What Is Termination for Cause?

Definition & Examples of Termination for Cause

Businessperson leaving office with box of personal items after being terminated for cause.
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When an employee is terminated for cause, they are fired from their job for a specific reason. They may not always receive advance notice of their termination, and it's possible they won't receive any severance or other compensation, either.

Find out when a firing qualifies as a termination for cause and what happens next.

What Is Termination for Cause?

Termination for cause is the firing or letting go of an employee for a sufficient reason, such as misconduct. While termination for cause does not always imply misconduct on the part of the employee, in many places, including Texas, for example, it does.

Reasons an employee could be terminated for cause could include:

  • Stealing
  • Lying
  • Failing a drug or alcohol test
  • Falsifying records
  • Embezzlement
  • Insubordination
  • Fraud
  • Felonious conduct
  • Disclosing private, confidential information or trade secrets
  • Deliberately violating company policy or rules

Conviction of a crime or the breach of a contract you have with your employer may also be grounds for termination for cause.

How Does Termination for Cause Work?

Unless you have an employment contract or other agreement, you are presumed to be employed “at will” in all states except Montana. At-will employment gives the employer and employee the flexibility to terminate employment at any time for nearly any reason, so long as the employee is not discriminated against on the basis of race, gender, sexual orientation, or any other protected class.

There is no federal law forcing an employer to give any sort of notice when terminating an employee for cause.

The only time an employer is required to give notice of termination is in the case of mass layoffs or large plant closures, per the Worker Adjustment and Retraining Notification (WARN) Act.

For example, say an employee shows up to work under the influence of drugs and alcohol. They could be immediately terminated for cause, especially if doing so is expressly forbidden by company policy. Or, suppose someone signs a non-disclosure agreement (NDA) as a condition of employment, but breaches that contract by disclosing proprietary information to an outside party or competitor. The employer could terminate that employee with cause as soon as the offense is found out.

Unemployment

When you are terminated for cause, it's possible you won't be eligible for unemployment. Laws vary by state, so check with your state unemployment office for details pertaining to your particular situation. If your unemployment claim is denied, you will be able to appeal and explain the circumstances of your termination.

However, don’t assume that because you were terminated for cause, you’ll be ineligible for unemployment. You won’t know until you ask.

Some employers prefer to give severance or even treat dismissals as layoffs, rather than deal with the difficulties that arise from terminating for cause. That could affect your eligibility as well.

Wrongful Termination

Wrongful termination, also known as wrongful dismissal, is when an employer terminates employment for reasons that are illegal or which breach a contract between employer and employee.

For example, if you have been fired for being a whistleblower, that is wrongful termination. The law protects your right to alert authorities to unsafe conditions or the violation of regulations at work. Similarly, if you have been fired on the basis of your skin color, religion, pregnancy, or another reason that is protected by law, that is cause for a wrongful termination suit for discrimination.

If you feel that your termination was illegal or that you have not been treated according to the law or your employer's company policy, reach out for help.

The U.S. Department of Labor provides information on filing claims, as does the U.S. Equal Employment Opportunity Commission (EEOC), which can help you if you are being discriminated against. You may need to file a discrimination charge with the EEOC if that's the case.

How to Handle Termination for Cause

Even if you saw the termination coming, losing your job often comes as a shock. If you’re wondering about eligibility for unemployment, employee rights after termination, or what happens to your retirement and health benefits when you’re terminated, the company’s human resources department should be your first stop. Representatives there should have the answers to your concerns. Even though they’re no longer representing you as an employee, the human resources department is charged with making sure that former employees have all the information they need to move forward.

You can also contact your state unemployment office or state department of labor for specific information about unemployment benefits in your state.

Key Takeaways

  • Termination for cause is when an employer has sufficient reason to let an employee go.
  • Misconduct on the part of the employee results in termination for cause.
  • If you have been terminated for cause, consult the human resources department of your former company for information about collecting pay and other concerns.

Article Sources

  1. National Conference of State Legislatures. "At-Will Employment - Overview." Accessed Aug. 10, 2020.

  2. Whistleblowers.gov. "Whistleblower Laws Enforced by OSHA." Accessed Aug. 10, 2020.