The Difference Between Wrongful Termination and Constructive Termination in California Employment Law

Understanding Your Employee Rights in California

Understanding the distinction between wrongful termination and constructive termination is essential for employees in California. These legal concepts revolve around unjust dismissals in the workplace, but the circumstances and legal remedies vary between them.

Both types of termination are unlawful under California employment law, and employees affected by either may have the right to compensation. However, recognizing the subtle differences between wrongful and constructive termination is vital for determining the correct course of legal action.

This article will explore the legal nuances between these two forms of termination, provide real-life case studies, discuss settlements, and answer frequently asked questions to help employees and employers alike better understand their rights and responsibilities under California law.

What Is Wrongful Termination?

Wrongful termination occurs when an employer illegally fires an employee in violation of state or federal employment laws. Most employment relationships in California are “at-will,” meaning employers can generally terminate an employee for any reason or no reason at all, as long as it’s not illegal. However, certain actions can make a termination wrongful, including:

1. Discrimination: Terminating an employee based on race, gender, age, religion, disability, national origin, or other protected classes under the California Fair Employment and Housing Act (FEHA) and federal law.

2. Retaliation: Firing an employee for engaging in protected activities, such as reporting workplace safety violations, filing a complaint about discrimination or harassment, or participating in an investigation.

3. Violation of Public Policy: Termination that violates California’s public policy, such as firing an employee for refusing to commit an illegal act, reporting illegal activity, or exercising their legal rights (e.g., taking family leave under the California Family Rights Act (CFRA)).

Wrongful Termination Example:

A female employee at a tech company in California was terminated shortly after reporting sexual harassment by a supervisor. Although the company cited “poor performance” as the reason for termination, the timing and lack of prior complaints indicated that the firing was retaliatory. The employee sued for wrongful termination and won, receiving compensation for lost wages and emotional distress.

Legal Insight:

In wrongful termination cases, employees must prove that the termination was illegal. This often involves demonstrating that the employer’s stated reason for the termination is pretextual or that the termination occurred under circumstances that suggest discrimination or retaliation.

California’s FEHA offers robust protections against wrongful termination, and victims can seek legal recourse through the California Department of Fair Employment and Housing (DFEH) or a lawsuit in civil court.

What Is Constructive Termination?

Constructive termination, also known as constructive discharge, occurs when an employee is forced to resign due to intolerable working conditions. The key difference is that, in a wrongful termination case, the employer directly terminates the employee, while in a constructive termination case, the employer’s actions create an environment so unbearable that the employee feels they have no choice but to quit.

Under California law, constructive termination is treated similarly to wrongful termination if the resignation is triggered by illegal conduct such as discrimination, harassment, or retaliation. To prove constructive termination, the employee must demonstrate that:

1. Working conditions were intolerable: The work environment became so hostile or unlivable that a reasonable person in the employee’s position would feel compelled to resign.

2. The employer was responsible: The intolerable conditions were a result of the employer’s actions or failures to act, such as ignoring harassment complaints or engaging in discriminatory practices.

3. The resignation was involuntary: Although the employee resigned, the resignation was effectively a forced termination due to the employer’s conduct.

Constructive Termination Example:

A sales manager at a California retail company was subjected to ongoing racial slurs and derogatory comments by coworkers. Despite repeated complaints to management, the company failed to take action. Feeling emotionally drained and unsafe, the employee resigned. After filing a lawsuit, the court ruled in favor of the employee, recognizing that the hostile work environment amounted to constructive termination.

Legal Insight:

Constructive termination cases often hinge on proving that the working conditions were objectively intolerable, not just unpleasant or difficult.

The courts use a “reasonable person” standard to determine whether the conditions would force a reasonable person to resign. Additionally, the employer must be aware of the conditions and either create them or fail to remedy the situation.

Case Studies of Wrongful and Constructive Termination

Case Study 1: Wrongful Termination Due to Age Discrimination

A 55-year-old employee at a marketing firm in California was laid off and replaced by a younger worker with less experience. The employee filed a wrongful termination lawsuit, alleging age discrimination in violation of California’s Fair Employment and Housing Act (FEHA). After a lengthy legal battle, the company settled for $750,000, covering lost wages and damages for emotional distress.

Case Study 2: Constructive Termination for Failure to Address Harassment

A female executive at a California tech startup faced ongoing sexual harassment from her immediate supervisor. Despite multiple complaints to HR, no actions were taken, and the harassment continued. Feeling trapped and unsafe, the executive resigned and filed a constructive termination lawsuit. The company eventually settled for $1.2 million, citing their failure to act as a significant factor.

Case Study 3: Wrongful Termination for Whistleblowing

An engineer at a manufacturing company reported safety violations to the California Occupational Safety and Health Administration (Cal/OSHA). Shortly after, he was terminated for “poor performance.” The engineer filed a wrongful termination claim, arguing that his termination was retaliation for whistleblowing. The court ruled in favor of the engineer, awarding him $500,000 in lost wages and punitive damages.

