Wrongful Termination During Layoffs, Medical Leave & Other Special Situations

When “It Was Just a Layoff” Is Not the Whole Story

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Most wrongful termination cases do not look like wrongful termination cases at first glance. They look like a layoff. A “performance issue.” A restructuring that hit your department hard. A medical leave that ended with your position conveniently eliminated. Or a sales role where commissions were almost due when you got the call.

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California has some of the strongest employment protections in the country, but those protections only work if you know they apply to your situation. This post covers the four scenarios where employees are most frequently terminated illegally, often without realizing they have a claim.

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If any of these situations apply to you, contact our wrongful termination lawyers in Los Angeles before you sign anything or accept a severance package.

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Wrongful Termination During Layoffs and Company Restructuring

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Layoffs are legal. Companies can reduce headcount for financial reasons, and California’s at-will employment doctrine gives them broad latitude to do so. What companies cannot do is use a layoff as cover for discrimination or retaliation.

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If a company is laying off 200 people and 80 percent of those selected are over 50 years old, that is not a coincidence. That is a pattern. If the only person cut from a department is the one who filed an HR complaint six weeks ago, that is retaliation. The layoff itself may be legal. The selection criteria may not be.

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The WARN Act: What You Are Owed Before a Mass Layoff

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California’s WARN Act (Cal-WARN, Labor Code § 1400–1408) requires employers with 75 or more employees to give 60 days’ advance notice before a mass layoff, plant closure, or relocation. A mass layoff is defined as laying off 50 or more employees within a 30-day period at a single location. Federal WARN (29 U.S.C. § 2101) applies to employers with 100 or more employees and similarly requires 60 days’ notice before layoffs of 50 or more workers, or 33 percent of the workforce, at one site.

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When notice is not given, employees are entitled to back pay and benefits for each day the notice was short, up to 60 days. Many employees who were laid off during tech and media company mass layoffs in 2022 and 2023 never received these payments, and many never knew they were owed them.

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Discriminatory Selection for Layoffs

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Under California’s Fair Employment and Housing Act (FEHA, Gov. Code § 12940), employers cannot select employees for layoff based on age, race, sex, disability, national origin, religion, sexual orientation, pregnancy, or a handful of other protected characteristics. Federal law under Title VII and the Age Discrimination in Employment Act (ADEA) adds parallel protections.

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The hard part is that discriminatory intent is rarely in writing. What you look for is the pattern: who got cut and who did not, whether the selection criteria have any legitimate business basis, and whether the people who were spared happen to share a demographic profile. If you believe your layoff targeted you because of your age, your disability, or a complaint you made to HR, document everything you remember and call an attorney before you sign the severance agreement.

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Fired While on Medical Leave or Disability

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California employees on qualifying medical leave have layered protections from both state and federal law. Getting fired during, or shortly after, a medical leave is one of the clearest red flags that something was done illegally.

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FMLA and CFRA: The Basics

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The federal Family and Medical Leave Act (FMLA) provides eligible employees up to 12 weeks of unpaid, job-protected leave per year for serious health conditions, the birth or adoption of a child, or to care for a close family member with a serious condition. California’s equivalent, the California Family Rights Act (CFRA, Gov. Code § 12945.2), mirrors FMLA but applies to employers with 5 or more employees, a much broader reach than the federal law’s 50-employee minimum.

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Both laws prohibit employers from firing, demoting, or otherwise retaliating against employees for taking protected leave. When you return from FMLA or CFRA leave, you are entitled to be restored to your same position, or a comparable one with equivalent pay, benefits, and working conditions. Employers who tell employees their position “no longer exists” while they are out on leave face a significant legal exposure, particularly if the role was filled or redistributed during the absence.

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When a Termination Is Legal vs. When It Is Not

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Employers can, in some circumstances, legally terminate an employee who is on medical leave. If the company undergoes a legitimate layoff and the employee’s position is eliminated for reasons that have nothing to do with the leave, that may be defensible. The same applies if the employee committed a serious misconduct issue before going on leave. What is illegal is firing someone because they took leave, or using the leave as a pretext to eliminate someone the employer wanted gone for discriminatory reasons.

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California also has the Fair Employment and Housing Act’s separate disability discrimination protections (Gov. Code § 12940(a)), which require employers to provide reasonable accommodations and engage in a good-faith interactive process before terminating a disabled employee. Skipping that process, or cutting it short because accommodation seemed inconvenient, is its own violation. If your employer fired you after you requested accommodations, or while you were receiving treatment for a condition, talk to an attorney about potential medical leave retaliation claims before accepting any settlement.

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Fired to Avoid Paying Commissions or Bonuses

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Sales employees in California encounter a particular form of wrongful termination: getting fired right before a commission vests or a quarterly bonus is due. This happens often enough that courts and the legislature have addressed it directly.

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California Labor Code Protections for Earned Commissions

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Under California Labor Code § 204, wages, including commissions, must be paid on regular paydays. Labor Code § 200 defines “wages” broadly to include commissions if they are compensation for services. Labor Code § 204.1 specifically governs commissions that are earned but not yet payable, requiring that they be paid when they become due even after separation.

