Wrongful Termination Damages: What Kinds of Losses Lead to Higher Compensation?

If you believe you were fired illegally, you’re probably wondering whether it’s worth it to bring a wrongful termination claim against your former employer. If you win your case, how much can you expect to receive in compensation? The answer to that question will depend largely on the losses or “damages” you suffered as a result of the illegal firing. We surveyed readers who recently had a wrongful termination claim to get an idea of the losses they experienced and how much they received in a settlement or award. Here’s what we learned.

Compensation for What You Lost

When you’ve been fired, your first wish may be simply to get your job back. But that’s rarely what happens, even in a successful wrongful termination claim. By the time a fired worker files a lawsuit, the former working relationship is usually harmed beyond repair, and judges don’t want to force people to work together.

Successful wrongful termination cases almost always result in cash settlements, or less often, in court awards after a trial. In theory, the money is meant to make up for what you lost or suffered, such as lost earnings and benefits, medical bills, and job search costs. Assuming you have solid evidence that you were fired for an illegal reason, the type and amount of losses you experienced will usually have a direct effect on the amount of compensation you might expect to receive.

Our survey results support that expectation.

Lost Earnings and Benefits

Our survey showed that readers who lost more income after they were fired tended to receive higher settlements in their wrongful termination claims. Those at the lowest end of the wage-loss scale (less than $5,000) received average settlements of only $12,200. As lost wages increased, average settlements rose. Those with over $60,000 in lost earnings received an average of $123,000 in compensation.

The connection between lost earnings and settlements isn’t surprising. Most people lose at least some income after being fired. (More than eight in ten of our readers reported having lost wages.) Also, it’s relatively easy to prove the amount of lost back pay: the wages you would have earned if you hadn’t been fired. While you’re unemployed and actively looking for work, it’s simply the amount of your old wages. If you land another job with the same or higher pay, you won’t have any further lost income. But if you earn less at the new job, some damages (the difference between your old and new pay) will continue to add up.

It can be more complicated to put a dollar figure on some of the other elements of damages for lost income and benefits, such as:

  • “front pay” (the wage losses you’ll continue to experience into the future as a result of the wrongful termination)
  • medical and dental insurance (including the difference in your out-of-pocket costs for premiums and health care), and
  • retirement plans, stock options, and profit sharing.

But the bottom line from our survey: The higher your lost earnings, the more you’re likely to receive in the way of compensation if your wrongful termination claim is successful.

Emotional Distress and Medical Bills

Nearly nine in ten (87%) readers said they experienced some form of emotional distress (often called “pain and suffering”) after they were wrongfully terminated. Again, this isn’t a surprising result. Most people find it hard to be fired for any reason. And the emotional consequences—including sleep loss, anxiety, depression, helplessness, or just plain anger—can be especially devastating if the termination follows a long period of illegal harassment or discrimination.

Of the readers who reported emotional distress and ultimately received settlements, the average compensation was $39,100—about 50% higher than the average for those without emotional consequences ($26,000), but only slightly higher than the overall average for all settlements ($37,200). Several factors might be responsible for reducing the impact of emotional distress on settlement amounts, including:

  • Employees can’t collect damages for emotional distress in certain types of wrongful termination claims, such as those based on a violation of the federal Age Discrimination in Employment Act or a breach of an employment contract.
  • In wrongful termination cases based on federal antidiscrimination laws protecting race, national origin, religion, gender, and disability, those laws limit the amount of damages for emotional distress. The maximum combined total for emotional distress, punitive damages (see below), and out-of-pocket costs (like medical bills) ranges from $50,000 to $300,000, depending on the size of the employer.
  • It can be difficult to prove damages for emotional distress, unless you have verification from a mental health professional. If you’ve received treatment for your symptoms, you’ll have that documentation (along with the bills). This is probably why the average settlements jumped significantly for those readers who had both emotional damages and medical expenses. Readers who had medical bills to support their emotional distress claims received average compensation of $54,800—62% higher than those without medical bills and more than twice as high as those without emotional damages.

Just under half (49%) of our readers told us they had out-of-pocket expenses related to their efforts to find a new job after being wrongfully terminated. Those readers received an average of $60,700 in compensation—almost three times higher than the average for those who didn’t claim these costs ($20,600). But it’s worth pointing out that the readers who reported job-search costs also had other significant damages, including lost earnings and emotional distress. Different types of damages don’t exist in a vacuum; they add up. So these results are probably related to the fact that employees who spent a fair amount of money looking for a new job may have earned more at their old jobs and/or were out of work for a long time after being fired. All of those factors played into the compensation they ultimately received in their wrongful termination claims.

Attorneys’ Fees and Costs

In some types of wrongful termination cases (such as discrimination claims), a court may award damages for attorneys’ fees and other costs, including filing fees, expert witness fees, and deposition costs. (For more information on attorneys’ fees, see our article on how much wrongful termination lawyers cost.)

Punitive Damages

If you win your wrongful termination lawsuit after a trial, the court may order the employer to pay “punitive damages.” Unlike other types of damages awards that are meant to compensate fired employees for their losses, punitive damages are meant to punish employers for particularly outrageous illegal actions and to warn other employers not to do similar things. But they’re very rare, only available in some types of wrongful termination claims, and not allowed in some states. So even if you’d love to make your former employer pay for its bad conduct, don’t count on getting a jury to award punitive damages.

What Else Affects Compensation?

As we’ve seen, the amount of losses you’ve experienced as a result of your firing—especially lost income—can influence the amount of any settlement or award you’re likely to receive in a wrongful termination case. Other factors are important as well, especially whether you had an attorney to help you through the process. (For more information, see our article on how much you can expect in compensation for wrongful termination.)

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