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If you were fired for a reason you believe was illegal, you probably want to know what a wrongful termination settlement in California could be worth. No reliable average exists. Below, we explain why, what moves a claim’s value up or down, how settlement differs from severance, and how the money is taxed.
What Is the Average Wrongful Termination Settlement in California?
There is no reliable average. Settlements are private, and many are confidential, so there is no dependable public figure. Value depends on the legal reason for the firing, the pay you lost, and whether emotional distress and punitive damages are available. A court may award both in a private lawsuit under California’s Fair Employment and Housing Act (FEHA).
Four things usually shape value: the legal reason the firing was unlawful, the pay you lost, the damages that legal theory allows, and the strength of the evidence. An unfair firing is not always an illegal one. Without a contract, employment is generally at will, and the employee “can be fired with or without good cause” (Foley). But an employer cannot fire someone for a reason the law prohibits. That is where California wrongful termination claims begin.
“Wrongful termination” covers several different claims. Each one allows different damages.
| Legal theory | Example | Damages generally available |
|---|---|---|
| FEHA discrimination or retaliation | Fired because of age, pregnancy or disability, or for reporting harassment | Lost pay, emotional distress, punitive damages if the legal standard is met, and attorney’s fees |
| Termination in violation of public policy | Fired for refusing to break the law | Damages traditionally available in tort cases |
| Whistleblower retaliation | Fired for reporting a suspected legal violation | Damages, plus a civil penalty of up to $10,000 per violation |
| Breach of an implied promise | A handbook or manager promised termination only for cause | Contract damages only, not tort or punitive damages |
| Forced to quit (constructive discharge) | Conditions so intolerable that a reasonable person would resign | Treated as a firing, but the employee still needs one of the claims above |
FEHA covers terminations because of protected traits, such as being fired because of your age or fired while pregnant or on pregnancy leave, and retaliation, such as being fired after reporting sexual harassment (Gov. Code section 12940(a) and (h)). A firing tied to a health condition raises similar questions, covered in whether you were fired for medical reasons.
Whistleblower claims under Labor Code section 1102.5 are covered in our article on being fired for whistleblowing. If you resigned, Turner v. Anheuser-Busch, Inc. (1994) 7 Cal.4th 1238 held that a constructive discharge “is legally regarded as a firing rather than a resignation” (California Supreme Court). The employee still must prove an underlying wrong to recover. See constructive discharge in California.
Lost pay is often the base of a claim. It can include wages and benefits lost since the firing (back pay) and future losses when returning is not realistic (front pay).
A fired employee is expected to look for comparable work. Under Parker, the employer must prove what the employee earned or could have earned elsewhere. Jobs the employee did not take count only if the work was “comparable, or substantially similar.” Turning down work “of a different or inferior kind” does not reduce recovery.
In a private FEHA lawsuit, “the superior court may award compensatory and punitive damages,” according to the California Supreme Court in Peralta Community College Dist. v. Fair Employment & Housing Com. (1990) 52 Cal.3d 40. Compensatory damages can include emotional distress, and Tameny claims allow tort damages.
Punitive damages punish rather than repay. Under Civil Code section 3294, they require proof “by clear and convincing evidence” that the employer was guilty of “oppression, fraud, or malice.” The statute covers obligations “not arising from contract,” so a contract-only claim does not allow them.
Under Government Code section 12965, a court in a FEHA case may award the prevailing party reasonable attorney’s fees and costs. A prevailing employer “shall not be awarded fees and costs unless the court finds the action was frivolous, unreasonable, or groundless when brought,” or the employee kept litigating after it clearly became so. For the employee’s side, read about contingency fees for employment lawyers.
Under federal Title VII, compensatory damages for future losses and emotional harm, plus punitive damages, are capped by employer size (42 U.S.C. section 1981a(b)(3)):
| Employer size (employees) | Federal cap per employee |
|---|---|
| 15 to 100 | $50,000 |
| 101 to 200 | $100,000 |
| 201 to 500 | $200,000 |
| More than 500 | $300,000 |
FEHA’s remedy provisions contain no similar dollar limits. That difference matters when the same facts could support either a state or a federal claim.
