Lost wages are usually the largest economic number in a wrongful termination case, and the employer has a way to cut them. Under Parker v. Twentieth Century-Fox Film Corp., the employee recovers lost salary “less the amount which the employer affirmatively proves the employee has earned or with reasonable effort might have earned from other employment.” That burden sits with the company. A mitigation defense works only when the employer can show comparable jobs were open and the former employee didn’t make a reasonable effort to get one.
What does the duty to mitigate mean after a termination?
It means a fired employee can’t sit out the job market and then bill the former employer for every month of unemployment.
The California Supreme Court stated the rule in Parker in 1970: “The general rule is that the measure of recovery by a wrongfully discharged employee is the amount of salary agreed upon for the period of service, less the amount which the employer affirmatively proves the employee has earned or with reasonable effort might have earned from other employment.” Parker was a contract case, but courts still apply the same rule to wrongful termination claims decades later, as Villacorta shows below.
Two separate reductions sit inside that sentence. One is money the employee actually earned at a new job. The other is money the employee could have earned with a reasonable search. The second is where most of the litigation happens, because it requires proof about jobs the employee never took.
Who has to prove the employee failed to mitigate?
The employer. Failure to mitigate is an affirmative defense, and the company carries it from the answer through trial.
The Court of Appeal stated the burden directly in Mize-Kurzman v. Marin Community College District (2012) 202 Cal.App.4th 832: it is the employer’s burden “to affirmatively prove failure to mitigate as an affirmative defense.” (The Supreme Court later disapproved Mize-Kurzman on an unrelated whistleblower question in People ex rel. Garcia-Brower v. Kolla’s, Inc. (2023) 14 Cal.5th 719. Its mitigation discussion wasn’t affected.)
In practice, the burden has three parts. The jury instruction quoted in Villacorta v. Cemex Cement, Inc. (2013) 221 Cal.App.4th 1425 required the employer to prove “That employment comparable or substantially similar to plaintiff’s former job was available,” “That plaintiff failed to make reasonable efforts to seek this employment,” and the amount the plaintiff could have earned from it. Plaintiffs’ lawyers know the employer has to prove all of it. An answer that pleads failure to mitigate as boilerplate, followed by no discovery on the job search, gives the jury nothing to work with.
How close does the other job have to be?
A job close enough to the old one, in the work and in the pay and location, that a reasonable person in the employee’s position would take it.
Parker set the limit on what the employer can point to: “the employer must show that the other employment was comparable, or substantially similar, to that of which the employee has been deprived; the employee’s rejection of or failure to seek other available employment of a different or inferior kind may not be resorted to in order to mitigate damages.”
The facts of Parker show how strict the test is. The actress Shirley MacLaine Parker had a contract for the lead in Bloomer Girl, a musical to be filmed in Los Angeles, at a minimum of $750,000. The studio canceled the film and offered her the lead in Big Country, Big Man at the same pay. The court held the offer was “of employment both different and inferior,” because the new role was a western to be filmed in Australia and the offer cut back her director and screenplay approval rights. Same money, different job. Her refusal didn’t reduce the award at all.
The factors a California jury weighs come from that line of cases. The instruction quoted in Villacorta told jurors to consider, among other things, whether “The salary, benefits, and hours of the job were similar to plaintiff’s former job,” whether “The new position required similar skills, background, and experience,” and whether “The job was in the same locality.”
Do the employee’s earnings at a new job always reduce the award?
No. Earnings from a job that is different or inferior may not count at all.
That surprises many employers. In Villacorta, a cement plant employee found a new job after about eight months, but it required him either to live away from his family during the work week or to commute six hours a day. The employer argued his damages should stop when the new paychecks started. The jury awarded three years of lost wages, about $198,000, and the Court of Appeal affirmed. The court explained: “Thus, if the new job is different or inferior, then the wages from that job may not be used to mitigate damages.”
The lesson for the defense is that a new job helps only if the company can show it was comparable. The commute and the time away from home go into that comparison along with the pay, and the plaintiff will testify about each one.
Can the company point to a pension or other benefits instead?
Usually not. Mitigation is about the job search, not every dollar the employee received after leaving.
In Mize-Kurzman, the trial court let the employer show the jury that the plaintiff was eligible to retire and how much pension income she could collect. The Court of Appeal held that was error, stating “we believe that the court erred in admitting evidence of plaintiff’s retirement eligibility and income on the issue of mitigation of her damages.” The court also quoted an earlier decision holding that “the law of this state does not require the mitigation of damages by everything of value received during a period of wrongful unemployment.”
