Understanding Wrongful Termination and Illegal Firing Practices

What is illegal firing?

Illegal firing, also known as wrongful termination, happens when an employer fires an employee in violation of federal, state or local law. While many employees may believe they were wrongfully terminated, federal and state laws determine whether a firing was actually unlawful. For example, it may be legal to terminate an employee for poor performance in a state that allows at-will employment. However, anti-discrimination laws make it illegal to fire someone based on a protected characteristic such as a disability.

Can an employee be fired for no reason?

In nearly every state except Montana, the answer is yes. Under at-will employment, employers can generally terminate employees at any time, for almost any reason or for no stated reason at all. However, at-will employment does not allow employers to fire workers for discriminatory, retaliatory or other unlawful reasons.

Employers also aren’t usually required to explain why someone was fired unless a contract or specific law says otherwise. While losing a job without a stated reason may qualify a worker for unemployment benefits, it doesn’t automatically mean the termination was illegal.

In this interview, labor and employment attorney Bryn Goodman explains what every business owner needs to know about wrongful termination.

Examples of illegal reasons to fire someone

Several actions can lead to wrongful termination claims, most of which involve violating employee rights protected by federal or state law. If you’re considering terminating an employee, make sure the decision isn’t based on any of the following factors.

1. Discrimination

Discrimination is one of the most common reasons employees file wrongful termination claims. Federal and state laws prohibit employers from firing workers based on protected characteristics such as race, religion, color, sexual orientation, gender or gender identity, national origin, age, disability or pregnancy.

2. Retaliation

Retaliation is another common basis for wrongful termination claims. According to Andrew Russell, a partner at McGuireWoods who specializes in employment law, employers cannot fire employees for engaging in certain legally protected activities.

“For example, an employee may report a potential safety violation, file a complaint about an underpayment of wages or report that they have been illegally harassed by a supervisor,” Russell explained. “This is all protected activity, and an employer may not fire an employee in retaliation for engaging in such activity.”

Common examples of protected activities include when an employee:

• Opposes or reports discrimination or harassment
• Inquires about pay discrepancies
• Requests reasonable accommodations
• Files a complaint or grievance
• Reports illegal activities
• Participates in an investigation

3. Whistleblowing

Terminating an employee for whistleblowing can expose your business to serious legal liability. Employees are generally protected from retaliation when they report suspected violations of the law, workplace safety concerns or other protected misconduct.

For example, if an employee reports a health or safety violation to the Occupational Safety and Health Administration (OSHA), you cannot terminate them for doing so. Employees may also be protected when they report other types of suspected wrongdoing.

4. Refusing to break the law

In most states, it’s illegal to fire an employee because of an employer’s criminal activity. For example, it would be unlawful to terminate an employee for refusing to break the law or participate in illegal conduct.

Employees may have legal protections even if they never report the activity. In many states, refusing to take part in illegal conduct is enough.

5. Employment contract violations

Employment contracts can limit when or how an employee may be terminated. For example, a written contract may specify the circumstances that allow termination or outline steps an employer must follow before ending the employment relationship.

In some cases, an employment agreement may be implied by company policies or other employer actions. Before terminating an employee, review any agreements or policies that could affect the decision.

6. Requests for protected employment leave

It’s illegal to terminate an employee for requesting protected employment leave under laws such as the Family and Medical Leave Act (FMLA). Many states also have unpaid and paid leave laws covering situations such as illness, parental leave and military service, so it’s important to understand the requirements that apply in your state.

7. Requests for reasonable accommodations

It’s illegal to terminate an employee for requesting reasonable accommodations for a disability. For example, an employee may request changes to their work environment or job duties to help them perform their role. Employers are generally required to provide reasonable accommodations unless doing so would create an undue hardship for the business.

8. Fulfilling civic duties

It’s illegal to terminate an employee for fulfilling certain civic duties, such as serving on a jury. According to the Jury Systems Improvement Act (JSIA), employers can’t fire or otherwise discipline workers because they’ve been called for federal jury service.

Voting may also be protected under state law. While federal law doesn’t require employers to provide paid time off to vote, most states have laws requiring employers to provide voting leave. Terminating an employee for using that leave could expose your business to legal liability.

9. Refusal to take a lie detector test

Employers generally can’t require employees to take a lie detector test as a condition of employment. However, the Employee Polygraph Protection Act includes limited exceptions for certain employers and situations.

For example, government employers may use polygraph tests in some hiring decisions. Certain security service and pharmaceutical employers may also qualify for exemptions. Additional exceptions may apply when an employer is investigating a specific incident involving economic loss or injury to the business.