Some Labor Code claims add penalties on top of damages. Labor Code section 98.6 allows a civil penalty of up to $10,000 per employee for each violation, awarded to the employee, for retaliation over wage complaints and related activity. Section 1102.5 allows up to $10,000 for each violation. If final wages are late, Labor Code section 203 continues wages “as a penalty” for up to 30 days. For retaliation cases, see our article on the average retaliation settlement.
An arbitration agreement may send your claim to a private arbitrator instead of a jury. That changes the process, not necessarily the damages. In Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, the California Supreme Court held that an agreement to arbitrate FEHA claims must provide all types of relief available in court. It refused to enforce a clause limiting damages to back pay.
| Tends to raise value | Tends to lower value |
|---|---|
| Written evidence linking the firing to a complaint, leave request or protected trait | Performance problems documented before any complaint and applied the same way to others |
| A FEHA or public-policy claim that allows emotional distress and punitive damages | A contract-only claim limited to contract damages |
| Higher pay and a long gap before comparable work | Comparable work found quickly, or not looked for |
| Conduct by or approved by an officer, director or managing agent | Conduct by a lower-level employee the company did not authorize or ratify |
| State FEHA claims with fee shifting and no dollar caps | Federal-only claims subject to Title VII caps |
| Statutory penalties that apply on top of damages | A claim filed after its deadline |
Most cases have factors in both columns. An employment attorney can evaluate how they apply to your specific facts.
Severance is money an employer offers when employment ends, usually in exchange for a release of claims. A wrongful termination settlement resolves a claim already raised. Signing a release in either one generally gives up the claims it covers.
California gives employees time to decide. Under Government Code section 12964.5, an employer offering a separation agreement must tell the employee of the right to consult an attorney and allow at least five business days to do so. That notice rule does not apply to a negotiated settlement of a claim the employee has already filed in court, with an agency or through the employer’s internal complaint process. Our article on severance agreements in California explains what to look for in the release.
It depends on what each part of the payment is for. According to IRS Publication 4345:
The IRS notes that a settlement may be allocated among elements such as back pay, emotional distress and attorney’s fees, and it generally will not disturb an allocation that is consistent with the substance of the settled claims. Because the wording matters, consider asking a tax professional to review the terms before you sign.
Different employment claims have different filing deadlines. For many California discrimination and retaliation claims under FEHA, an employee generally has three years from the date they were last harmed to begin the process with the California Civil Rights Department. After a right-to-sue notice, the lawsuit generally must be filed within one year, so requesting that notice early can shorten your time.
Public-policy, contract and whistleblower claims have their own deadlines. Our article on the wrongful termination statute of limitations in California explains how these clocks differ. An employment attorney can evaluate which deadlines apply to your situation.
If you were fired after a complaint, a leave request, a pregnancy announcement or an accommodation request, were offered severance in exchange for a release, or resigned because conditions became intolerable, consider speaking with a California employment lawyer. An attorney can identify the legal theories that apply, review any severance or arbitration agreement, and explain the deadlines. In Los Angeles County, see how a Los Angeles wrongful termination lawyer at our firm reviews these cases.
At Abramson Labor Group, we represent California employees in wrongful termination cases. Our case reviews are free and confidential, and we work on contingency. Request your free case evaluation or contact us to talk through what happened.
Not reliably. A calculator cannot tell whether your claim allows emotional distress or punitive damages, what comparable work was available, or whether federal caps apply. Two workers with the same salary can have very different claims.
What you actually earned is generally subtracted from your lost pay. Under Parker, an employer can subtract pay from jobs you did not take only if it proves those jobs were comparable or substantially similar. Turning down work of a different or inferior kind does not reduce your recovery.
It can, for punitive damages. Under Civil Code section 3294(b), a corporate employer owes punitive damages for an employee’s conduct only if an “officer, director, or managing agent” authorized, ratified or committed it, or knew of the employee’s unfitness in advance and acted with conscious disregard of others’ rights.
This article is general information about California law, not legal advice. Every situation is different. For advice about your specific case, talk to a licensed California employment attorney.
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