Case Study 4: Constructive Termination Due to Disability Discrimination

An administrative assistant with a physical disability repeatedly requested reasonable accommodations, such as modified work hours, to perform her job. Her employer ignored these requests and subjected her to public ridicule. Unable to continue working in such an environment, she resigned and sued for constructive termination. The case was settled for $600,000, with the court acknowledging the employer’s discriminatory conduct.

Case Study 5: Wrongful Termination for Taking Medical Leave

A California retail worker took medical leave under the Family and Medical Leave Act (FMLA) to undergo surgery. Upon returning to work, she was terminated, with the employer claiming her position had been eliminated. The employee sued for wrongful termination, alleging that the company violated her rights under FMLA. The company settled the case for $450,000.

Key Differences Between Wrongful and Constructive Termination

Understanding the difference between wrongful termination and constructive termination is crucial for employees pursuing legal action. Below is a summary of the key distinctions:

Wrongful Termination	Constructive Termination
Employer directly fires the employee	Employee resigns due to intolerable working conditions
Based on illegal reasons such as discrimination or retaliation	Resignation is considered forced due to hostile or unlivable conditions
Employee does not quit voluntarily	Employee feels they have no choice but to quit
Easier to prove if direct evidence of illegal firing exists	Requires proof that a reasonable person would resign under the circumstances

In both types of cases, employees may be entitled to compensation for lost wages, emotional distress, and other damages.

Notable Settlements in Termination Cases

1. $1.5 Million for Constructive Termination in a Tech Company

A software developer resigned after facing continuous racial discrimination and harassment. The company failed to take corrective action despite multiple complaints. The employee sued for constructive termination, and the case was settled for $1.5 million, covering lost wages and emotional distress.

2. $900,000 for Wrongful Termination Due to Pregnancy Discrimination

A manager at a California retail chain was terminated shortly after informing her employer that she was pregnant. The employer cited performance issues, but the timing of the termination suggested otherwise. The employee sued for wrongful termination, alleging pregnancy discrimination, and the company settled for $900,000.

3. $750,000 for Wrongful Termination After Reporting Sexual Harassment

An accountant at a financial firm was terminated after reporting sexual harassment by a senior executive. She sued for wrongful termination, claiming that the firing was retaliatory. The case was settled for $750,000, with the company admitting no fault but paying damages for lost wages and emotional distress.

4. $500,000 for Constructive Termination Due to Unsafe Work Conditions

A warehouse worker resigned after his employer ignored multiple safety complaints about hazardous conditions in the workplace. The employee filed a constructive termination lawsuit, which was settled for $500,000 after the employer admitted to failing to address the safety issues.

5. $1 Million for Wrongful Termination Based on Disability

A customer service representative with a hearing disability was terminated after requesting accommodations for his condition. He sued for wrongful termination based on disability discrimination, and the case was settled for $1 million, covering lost wages and damages for emotional distress.

FAQs About Wrongful and Constructive Termination

1. What Is the Statute of Limitations for Filing a Wrongful Termination Claim in California?

In California, the statute of limitations for filing a wrongful termination lawsuit depends on the type of violation. For violations under FEHA (discrimination or retaliation), employees generally have one year to file a complaint with the DFEH. For other types of claims, such as breach of contract, the time limit may vary.

2. How Do I Prove Constructive Termination?

To prove constructive termination, you must demonstrate that working conditions were so intolerable that a reasonable person would have felt compelled to resign. You must also show that**…that the employer either created or failed to remedy the situation despite being aware of it.**

3. Can I Receive Compensation for Emotional Distress in a Constructive Termination Case?

Yes, if you win a constructive termination case, you may be entitled to compensation for emotional distress in addition to lost wages and other damages.

4. What’s the Difference Between Wrongful Termination and At-Will Employment?

At-will employment allows employers to terminate employees without cause, but wrongful termination occurs when an employee is fired for illegal reasons, such as discrimination, retaliation, or violation of public policy.

5. What Are the Remedies Available for Wrongful or Constructive Termination?

Employees who win wrongful or constructive termination cases may receive back pay (lost wages), front pay (future lost earnings), reinstatement (if applicable), compensation for emotional distress, and punitive damages in severe cases.

Both wrongful termination and constructive termination are illegal under California law, but they differ in how the employment ends.

Wrongful termination involves an unlawful firing by the employer, while constructive termination occurs when the employer’s actions or inactions make the working environment unbearable, forcing the employee to resign. In either case, employees have the right to seek legal recourse.

By understanding these differences, employees can better navigate their legal options, whether they’re dealing with discrimination, retaliation, or hostile work environments.

If you believe your termination was unlawful, it’s critical to consult an experienced employment attorney to assess your case and determine the best course of action.