Is there an “average settlement” in wrongful termination cases? (2026 Updates)

Workers who prevail in a wrongful termination claim often receive compensation ranging from $5,000 to $100,000. However, each case is different. There is no single “average” wrongful termination.

Numerous factors can change how much a particular case is worth. Of particular significance is your salary before termination. This drives many of the legal damages that you can recover with a lawsuit.

In this article, I discuss what you need to know about wrongful termination settlements.

Available Damages in Wrongful Termination Cases

Because terminations can be wrongful under either state or federal law, the available legal damages may vary. However, they generally include:

• wage loss, including both back pay and front pay,
• compensation for lost non-wage benefits, like health insurance or even stock options,
• emotional distress,
• medical expenses, both to cover costs incurred from any changes in medical insurance or for conditions that stemmed from the wrongful termination,
• loss of professional reputation,
• attorneys’ fees for filing and pursuing the wrongful termination claim, and
• punitive damages to punish the employer if the termination was especially wrongful.

Some of these are economic damages that are relatively easy to determine. Others are more speculative, such as emotional distress. Either way, I fight to recover the highest possible amount, whether through administrative remedies, negotiations, or a lawsuit.

Settlement Amount Factors

Numerous factors can impact the amount of damages you suffer for wrongful termination. Among them are:

• your salary,
• what kind of benefits came with the job,
• your age and skill set,
• the conduct of the employer,
• whether the employer tarnished your reputation and hurt your future job prospects,
• whether you mitigated your damages by looking for a new job, and
• whether you hired a wrongful termination lawyer.

In some cases, these factors can work in your favor. If you were a well-paid employee in an upper management position, and the termination was clearly in violation of the law, you could recover far more than the average wrongful termination settlement. If you were an entry-level or low-paid worker, you will likely recover less than average compensation.

Punitive Damages

The employer’s conduct is also significant. If the employer was especially egregious, you may be able to recover punitive damages. These go above and beyond the compensatory damages you need to recover fully from the wrongful termination.

They are meant to punish employers for their bad conduct. When they are awarded, punitive damages can drastically increase what you receive.

Punitive damages are only awarded in a verdict. However, the possibility of punitive damages can make the employer more inclined to settle the case outside the courtroom. This can lead to a higher settlement offer.

Settlements vs. Court Verdicts

Just like with other types of lawsuits, wrongful termination claims tend to be settled out of court.

Employers are generally wary of taking the case to court. They tend to avoid publicity surrounding the wrongful termination claim. This is especially common when the allegations are of egregious conduct.

They also tend to want to avoid the expense of defending a claim for too long. These interests push them towards an out-of-court settlement.

Common Cases

A wrongful termination is a discharge for an illegal reason. Even for workers in at-will employment structures, there are numerous ways for a termination to be for an illegal reason. Some of them include:

• breaching the employment contract,
• discrimination on the basis of a protected class, like sexual orientation or national origin,
• retaliation, such as for reporting sexual harassment, filing a workers’ compensation claim after a workplace injury, or being a whistleblower,
• WARN Act violations (in cases of mass layoffs), and
• public policy violations.

California Law

Under California employment law, the legal damages available for a wrongful termination case are:

• what you would have earned, including wages, benefits, and pay increases, between your termination and the present time,
• the present cash value of any future wages and benefits that you would have earned for the reasonably certain period of continued employment with the employer, and
• any other contract damages that the employer caused by wrongfully terminating you.¹

The factors used to determine how long you would have stayed with the employer are:

• your age, work performance, and intention to stay with the employer,
• the employer’s prospects for continuing the work that involved you, and
• any other factors that are relevant.²

California requires you to mitigate your damages after being wrongfully terminated, though. This means that you have a legal duty to make reasonable efforts to find a new job after being discharged.

If you do not uphold this duty, your compensation from a successful wrongful termination claim can be reduced.

It is up to the employer to prove that you did not adequately mitigate your damages. To prove this, the employer has to show the following three elements of the jury instructions:

1. that there was employment available and that was substantially similar to your job with the employer,
2. that you failed to make reasonable efforts to seek and retain that employment, and
3. how much you could have earned from this employment.³

Some of the factors that can be considered in determining whether another form of employment was substantially similar to your job with your former employer are whether:

• the nature of the work in the other job was similar to your prior employment with the former employer,
• the new position would have been substantially inferior to your old job,
• the salary, benefits, and job hours were similar,
• any of the new position’s requirements took similar skills, background, and experience to perform as the old one,
• the job responsibilities were similar, and
• the job was in the same locality.⁴

There is no average settlement amount in wrongful termination cases.

Frequently Asked Questions (California-Specific)

What is the average wrongful termination settlement in California?

There is no single “average” amount because every case is unique. However, typical settlements often range between $5,000 and $100,000.

Smaller claims with minimal lost wages might settle for $5,000 to $20,000 as “nuisance value.” Conversely, cases involving long-term, high-earning employees or severe workplace discrimination and retaliation can yield settlements or jury verdicts in the six- or seven-figure range.

What factors will increase the value of my wrongful termination case?

The value of your settlement largely depends on your actual financial losses and the strength of your evidence. Key factors that increase case value include:

• High lost wages: Your previous salary, bonuses, and lost benefits.
• Strong evidence: Documented proof such as emails, texts, HR complaints, or witness testimony.
• Severe employer misconduct: Blatant discrimination, sexual harassment, or retaliation for whistleblowing.
• Company size: Larger corporations typically have higher insurance policies and resources to pay larger settlements.

Can I get compensated for emotional distress?

Yes. In California, if your termination violates public policy—such as being fired due to your race, gender, age, or for reporting illegal activity—you can seek non-economic damages. This means you can be financially compensated for the anxiety, depression, insomnia, and damage to your professional reputation caused by the unlawful firing.

How long do I have to file a wrongful termination claim in California?

The legal deadline, known as the statute of limitations, depends on the legal basis of your claim:

• Violations of Public Policy: You generally have two years from the date you were fired.
• Discrimination or Harassment (FEHA): You typically have three years to file a pre-lawsuit complaint with the California Civil Rights Department (CRD).
• Breach of Written Contract: You have four years to file a lawsuit.
• Breach of Implied Contract: You have two years to file.

Are wrongful termination settlements taxable?

In most cases, yes. The portion of your settlement that covers “back pay” (lost wages) and “front pay” (future lost earnings) is treated as standard income and is subject to state and federal taxes, including Medicare and Social Security.

However, compensation awarded specifically for physical injuries or physical sickness is generally tax-exempt. You should always consult with a tax professional regarding the specifics of your settlement.

Do I have to accept a settlement offer from my former employer?

No. You are never legally obligated to accept a settlement offer. If you and your employment attorney believe the employer’s offer is too low and does not adequately cover your lost wages and damages, you have the right to decline the offer and take the case to trial.

Additional Reading

For more in-depth information, refer to these scholarly articles:

• Wrongful termination and the expanding public policy exception: Implications and advice – SAM Advanced Management Journal.
• The Legal Consequences of a Wrongful Termination – Constitutional Law International.
• At Will Employment Agreements: New Focus for Shielding Employers from Wrongful Termination Suits – Western State University Law Review.
• Past, Present, and Future in Wrongful Termination Law – Labor Law.
• Demonstrating Failure To Discharge Plaintiffs Duty To Mitigate In A Wrongful Termination Case: An Empirical Approach – Journal of Business of Economics Research.