Pension and benefit arguments raise separate offset and collateral source questions. They’re worth analyzing, but they aren’t a substitute for proof that comparable jobs were available.
| Evidence | What it shows | Where the defense usually gets it |
|---|---|---|
| Job postings for similar roles in the same area | Comparable employment was available | Online job boards, staffing agencies, the company’s own recruiters |
| The plaintiff’s applications and the responses to them | Whether the search was reasonable | Interrogatories, document requests, deposition |
| Offers the plaintiff declined | Earnings the plaintiff could have had | Deposition, subpoenas to prospective employers |
| The new job’s pay and location | Whether actual earnings offset the claim | Payroll records, offer letter, testimony |
| Labor market analysis | Time a reasonable search would take and the pay available | Vocational or labor economics expert |
How should the defense build a mitigation record?
Early, and with documents, because the plaintiff controls most of the evidence.
Job-search records disappear. Applications get submitted through portals that delete old accounts, and emails get cleaned out. Discovery should ask for every application, every response, every interview, every offer, and every source of income since the termination. The deposition should walk through the search month by month. Months with no applications are often more persuasive to a jury than an expert’s report.
A labor market or vocational expert can turn that record into a number: how long a reasonable search would have taken and what comparable jobs paid. Expert work costs money, and the decision to retain one should follow from how large the lost-wage claim is. In a case with a modest salary and a short gap, a few printed job postings and a strong deposition may be enough.
Offering the employee a job back is another tool, but Parker is the warning. An offer that changes the position or moves it to another city may be treated as inferior, and a refusal then reduces nothing. An unconditional offer of the same job can be a strong mitigation fact. Draft it with counsel, because a poorly worded offer can become an exhibit for the other side.
Steps to take once a wrongful termination claim arrives
- Put a litigation hold on the personnel file, payroll and benefits records, the termination paperwork, the position description, and emails and texts about the decision, along with any later job postings for the same role.
- Calendar the deadline on the demand letter, CRD complaint, or summons, and check for an arbitration agreement and an employment practices liability (EPLI) policy that requires prompt notice.
- Identify the decision-makers and witnesses, and make sure no reference request or rehiring inquiry about the former employee gets an answer that could look like retaliation.
- Pull the documents the damages claim depends on: the employee’s pay and benefits history, the job description, and evidence of comparable openings in the same area since the termination date.
- Talk to a lawyer before responding, offering reinstatement, contacting the former employee or their lawyer, or making a settlement offer.
The mitigation defense rewards employers who plan for it at the start of a case instead of the eve of trial. Counsel providing California employment defense usually builds the damages record alongside the liability defense, because a strong mitigation showing can cut the economic exposure even when the termination itself is hard to defend.
FAQ
Does a fired employee have to take any job to mitigate damages?
No. Under Parker, the employee only has to make reasonable efforts to find comparable work. An employee who turns down a lower-level job or a job far from home generally doesn’t lose any back pay for refusing it. The employer’s proof has to focus on positions close to the one the employee lost.
What if the former employee stopped looking for work?
That’s the strongest version of the defense, but the company still has to prove comparable jobs were available during the period the employee wasn’t searching. Deposition testimony about the gap, combined with job postings or expert testimony showing open positions at similar pay, gives the jury a basis to reduce the lost-wage award for that period.
Does mitigation reduce emotional distress damages?
The mitigation doctrine discussed in Parker and Villacorta applies to economic losses such as wages and benefits. In Villacorta, the court treated the question of whether the new job was inferior as an economic one, even though the reason was time away from family. Emotional distress damages are argued and proved separately, so a strong mitigation case won’t by itself reduce that part of an award.
Should the company offer to rehire the employee to cut off damages?
Sometimes. An unconditional offer of the same job, at the same pay and location, can be strong mitigation evidence if the employee refuses it. An offer that changes the role or its key terms risks being treated as inferior under Parker. Discuss the timing and wording with counsel before making any offer.
If a former employee’s lost-wage claim has been filed
If your company faces a wrongful termination claim with a large lost-wage demand, the former employee’s job search and the local job market usually decide how much of that number is real. Rosenberger + Kawabata represents employers defending employment lawsuits and claims through its business litigation practice, including claims involving wrongful termination and lost-wage damages. Contact Rosenberger + Kawabata online for a confidential consultation, or call (310) 894-6921.
Sources
The decisions are Parker v. Twentieth Century-Fox Film Corp. (1970) 3 Cal.3d 176; Villacorta v. Cemex Cement, Inc. (2013) 221 Cal.App.4th 1425; and Mize-Kurzman v. Marin Community College District (2012) 202 Cal.App.4th 832, disapproved on another ground in People ex rel. Garcia-Brower v. Kolla’s, Inc. (2023) 14 Cal.5th 719.
This post is general information about California and federal employment law as of November 7, 2026. It is not legal advice, and reading it does not create an attorney-client relationship. Employment statutes, regulations, and court decisions change often, and the outcome of any claim depends on its facts. Past results do not guarantee future outcomes.