Employee being terminated

Wrongful Termination Damages: Calculating Compensation and Legal Factors

By Douglas Lipsky

Wrongful termination is a serious issue that can have profound financial and emotional consequences for employees. Understanding how damages are calculated and the legal factors that come into play is essential when navigating a wrongful termination case. In this blog, we’ll break down the process of calculating compensation and discuss key legal factors to consider.

What is Wrongful Termination?

In New York, employment is “at-will,” meaning that either the employer or the employee can terminate the employment relationship at any time and for any reason, with certain exceptions. However, wrongful termination occurs when an employer fires an employee in violation of state or federal laws or breaches an employment contract. 

Common types of wrongful termination include:

  • Discrimination-based termination – firing an employee based on characteristics such as race, gender, age, religion, disability, or other protected categories, even though they were performing their job effectively.
  • Retaliation – terminating an employee for engaging in protected activities, such as reporting workplace discrimination, harassment, or safety violations.
  • Breach of contract – discharging an employee in violation of an employment contract exists (either written or implied)
  • Violation of public policy – firing an employee for participating in a legal right or community action (e.g. jury duty, voting, military service).
  • Whistleblower retaliation – terminating an employee for reporting illegal activities or unethical conduct within the organization.
  • Constructive discharge – making the work environment so intolerable that the employee has no choice but to resign.

Understanding these types of wrongful termination is essential for assessing whether your situation aligns with any of them and if you may have a valid legal claim.

Calculating Economic Damages

Economic damages in a wrongful termination case encompass tangible and quantifiable losses resulting from the termination. These damages include:

  • Back pay – wages and salary you would have earned from the date of termination to the present if the wrongful termination had not occurred.
  • Front pay – compensation for future income losses resulting from the wrongful termination including lost earnings, benefits, and career advancement opportunities.
  • Lost benefits – healthcare coverage, retirement plans, stock options, and other perks that an employee would have received if they were still employed. 
  • Bonuses and commissions – lost incentive pay (e.g. bonuses or commissions)
  • Overtime and additional compensation – overtime pay, shift differentials, or other forms of compensation. 

Understanding the breakdown of economic damages helps you assess the financial impact of your wrongful termination. By working with an experienced employment attorney, you can maximize your compensation. 

Non-Economic Damages

In addition to economic damages, you may also be entitled to non-economic damages, which compensate for emotional distress, pain, and suffering. These damages can be more challenging to quantify as they involve subjective experiences. The severity of your emotional distress and the legal standards in your jurisdiction will play a role in determining the amount awarded.

Legal Factors Influencing Compensation

Several legal factors can influence damages in a wrongful termination case, such as:

  • Statutory limits – The amount you can recover may be subject to statutory limits or caps, which vary depending on federal or state laws. These limits can affect the maximum compensation you can seek in your case.
  • Mitigation of damages – You have a legal obligation to make reasonable efforts to mitigate your losses after a wrongful termination. This means actively seeking new employment opportunities to minimize the financial impact.
  • Comparative fault – If your actions contributed to your termination, it could affect the compensation you receive.

Understanding these legal factors and how they apply to your specific situation is essential for building a strong case. An experienced employment attorney who is well-versed in the employment laws of your jurisdiction can help you navigate these complexities effectively,

The Takeaway

Wrongful termination can impact your life, both financially and emotionally. Understanding how to calculate damages and anticipating the legal factors that come into play are essential when pursuing a wrongful termination case. Consulting an employment attorney is the best way to ensure you receive the compensation you deserve.

About the Author
Douglas Lipsky is a co-founding partner of Lipsky Lowe LLP. He has extensive experience in all areas of employment law, including discrimination, sexual harassment, hostile work environment, retaliation, wrongful discharge, breach of contract, unpaid overtime, and unpaid tips. He also represents clients in complex wage and hour claims, including collective actions under the federal Fair Labor Standards Act and class actions under the laws of many different states. If you have questions about this article, contact Douglas today.