The average settlement in wrongful termination cases (2024)

Workers who prevail in awrongful termination claim often get awarded between $5,000 and $100,000 in compensation. However, each case is different. There is no single “average” wrongful termination.

Numerous factors can change how much a particular case is worth. Especially important is the worker’s salary prior to termination. This drives many of the legal damages that the worker can recover with a lawsuit.

What legal damages are available in wrongful termination cases?

Workers who have been wrongfully terminated can recover their legal damages. These types of damages are meant to cover all of the ways that the worker has suffered as a result of their discharge.

Because terminations can be wrongful under either state or federal law, the legal damages that are available may vary. However, they generally include:

• wage loss, including both back pay and front pay,
• compensation for lost non-wage benefits, like health insurance or even stock options,
• emotional distress,
• medical expenses, both to cover costs incurred from any changes in medical insurance or for conditions that stemmed from the wrongful termination,
• loss of professional reputation,
• attorneys’ fees for filing and pursuing the wrongful termination claim, and
• punitive damages to punish the employer, if the termination was especially wrongful.

Some of these are economic damages that are relatively easy to determine. Others are more speculative. Some are non-economic damages that are difficult to put into a dollar amount.

With the help of an employment lawyer, workers can better understand their legal rights to compensation and what they should expect in a settlement amount.

What is the average settlement for a wrongful termination claim?

Every case is unique. Generally, however, workers who succeed in a wrongful termination case tend to receive an amount of compensation between $5,000 and $100,000.

There are numerous factors that can impact the amount of damages suffered by the worker. Among them are:

• the worker’s salary,
• what kind of benefits came with the job,
• the worker’s age and skillset,
• the conduct of the employer,
• whether the employer tarnished the worker’s reputation and hurt their future job prospects,
• whether the worker mitigated his or her damages by looking for a new job, and
• whether the worker has hired a wrongful termination lawyer.

In some cases, these factors can work in the former employee’s favor. If the worker was a well-paid employee in an upper management position and the termination was clearly in violation of the law, he or she could recover far more than the average wrongful termination settlement. Entry-level or low-paid workers will likely recover less than average compensation.

Possible Punitive Damages

The conduct of the employer is also very important. If the employer was especially egregious, the worker may be able to recover punitive damages. These go above and beyond the compensatory damages that the worker needs in order to fully recover from the wrongful termination.

They are meant to punish employers for their bad conduct. When they are awarded, punitive damages can drastically increase what the worker receives.

Punitive damages are only awarded in a verdict. However, the possibility of facing punitive damages can make the employer more interested in settling the case outside the courtroom. This can lead to a higher settlement offer being made.

Are wrongful termination settlements more common than court verdicts?

Yes. Just like with other types of lawsuits, wrongful termination claims tend to be settled out of court.

Employers are generally wary of taking the case to court. They tend to want to avoid the publicity of the wrongful termination claim. This is especially common when the allegations are of egregious conduct.

They also tend to want to avoid the expense of defending a claim for too long. These interests push them towards an out-of-court settlement.

What are some common kinds of cases?

A wrongful termination is a discharge for an illegal reason. Even for workers in at-will employment structures, there are numerous ways for a termination to be for an illegal reason. Some of them include:

• retaliation for exercising the worker’s rights by, for example, filing a workers’ compensation claim after a workplace injury,
• retaliation for reporting sexual harassment,
• violations of whistleblower protections,
• breaching the employment contract, and
• discrimination on the basis of a protected class, like sexual orientation or national origin.

How do damages work in a wrongful termination lawsuit in California?

Under California employment law, the legal damages available for a wrongful termination case are:

• what the worker would have earned, including wages, benefits, and pay increases, between his or her termination and the present time,
• the present cash value of any future wages and benefits that the worker would have earned for the reasonably certain period of continued employment with the employer, and
• any other contract damages that the employer caused by wrongfully terminating the worker.¹

The factors used to determine how long the worker would have stayed with the employer are:

• the worker’s age, work performance, and intention to stay with the employer,
• the employer’s prospects for continuing the work that involved the worker, and
• any other factors that are relevant.²

California requires workers to mitigate their damages after being wrongfully terminated, though. This means that fired workers have a legal duty to make reasonable efforts to find a new job after being discharged.

If they do not uphold this duty, the worker’s compensation from a successful wrongful termination claim can be reduced.

It is up to the employer to prove that the worker did not adequately mitigate his or her damages. To prove this, the employer has to show:

• that there was employment available and that was substantially similar to the worker’s job with the employer,
• that the worker failed to make reasonable efforts to seek and retain that employment, and
• how much the worker could have earned from this employment.³

Some of the factors that can be considered in determining whether another form of employment was substantially similar to the worker’s job with his or her former employer are whether:

• the nature of the work in the other job was similar to the worker’s prior employment with the former employer,
• the new position would have been substantially inferior to the worker’s old job,
• the salary, benefits, and job hours were similar,
• any of the new position’s requirements took similar skills, background, and experience to perform as the old one,
• the job responsibilities were similar, and
• the job was in the same locality.⁴

By establishing an attorney-client relationship with a wrongful termination attorney from a local law firm, workers can maximize the amount of money they recover. They can also avoid being accused of failing to mitigate their damages.

Additional reading

For more in-depth information, refer to these scholarly articles:

• Wrongful termination and the expanding public policy exception: Implications and advice – SAM Advanced Management Journal.
• The Legal Consequences of a Wrongful Termination – Constitutional Law International.
• At Will Employment Agreements: New Focus for Shielding Employers from Wrongful Termination Suits – Western State University Law Review.
• Past, Present, and Future in Wrongful Termination Law – Labor Law.
• Demonstrating Failure To Discharge Plaintiffs Duty To Mitigate In A Wrongful Termination Case: An Empirical Approach – Journal of Business of Economics Research.