policies, and strategic representation. With potential damages including emotional distress, punitive damages, and attorney’s fees, proactive preparation is critical.
If your company is facing a wrongful termination claim or if you want to strengthen your compliance with California employment law, our attorneys can help.
Contributions to this blog by Anastasia Pedraza.