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Retaliatory discharge occurs when an employer terminates an employee specifically as a punishment for the employee's engagement in legally protected activities. This can include actions such as filing a complaint about workplace safety violations, reporting illegal activities, or asserting their rights under labor laws. When an employee participates in such activities, they are typically protected by law from adverse employment actions. Therefore, if an employer fires an employee for participating in these protected activities, this constitutes retaliation, which is illegal.

Other options describe legitimate reasons for termination or actions that do not involve punishing an employee for protected conduct. For example, firing an employee for poor performance or due to company downsizing relates to business considerations or performance metrics rather than retaliation against legally protected actions. Ending a contract due to employee misconduct similarly does not involve retaliation; it usually follows established policies regarding behavior expectations. These actions may be lawful and do not constitute retaliatory discharge.