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A commission is “earned” when the employee has completed the work required to generate it: in most cases, when the sale is closed or the deal is funded. An employer who terminates an employee the week before a commission would be paid, with no other legitimate reason for the firing, faces a wage theft claim under the Labor Code on top of any wrongful termination claim. Waiting periods written into commission plans cannot strip employees of wages they have already earned.

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Bonuses and Targeted Terminations

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Discretionary bonuses are harder to claim than earned commissions, but they are not untouchable. If a bonus was promised as part of your compensation agreement, whether in an offer letter, an employment contract, or a documented company policy, California courts have found those promises enforceable. If you were fired in October when your annual bonus paid out in November, and the stated reason for your termination does not hold up under scrutiny, that timing becomes evidence.

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Document everything: the commission schedule, the deals you closed, any written communication about bonus eligibility, and the timeline between your termination and the payment date you were approaching. That documentation forms the foundation of a wage claim before the California Labor Commissioner or a civil lawsuit.

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How Wrongful Termination Affects Your Work History and Future Employment

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A firing affects more than your paycheck. It follows you into reference checks, background screenings, and future job interviews. California law does limit how much damage an employer can do, but not completely.

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Under California Civil Code § 47(c), an employer’s communication to a prospective employer about a former employee’s job performance is a “conditionally privileged” statement, meaning it is protected as long as it is made without malice. Former employers can disclose factual information about your performance, the reason for your termination, and whether they would rehire you. What they cannot do is make false statements that damage your reputation. That crosses into defamation.

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In practice, many California employers stick to confirming dates of employment and job title only, precisely to avoid liability. But if your former employer is telling future employers that you were fired for cause when the real reason was your age or your medical condition, that is a defamation exposure on top of everything else. If you are losing job opportunities because of what a former employer is saying, that matters both as a separate legal claim and as evidence of damages in your wrongful termination case.

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On the unemployment side: an employee terminated for wrongful reasons is almost always entitled to California unemployment benefits. If your former employer is contesting your unemployment claim, that documentation fight often surfaces information that is directly useful in a civil case.

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Industry-Specific Wrongful Termination Patterns in Los Angeles

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Los Angeles has three industries where wrongful termination claims surface at higher rates than average, each with its own patterns.

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Healthcare

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Healthcare workers in California have specific whistleblower protections under Health and Safety Code § 1278.5, which prohibits retaliation against hospital employees who report patient safety concerns. Nurses, medical assistants, and other clinical staff who raise concerns about unsafe staffing ratios, improper billing, or patient care standards are protected, and frequently fired anyway. These cases often involve a documented complaint followed closely by a performance improvement plan and then termination. The sequence matters.

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Technology

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The wave of tech industry layoffs from 2022 through 2024 produced a large volume of potential Cal-WARN and discriminatory layoff claims in the LA market. Older engineers, women in leadership roles, and employees who had recently raised internal complaints about discrimination or safety practices were selected for layoffs at rates worth examining. Many signed severance agreements with broad releases without knowing they had ADEA or FEHA claims.

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Entertainment

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Entertainment industry employees, including production staff, writers, and below-the-line crew, face termination during and after strikes, on completion of projects, and in the ongoing shift between union and non-union productions. Retaliation for union activity is illegal under the National Labor Relations Act. Sexual harassment retaliation cases in entertainment have produced some of the largest verdicts in California in the last decade, and the pattern of using a production ending or restructuring as cover for retaliatory firing is well-documented in this industry.

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Your Rights and When to Call an Attorney

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California gives wrongful termination victims several paths to recovery, and the right path depends on the type of violation involved.

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If your claim involves discrimination under FEHA, you must first file a complaint with the California Civil Rights Department (CRD, formerly DFEH) and receive a right-to-sue notice before you can file in civil court. For federal discrimination claims under Title VII or the ADEA, that complaint goes to the EEOC. There are filing deadlines: 3 years from the violation for FEHA claims since AB 9 extended the deadline effective January 1, 2020, and 300 days for federal EEOC claims. Missing the deadline ends your right to sue.

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Wage claims for unpaid commissions or bonuses can be filed directly with the California Labor Commissioner without going through a discrimination agency first. These claims have a 3-year statute of limitations for oral promises and 4 years for written contracts (Code of Civil Procedure § 337).

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WARN Act claims are civil actions that can be filed in federal district court, and the 60-day notice period becomes a hard calculation: how many days of notice were you short, multiplied by your daily pay and benefits.

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What to Do Before You Hire an Attorney

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Before your consultation, pull together whatever documentation you have: your offer letter, any employment contracts, your commission schedule, performance reviews, emails about your termination, and a written timeline of events leading up to the firing. Note any comments made about your age, health, or protected characteristics, even casual ones. If you signed a severance agreement, bring it. If you have not signed yet, bring it before you sign anything, because most severance agreements include a release of all claims.

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California law under the Older Workers Benefit Protection Act gives employees over 40 at least 21 days to consider a severance agreement and 7 days to revoke after signing if the release waives ADEA rights. Do not let an HR department pressure you to sign before you have reviewed your options.

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Rager & Yoon represents employees across Los Angeles in wrongful termination, retaliation, and wage claims. If you were fired during a layoff, while on medical leave, or right before a commission or bonus payout — and something about the timing or explanation does not add up — get a legal opinion before you close the door on your options.

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Call Rager & Yoon at 213-255-4165 for a free consultation. There is no cost to speak with an attorney, and no fee unless we recover for you.