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How to Calculate Wrongful Termination Settlement

wrongful termination settlement calculator

Have you been wrongfully terminated from your job? If so, you may be able to file a wrongful termination lawsuit against your employer. But before that, it’s essential to understand how to use a wrongful termination settlement calculator. This knowledge can be vital in ensuring you receive fair compensation. 

What is Wrongful Termination?

Wrongful termination happens when an employer violates an employment contract or law when firing an employee. It can stem from harassment, discrimination, or retaliation, among other reasons. 

Although most States practice at-will employment, meaning either party can end the employment relationship at any time, certain terminations can still be illegal.  

Wrongful Termination Examples

To give you some perspective on what it is like to be wrongfully terminated, let’s look at some examples of wrongful termination. 

Breach of Contract

This occurs if the employer violates contractual agreements with the employee. For example, firing an employee without following the disciplinary steps outlined in an employee handbook can be viewed as illegal dismissal. It doesn’t matter if the firing is with basis—it will still count as a breach of contract if the right procedure, as stated in the contract, wasn’t properly followed.

Harassment or Discrimination

This includes creating a hostile work environment through negative comments or actions about an employee’s gender, race, or other protected characteristics. Firing or mistreating an employee based on age, gender, or race may also fall under this description. If you prove that the dismissal was due to any of these reasons, then there is sufficient ground to seek compensation.

Note that the employee doesn’t have to be dismissed outright. Instead, the employer may create a hostile environment where the employee has no choice but to resign. This also falls within the umbrella of wrongful dismissal and may be the subject of a lawsuit.

Constructive Dismissal

This involves creating conditions that force an employee to quit. Unlike harassment and discrimination, however, a constructive dismissal happens when the employee is demoted or given a significant pay cut without a valid reason. If this happens, the employee may seek compensation based on the grounds that although they have not been terminated, the pay cut impacts their life in one way or another, forcing them to quit and possibly look for other employment opportunities elsewhere. 


This involves firing an employee for reporting illegal activities, discrimination, or participating in investigations, usually against the employer. It is illegal for employers to fire or punish employees for engaging in protected activities.


The United States Department of Labor established the Whistleblower Protection Program in 1989. This Act prevents employers from retaliating against an employee if an employee divulges information about the employer that is considered illegal or immoral. A classic example is the case of Edward Snowden, a systems administrator who leaked information about the National Security Agency illegally spying on US citizens. 

At Will-Employment

At-will employment is a fundamental principle in U.S. labor law. It means that an employer can terminate your employment at any time, for any reason, or no reason at all, as long as the reason is not illegal.

Similarly, you are free to leave your job anytime without reason. This flexibility is a cornerstone of the American workforce, but it also raises questions about job security and legal rights in case termination is unfair. 

Statute of Limitations in Wrongful Termination Suits

The statute of limitations is essentially a deadline for filing a lawsuit. This timeframe varies by state and the type of the claim. Generally, you have anywhere from one to three years to take legal action against your former employer. However, it’s crucial to recognize that this period can be adjusted based on the unique facts and circumstances of your case.

For instance, if your termination was part of a broader pattern of discrimination, the applicable statute may extend beyond the typical one-year period. Additionally, if there’s evidence your employer attempted to conceal discriminatory practices leading to your wrongful termination, this could prolong the statute’s duration.

Federal Statute of Limitations

Note that under federal law, you only have 180 days to file a claim for wrongful termination. Hence, if the intent is to file at a federal level, the filing deadline is usually shorter.

When filing under both state and federal laws, you may be required to file under the EEOC before initiating a lawsuit. The time limits are also subject to change, so having a lawyer who is updated when it comes to these changing laws is essential. Otherwise, you might lose your right to seek compensation, given that courts usually take these deadlines very seriously. 

Factors Considered for Wrongful Termination Settlement

When calculating wrongful termination settlements, several factors will likely come into play. The primary focus is on the tangible and intangible losses you’ve suffered. These factors ensure that the settlement is fair and properly compensates your wrongful termination.

