If you've been wrongfully terminated, understanding what compensation you may recover helps you evaluate your case and settlement offers. Wrongful termination damages can be substantial, compensating for lost income, emotional harm, and sometimes punishing employers for egregious conduct.
Types of Damages
Wrongful termination claims may recover several categories of damages:
Economic damages: Measurable financial losses like lost wages and benefits.
Compensatory damages: Compensation for emotional distress, humiliation, and suffering.
Punitive damages: Additional damages to punish particularly egregious employer conduct.
Equitable relief: Reinstatement to your job or other non-monetary remedies.
Back Pay
Back pay is compensation for wages lost from the date of termination to resolution of your case. Back pay includes: regular salary or wages, overtime you would have earned, commissions and bonuses, value of lost benefits (health insurance, retirement contributions), and any raises or promotions you would have received.
Back pay is typically the largest component of wrongful termination damages, especially in cases that take years to resolve.
Front Pay
Front pay compensates for future lost earnings when reinstatement isn't practical. Front pay covers the period from judgment until you can be expected to find comparable employment—or longer if the termination permanently affects your career.
Courts consider factors like your age, transferable skills, local job market, industry conditions, and likelihood of finding equivalent employment. Front pay awards range from months to years of salary.
Lost Benefits
Benefits often represent significant value beyond salary. Compensable lost benefits include health insurance premiums you must now pay, lost retirement contributions, lost stock options or equity grants, lost vacation and sick time, and any other benefits you would have received.
Emotional Distress Damages
Wrongful termination causes real psychological harm. Compensable emotional damages include anxiety and depression, humiliation and embarrassment, damage to self-esteem and confidence, stress-related physical symptoms, and impact on personal relationships.
Emotional distress damages are subjective—there's no formula. Evidence that strengthens these claims includes testimony about how the termination affected you, testimony from family and friends about changes they observed, medical or counseling records documenting psychological treatment, and expert testimony in severe cases.
Punitive Damages
Punitive damages punish employers for particularly egregious conduct and deter similar behavior. Punitive damages require proof of malice, recklessness, or conscious disregard for your rights—ordinary negligence isn't enough.
Situations that may warrant punitive damages include retaliation for whistleblowing, termination for discriminatory animus, covering up the true reason for termination, and repeated or systemic wrongful conduct.
Some statutes cap punitive damages; others don't. When available, punitive damages can significantly increase total recovery.
Attorney Fees
Many employment statutes allow prevailing employees to recover attorney fees. This is significant because it doesn't reduce your damage award—the employer pays your attorney in addition to your compensation. Not all wrongful termination claims include fee-shifting; it depends on the specific legal basis for your claim.
Reinstatement
In some cases, you may seek reinstatement—getting your job back. However, reinstatement is often impractical when relationships are too damaged, the position was eliminated, or you've moved on. When reinstatement isn't appropriate, front pay substitutes for this remedy.
Statutory Caps
Some statutes cap damages. Federal discrimination laws (Title VII, ADA) cap combined compensatory and punitive damages based on employer size, ranging from $50,000 to $300,000. State laws may have different or no caps. Contract claims generally have no caps.
Understanding which laws apply to your claim helps predict potential recovery.
Mitigation of Damages
You have a duty to mitigate damages—meaning you must make reasonable efforts to find new employment. Damages are reduced by income earned (or that could have been earned) through reasonable job search efforts. Document your job search carefully. Failing to look for work reduces your recovery.
Calculating Your Claim's Value
Work with your attorney to calculate potential damages: your salary, benefits, and likely duration of unemployment provide economic damages. The egregiousness of employer conduct affects punitive damages potential. Your documented emotional impact supports compensatory damages.
Attorneys evaluate these factors to estimate case value, assess settlement offers, and decide whether to proceed to trial.
Tax Implications
Some damages are taxable; others aren't. Back pay is generally taxable as wages. Emotional distress damages may be taxable unless related to physical injury. Punitive damages are typically taxable. Consult a tax professional about your specific situation.