10. Citizenship

It’s illegal to fire an employee based on their citizenship or place of birth. Federal law prohibits employers from discriminating against workers because of their citizenship status or national origin.

Common grounds for legal termination

While most employers in the U.S. operate under at-will employment laws, employers often fire workers because of genuine workplace issues. Here are some examples: 

• Poor job performance or incompetence
• Insubordination or refusal to follow instructions
• Chronic workplace absenteeism or tardiness
• Theft or disclosure of proprietary information
• Workplace misconduct, such as workplace bullying, criminal behavior or fraud (like accounting fraud)
• Substance abuse
• Violence or threats of violence
• Sexual harassment
• Company downsizing or restructuring

Terminations for these reasons are generally lawful as long as the decision isn’t based on discrimination, retaliation or another protected activity. Employers should still document the reason for the termination and follow any applicable company procedures.

Federal anti-discrimination laws

Federal laws and regulations help protect employees from discrimination, retaliation and other unlawful workplace practices. Employers should understand the rules that apply to their workforce before making termination decisions. Here are some of the key federal laws to consider when handling an employee termination:

• Title VII of the Civil Rights Act of 1964 (Title VII): Title VII prohibits employment discrimination based on race, color, religion, sex or national origin. Employers cannot terminate employees because of these protected characteristics.
• The Americans with Disabilities Act (ADA): The ADA prohibits discrimination against qualified individuals with disabilities. Employers generally must provide reasonable accommodations unless doing so would create an undue hardship for the business.
• The Age Discrimination in Employment Act of 1967 (ADEA): The ADEA protects employees age 40 and older from workplace age discrimination. Employers cannot terminate employees because of their age.
• The Family and Medical Leave Act (FMLA): Under the FMLA, eligible employees may take up to 12 weeks of unpaid, job-protected leave for certain family and medical reasons. Employers cannot terminate eligible employees for taking protected leave under the law. Employers should also understand how FMLA regulations apply to employee eligibility, leave requests and job restoration requirements.
• The Pregnant Workers Fairness Act (PWFA): The PWFA generally requires covered employers to provide reasonable accommodations for known limitations related to pregnancy, childbirth or related medical conditions, unless doing so would create an undue hardship. Employers cannot terminate or otherwise discriminate against employees because of pregnancy-related conditions or accommodation requests.
• The Occupational Safety and Health Act of 1970: OSHA protects employees who report workplace safety concerns or exercise other rights under the law. Employers cannot retaliate against workers for reporting health or safety hazards.
• Jury Systems Improvement Act (JSIA): The JSIA protects employees who serve, or are scheduled to serve, on a federal jury. Employers cannot fire, intimidate or otherwise penalize workers because of jury service.

“Should an employer’s decision to fire an employee be motivated by the protected class of that employee as set forth in any of the above-referenced statutes or others, a court would likely find the termination to be discriminatory and illegal,” said Andrew Zelmanowitz, partner and employment law expert at Berger Singerman.

State and local laws don’t always match federal requirements and, in some cases, provide employees with additional protections. For example, Zelmanowitz noted that the Florida Civil Rights Act expands on Title VII by prohibiting discrimination based on additional characteristics, including disability and marital status.

What is the WARN Act?

Most employment laws focus on why an employee can or can’t be terminated. Others govern the process employers must follow when conducting large-scale layoffs. For example, the Worker Adjustment and Retraining Notification Act of 1988 (WARN Act) generally requires covered employers to provide advance written notice before certain plant closings and mass layoffs.

“When an employer institutes a mass layoff or closes a division of its operations, it may be required to provide advance notice to employees of the impending layoff in compliance with the WARN Act,” Zelmanowitz explained. “In jurisdictions where employees have additional rights by statute, compliance is required by the employer, including notice periods.”

What happens if an employer illegally terminates someone?

An employer that illegally terminates an employee may face business lawsuits, government investigations, financial penalties and other legal consequences. Depending on the circumstances, those claims can result in significant liability. Here are some potential outcomes:

• Administrative claims: Employees often begin by filing a complaint with a government agency, which may trigger an investigation or administrative hearing.
• Litigation: Employees may also pursue their claims in court. Russell noted that a wrongfully terminated employee “may be able to pursue his or her claims by filing a lawsuit against their employer in court.”
• Financial obligations: Employers found liable for wrongful termination may be responsible for back pay, lost wages, legal fees and other damages, depending on the circumstances of the case.
• Federal and state enforcement: Government agencies may investigate alleged violations and take enforcement action against employers that fail to comply with applicable workplace laws.

Source interviews were conducted for a previous version of this article.