File for unemployment benefits. Once you have begun the filing process, you'd be required to make a job search and hopefully you will find another job as soon as possible. It sounds as though they have had you in the family business and under the company thumb for too long. If you cave now, giving in to whatever they demand you do, you will be selling out both yourself and the child to these people.
No, since he (your father) was your employer, he can fire you for anything at any time. But you should have a pretty good shot at unemployment benefits, providing he was paying state unemployment taxes in on you and was not merely paying you in cash under the table. If this was the case, threaten to file a complaint with U.I and or the feds about his payroll practices. If he can threaten you, you could probably threaten him.