Wrongful Termination and the Duty to Mitigate Damages

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 What Is Wrongful Termination?

Wrongful termination may also be referred to as unfair termination. This occurs when an employee is illegally fired from their job. Because most employees are considered to be at-will employees, their employer can legally terminate their employment at any time and for any reason, or for no reason at all.

This means that at-will employees are also allowed to leave their job at any time for any reason, or for no reason at all. However, there are laws that protect at-will employees; if an employer breaks any of these laws when terminating an employee, including an at-will employee, it would be considered wrongful termination.

The following are some examples of wrongful or unfair termination:

  • Discrimination: If an employee is terminated based on their belonging to a protected class, it is discrimination and is therefore considered to be wrongful termination. Just a few examples of protected classes include race or color, national origin, and disability;
  • Retaliation: Employees who report their employers for workplace violations are legally protected from retaliation on the part of the employer. As such, if their employer responds to their actions by terminating their employment, it is illegal and will be considered wrongful termination;
  • Breach of Good Faith and Fair Dealing: This refers to when an employer terminates the employee for a fabricated reason, such as lying about their performance or conduct.
  • Violation of Public Policy: It is considered to be wrongful termination if an employer terminates an employee because they belong to a recognized group or political party. This is similar to discrimination, but the two are different in legal terms; and
  • Family or Medical Leave: Employees who need to take time away from work for extended medical leave are protected under the Family Medical Leave Act, or FMLA. An example of this would be caring for sick loved ones, or taking maternal or paternal leave for themselves. This Act states that employees are entitled to unpaid leave, and are to have their job to return to. Should an employer terminate an employee because they take time off for medical reasons, and that time off qualifies under the FMLA, it could be considered wrongful termination.

What Is the Duty to Mitigate Damages? What Are Some Examples Of the Duty to Mitigate Damages?

When one party to a contract incurs damages resulting from a breach of contract, they have a legal obligation to minimize the effects and losses of that injury. The duty to mitigate is essentially intended to deny recovery of any part of damages that could have been reasonably avoided on the part of the affected party.

While “reasonably avoided” has no specific legal definition, the term generally refers to what any other reasonable person would do under similar circumstances. It is important to note that an innocent party would not be required to take extraordinary efforts, or sacrifice any substantial right to avoid losses from a breach of contract.

Some of the most common examples of the duty to mitigate damages would be:

  • Landlord and Tenant: A landlord has the duty to mitigate damages when a tenant breaches their lease. An example of this would be how they have the duty to find another tenant, and cannot allow the property to sit empty for two years then sue their former tenant for back rent;
  • Sales: The seller of goods must mitigate their damages by trying to resell them after a buyer has breached the contract. An example of this would be when a buyer of livestock breaches a contract. The seller must try to resell the livestock, and they cannot let them die and then sue the would-be buyer for damages; and
  • Creditors: A creditor must mitigate their damages when a debtor breaches their contract. An example of this would be if a debtor breaches their car loan. The creditor must then mitigate the damages by attempting to sell the car to another party. They cannot keep the car and then sue the debtor for damages.

Is There a Duty To Mitigate Damages When an Employer Breaches an Employment Contract? What Is the Measure Of Those Damages?

Simply put, yes. An employee who has been wrongfully terminated must mitigate their damages by finding another job. What this means is that they cannot sue the employer for their lost wages without taking preventative action. If an employee has been wrongfully terminated or was under an employment contract, it could be possible to collect the expectation measure of damages. This would be the money owed to the employee under the employment contract, either for the remaining or a reasonable amount of time.

Once again, they must look for other comparable employment before taking any legal action. Additionally, they must subtract whatever they make from that job from what they are requesting in damages from their former employer.

The measure of recovery is generally:

  • The amount of salary agreed upon for the period of service;
  • Minus the amount which the employer affirmatively proves the employee has earned; or
  • With reasonable effort might have earned, from other employment.

What Factors Do Courts Consider When Determining the Duty to Mitigate?

Depending on the circumstances surrounding the wrongful termination, the court may consider many different factors when determining the duty to mitigate damages. In general, the employer must show that the employment was comparable or substantially similar to that of which the employee has been denied. This must be done before any projected earnings from other employment opportunities that were not sought or accepted by the terminated employee can be applied in mitigation.

Additionally, the employee’s rejection of or failure to seek other available employment may not be resorted to in order to mitigate damages. This applies when the employee rejected or failed to seek other available employment, or when that available employment was of a different or inferior kind to what they previously had.

Once again, the most important factor a court will consider when determining a duty to mitigate is whether there is a large number of comparable or substantially similar work available to the employee seeking a new job. For example, if the employee’s previous job was a highly specialized position, and there are no other substantially similar employment opportunities near the employee, the court will likely not require much mitigation. Thus, location of similar employment opportunities also plays an important role in determining the duty to mitigate.

Can I File a Legal Claim For Wrongful Termination?

If you have faced wrongful termination, you should contact your employer’s human resources department. It is important to note that you will generally be required to exhaust all available administrative remedies prior to taking any legal action.

If the human resources department is unable to resolve your issues, you may then contact the EEOC in order to file a claim against your employer. Because the Equal Employment Opportunity Commission combats workplace discrimination, they may conduct an investigation into your employer in order to issue a remedy.

Prior to actually filing a complaint with the EEOC, you should gather as much information as possible. This could include:

  • Documents;
  • Hiring and firing forms;
  • Pay stubs;
  • Written witness statements; and
  • Anything else you believe will serve as evidence to support your claims.

If the EEOC is not able to remedy the situation, you may then file a civil lawsuit against your employer while also being mindful of your duty to mitigate damages. A successful lawsuit may result in the following equitable remedies:

  • Reinstatement to your position, if you wish to return;
  • An injunction against the employer in order to prevent them from taking further action;
  • Compensation for any loss of pay or benefits;
  • A “make whole” solution; and/or
  • Compensation for any out of pocket expenses related to searching for a new job in order to mitigate damages,
  • or those directly caused by the wrongful termination.

Do I Need an Attorney For Wrongful Termination and the Duty to Mitigate Damages?

If you have been wrongfully terminated, you should consult with a local wrongful termination lawyer as soon as possible. An experienced and local employment attorney will be able to provide you with state-specific legal advice, and inform you of your duty to mitigate.

Additionally, an attorney can help you gather evidence to support your claim, and file a private lawsuit on your behalf. Finally, an experienced attorney will also be able to represent you in court, as needed.

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