An action for wrongful termination (or discharge) in violation of public policy gives a terminated employee the right to action against their former employer for wrongful termination. Although employment relationships are generally at will, and therefore may be terminated by either party without cause, this action for wrongful termination serves as a narrow exception to the at will principle.
To make a claim for wrongful discharge in violation of public policy a plaintiff must show that: (1) clear public policy existed and was manifested in state or federal constitution, statute or administrative regulation, or in common law; (2) dismissing employees under circumstances like those involved in the plaintiff's dismissal would jeopardize public policy; (3) the plaintiff's dismissal was motivated by conduct related to public policy; and (4) the employer lacked overriding legitimate business justification for the dismissal.
Employees may generally assert this claim after being terminated for (1) exercising a legal right, (2) refusing to do something illegal, or (3) reporting illegal conduct. For example, California has held that terminating employees for reporting the company's practice of employing undocumented workers, in violation of the Immigration Reform and Control Act (IRCA), was a wrongful termination in violation of public policy. This is because the IRCA was grounded in public policies of: (1) protecting documented workers from employment discrimination, and (2) to protect all documented workers from competition by undocumented workers whose willingness to accept lower wages would diminish the effectiveness of labor unions. As a result, terminating the employees who report violations of the act would directly threaten the policy objectives of the act.
Because wrongful termination in violation of public policy is generally recognized under tort law, courts have permitted plaintiffs to recover for compensatory and punitive damages. However, some jurisdictions, like Arkansas, recognize this action to be exclusively grounded in contract law, and as result, do not permit recovery of punitive damages.
See also: Labor and employment laws
[Last updated in November of 2021 by the Wex Definitions Team]