Lost Wages and Benefits

Firstly, lost wages and benefits play a significant role in wrongful termination settlements. When you’re terminated unfairly, you miss out on not only your regular salary but also on any potential bonuses, health insurance, benefits, and retirement plan contributions. 

Calculating these losses accurately is essential for a fair settlement. To determine the compensation for lost wages and benefits, the court will examine your earnings history, the duration you’ve been unemployed since termination, and your efforts to find comparable employment. 

Note that the impact of losing your job extends beyond immediate salary. Factors like career growth opportunities and promotions are also considered. If you’ve had to take a lower-paying job, this wage difference is taken into account as well. For those in specialized fields where finding similar employment is challenging, this factor becomes even more significant.

Emotional Distress

Compensation for emotional distress is a common element in wrongful termination settlements. Losing a job can be a traumatic experience, leading to stress, anxiety, and even depression. The legal system recognizes this and allows for compensation. 

However, providing emotional distress can be more subjective and requires thorough documentation, such as medical records, psychiatric evaluations, and personal testimony.

Emotional distress damages are meant to compensate you for the psychological impact of wrongful termination. However, these damages can be harder to quantify as lost wages and should be properly substantiated during your claim. The amount heavily depends on the individual circumstances and maliciousness of the employer’s act.

Punitive Damages

Punitive damages are not awarded in every case. When properly presented, however, it can significantly increase the value of your settlement. 

These damages are intended to punish particularly malicious or reckless behavior by the employer and to deter similar conduct in the future. To be eligible for punitive damages, there must be clear evidence of the employer’s wrongdoing that goes beyond mere negligence or incompetence.

Note that these are awarded at the discretion of the court and depend on the specifics of the case. Factors like the nature of the employer’s conduct and similar cases in the past all play a role in determining whether punitive damages are applicable.

Legal Costs

Of course, don’t forget that legal costs also form part of the settlement amount. This includes attorney’s fees and other fees associated with the lawsuit, like court fees and expenses for gathering evidence. 

Some jurisdictions may allow the recovery of these costs if you win your case. The logic behind this is that the wrongful acts of the employer compelled the employee to seek legal assistance. Therefore, all costs associated with the lawsuit should be borne by the party at fault.

Computing the Settlement with a Settlement Calculator

A settlement calculator works by taking all the factors mentioned above and providing an estimate of the best possible settlement you can ask for. You will be asked to input specific information, like your wages and benefits, and go from there. However, the wrongful termination settlement calculator only offers an estimate and should not be used as the main basis for filing your claim.

This is because calculators aren’t very good when considering non-economic damages. As mentioned above, factors like emotional distress and punitive damages can be hard to quantify. It often requires the discretion of a good lawyer to properly assess the unique circumstances of the case and present it convincingly to the judge or jury. 

Wrongfully Terminated? Seek Professional Counsel 

While a wrongful termination settlement calculator can offer a preliminary understanding of your potential compensation, it’s essential to recognize its limitations. They provide a basic estimate but cannot account for the small and unique details of each case. Every case is different, with its own set of circumstances that can significantly influence its outcome.

Therefore, the most reliable approach to understanding and maximizing your potential settlement is to seek the opinion of an experienced employment lawyer. The attorney can provide a comprehensive assessment of your case, taking into account all relevant factors. 

Written by
Serah Waweru

A graduate of Western Michigan University Cooley Law School, Serah Waweru is a personal injury and immigration attorney based in Tacoma, Washington. Her law firm serves clients in Washington and all over the United States. Serah has always been passionate about the law; she served as the Vice President of the Western Michigan University Cooley Law School Student Bar Association and vice president of the university's Black Law Students Association. Attorney Serah Waweru is also a proud member of the American Immigration Lawyers Association and the Washington State Bar Association.

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