Post-termination earnings must be deducted from wrongful termination verdict

A former employee filed suit against Rite Aid and a supervisor in 2008 for wrongful termination. After a trial, and two retrials following subsequent appeals, a California Court of Appeals largely affirmed the jury's US$6M verdict against the defendants. On appeal, Rite Aid contended that interim earnings of the plaintiff should be deducted from the past economic damages award. The Court of Appeals agreed, rejecting plaintiff's argument that the interim earnings should not be an offset because the job she took after her termination was not substantially similar to the one she held at Rite Aid.

An employer can prove that a former employee failed to mitigate damages caused by termination by showing that plaintiff failed to make a reasonable effort to search for other work or that plaintiff turned down offers of comparable employment. The duty to mitigate damages is separate than the question whether actual interim earnings should be deducted from an economic damages award. The Court of Appeals held that the amount actually earned from other employment must offset the damages award, and reduced the jury's verdict by more than US$140,000. Surprisingly, the court's decision creates a conflict in the lower courts which the California Supreme Court may be asked to resolve.