How to Avoid Lawsuits When Firing an Employee

In employment law, wrongful termination occurs when an employee is fired from their job for illegal or unauthorized reasons. Wrongful termination may also be known as unlawful termination. Such reasons can include but not be limited to:

• Whistleblowing;
• Complaints about violations of employee rights;
• Testifying against the company or another employee in legal suits;
• Participating in lawful union activities;
• Filing claims for worker’s compensation or charges of unfair labor practices;
• Reporting OSHA violations; and
• Wage garnishments in order to pay debts.

To simplify, an employer may not terminate an employee for any reason that violates federal, state, or local laws. Employers may also not fire an employee against public policy. Wrongful termination may also occur when an employer fires an employee who has refused to obey any work instructions that are illegal, such as ignoring safety regulations.

A less commonly known example of wrongful termination is when an employer fails to adhere to their own company’s policies regarding the proper termination process. This would include the employer failing to follow proper protocols when releasing the employee from their position. If an employer terminates an employee in any way that could be considered wrongful or illegal, they may face legal consequences for their actions.

Some Steps in Preventing a Wrongful Termination Lawsuit: Know the Law

The first, most obvious step is to avoid firing an employee for the aforementioned unauthorized reasons. It is imperative that you understand both state and federal laws regarding employee termination. All company managers or others with the power to fire employees must have at least a basic understanding of those state and federal laws so they may identify and respond to potential risks.

A few examples of such areas include:

• Retaliation;
• State and federal discrimination laws;
• Employment contracts; and
• Family and Medical Leave Act (“FMLA”) Laws.

Some justifiable reasons for firing an employee include but may not be limited to:

• Incompetence;
• Failure to respond to training;
• Repeated unexcused absences or tardiness;
• Sexual harassment;
• Verbal abuse;
• Physical violence;
• Falsification of records;
• Theft of company property; and/or
• Drunkenness on the job.

Something else to be aware of is if an employee is at-will. At-will employees are hired for an unspecified amount of time, and during this time, an employer has the right to fire them for any legal reason or no reason at all. The laws governing at-will employment vary from state to state, but are similar to general wrongful termination laws.

Have Clear Termination Procedures in Place, and Document Everything

Once all appropriate parties are aware of applicable laws, it is important to have clear termination procedures in place. Following these procedures closely will be imperative to avoiding wrongful termination lawsuits. Termination policies should include:

• Standard documentation forms;
• Planned agendas for termination meetings;
• Present witnesses at said meetings;
• Policies regarding when and how employees may collect their personal belongings from the premises;
• Exit interviews with human resources personnel;
• Plans regarding immediately limiting the terminated employee’s access to company property and files; and
• Procedures regarding how terminated employees are to receive their final paycheck.

If you are an employer and a terminated employee has listed you as a reference, you must be careful to avoid a defamation lawsuit. You can either provide a positive reference, or simply confirm job responsibilities and dates of employment. Any other action may leave you vulnerable to a defamation lawsuit.

It is important to maintain detailed and accurate documentation of all employees, but especially terminated employees. A manager’s documentation may be the only “real” evidence that may be used at trial. Examples of what to document include but may not be limited to:

• Written or verbal warnings given to the employee over the course of their employment;
• Records of employee evaluations;
• Number of times the employee arrived to work late or was absent without approval; and
• Steps taken to solve the problem with the employee’s participation.

What Other Steps Should I Take to Avoid Lawsuits When Firing an Employee?

You may have the employee waive their right to sue after termination. Once an employee has been downsized or terminated, a company may have them sign a waiver, which means that the employee no longer has any legal claim against the company. This means they cannot recover in court. In exchange for signing such a waiver, the employee receives some benefit in return, such as a severance package.

It is best to limit your discussion regarding why an employee was fired, in order to avoid a defamation lawsuit. If your other employees have any questions about their own work performance, you may tell them to review their individual contracts as well as any other information made available to them such as prior evaluations.

Do I Need an Attorney to Avoid Lawsuits When Firing an Employee?

To avoid lawsuits and protect your business, you should consult with a skilled and knowledgeable wrongful termination attorney. An experienced employment law attorney can review your termination policies and procedures, and help avoid litigation in the first place. Finally, should a lawsuit be filed against your business, an experienced employment law attorney can represent you in court as needed.