Wrongful Termination Claim
Definition - What does Wrongful Termination Claim mean?
A wrongful termination claim is a claim for damages an employee files against their employer for being terminated for an unlawful reason. It is a formal demand for compensation for damages, such as lost wages and other expenses that the termination may cause the employee to incur.
Insuranceopedia explains Wrongful Termination Claim
A termination is considered "wrongful" when the basis of firing or laying off an employee is illegal. These unlawful reasons include termination in violation of anti-discrimination laws, oral and written agreements, and labor laws. The employer may also face statutory penalties depending on the violation.
Employers often purchase employment practices liability (EPL) insurance policies to protect themselves from this risk. Besides wrongful termination, these policies cover all claims related to employment, including sexual harassment, negligent evaluation, and racial or gender discrimination.