What is Wrongful Termination?

When a termination is handled poorly or when an individual feels that a termination was unfair, unjustified, etc. (but not necessarily unlawful), four words often follow: “I was wrongfully terminated.”  Beyond being a general descriptor for a termination, “wrongful termination” is actually a distinct legal claim in Wisconsin.  So what is wrongful termination?  Glad you asked.

Wisconsin is an “at-will” state, meaning that an employer can terminate an employee for good cause, no cause, or even for reasons that are subjectively unfair or “wrong,” so long as the termination is not unlawful.  Importantly, employers do not have to provide employees with the reason(s) for their terminations.  On the flipside of the “at-will” doctrine, employees are free to quit whenever and for whatever reason (if any) they so choose.

Quickly looking beyond wrongful termination, a termination can be unlawful if the reason(s) underlying the termination decision violates existing laws, such as Title VII of the Civil Rights Act of 1964, the Wisconsin Fair Employment Act, the Americans with Disabilities Act, the Family and Medical Leave Act, and the Age Discrimination in Employment Act, just to name a few (we have more here, which still barely scratch the surface).

Unlike those laws, “wrongful termination” lacks a statutory definition, but rather is a construct of Wisconsin courts, having been specifically recognized as a cause of action by the Wisconsin Supreme Court in 1983.  Because it does not have a written definition, the boundaries of “wrongful termination” have expanded and contracted over the years.  However, what has remained true since 1983 is that “wrongful termination” occurs when an employee is terminated for refusing to violate a constitutional or statutory provision or for reporting unlawful conduct in the workplace.

Examples come from wrongful termination cases including a nurse who refused to work in an area of a hospital for which she was not qualified, a credit union clerk who refused to reimburse her employer for its losses resulting from a customer’s bad check, a truck driver who refused his employer’s command to operate his truck without a valid driver’s license, and a payroll clerk who refused to violate tax withholding regulations.

While not necessarily, wrongful termination claims can sometimes overlap with other exceptions to the at-will doctrine.  Looking at the above examples, other laws that could be implicated include, but would not be limited to, the Healthcare Worker Protection Law, the Fair Labor Standards Act, the Occupational Safety and Health Act of 1970, and the Sarbanes-Oxley Act of 2002.

The takeaway is that not every termination is “wrongful” or unlawful, though there are obvious exceptions.  Employers are wise to consult with an employment law attorney before making a termination decision to make sure the termination does not fall into an exception.  On the other hand, employees should consult with an employment law attorney if they think their termination was the exception.