By Robert A. Adelson
As a C-level or senior executive, and even mid-level executive, what if you are now facing employment termination? What if you have been put on a performance plan? What if you work in a hostile work environment? What if you have already been fired? And all this happened to you despite your record of exemplary performance and loyal service. All you are now told is that you are no longer a good fit; what can you do?
Generally, employees and executives are employees “at will.” That means you can be terminated, at any time, for any reason, or no reason at all.
Yet, despite your at-will employee status, you cannot be fired for the wrong reason. If you are fired for the wrong reason, that employer’s action can give rise to claims for wrongful termination. This article looks at wrongful termination for executives: What are your rights? What actions can you take? What damages can you seek?
What is wrongful executive termination?
You would have a case for wrongful termination if you were fired in breach of an employment contract. The contract can be a formal executive employment agreement, a job offer letter, or terms in your employee manual.
Sometimes, this can occur even with no written document. This is called “implied contract” or “promissory estoppel,” a breach of an oral understanding where you had a clear understanding, made sacrifices, and relied to your detriment on the promise made, only to find the employer reneges.
You may be wrongfully terminated if your employer fires you in retaliation for calling attention to fraud, unsafe conditions, or other illegal activities at the company in violation of public policy.
Executives may also be wrongfully terminated for discriminatory reasons based on age, gender, race, or national origin.
In addition, when the reason given by your employer for employment termination is used to disguise the actual cause of discharge, this pretense would itself be evidence that you had been wrongfully dismissed.
Employers often incorrectly assumed that a formal resignation by the employee would shield them from any and all liability for their actions. If you believe you are being pressured to resign or have resigned due to working conditions you consider intolerable, such as a significant cut in salary and benefits or reduction in responsibilities, a court may rule such facts to be evidence of a “constructive discharge,” and your termination will then be reviewed to determine whether it was wrongful.
Damages and negotiating terms of an executive separation
If you have been fired, or believe you soon may be, for what you believe are wrongful reasons, you do not have to accept it lying down. You must not simply accept it.
If you choose to fight back against wrongful termination, you may seek damages to (1) return you to the same position you were in but for the employer’s wrongful termination and (2) to make you whole for the damage to your career, including lost compensation during the period of unemployment and harm to your career. Such damages typically include:
- Lost salary and benefits, and continuation during the appropriate severance period
- Earned but unpaid executive bonus or prorated bonus, or long term incentive
- Vesting of equity or replacement of lost equity, whether options, restrictive stock or RSUs
- Reimbursement of expenses incurred in reliance on the job, such as loss on the sale of a home purchased for relocation
- Damages for pain and suffering to compensate for the toll the discharge had on your mental, emotional, and/or physical health
- Punitive damages in egregious situations
- References and messaging within the company and beyond
- Outplacement assistance
- Attorneys’ fees and court costs
Being the victim of wrongful termination is a painful experience, but it is wise to consider taking action to preserve your interests and protect your rights. An experienced executive employment attorney could put your case to your employer about the scope of your grievances and the potential liability of your employer if you were to bring suit and negotiate a settlement to properly address your claims. If the settlement is agreed to by both sides, your employer will receive a release from all of your claims. On your side, the termination could be considered a resignation or mutual agreement to better position you for the next job. The company would support your claims for unemployment compensation.
If you believe you are wrongfully terminated, don’t hesitate to seek the counsel of an experienced employment agreement lawyer to ascertain the remedies that may be available to you.