As stressful as firing an employee can be, it’s nothing compared to the stress of dealing with a wrongful termination lawsuit. It’s important, therefore, to ensure that you do everything you can to protect yourself and your business from such litigation when you find yourself in the situation where you do need to part ways with an employee.
While most Americans are considered “at-will” employees who require little (if any in some states) reason to be terminated. No matter what type of employee you are dealing with, there will be both federal and state requirements to fire them legally.
Issues that Can Lead to a Wrongful Termination Lawsuit
The main thing you, as an employer, can do to protect your business is to educate yourself on the types of issues that can lead to a wrongful termination. By knowing the common things that can lead to litigation, you can actively avoid them and, as such, any resulting lawsuit.
1. Breach of Contract
While a breach of a written contract is a fairly simple thing to avoid, there are also implied contracts an employee can be sued for breaching. Any implicit agreement between an employer and employee can count as an implied contract. This implied contract can take any form: orally via a conversation, or through a document like an employee handbook.
Where such a document or agreement exists, employers must have valid reasons to terminate such an employee based upon that agreement. Therefore, be clear and detailed in your employee handbook and make it abundantly clear that all company communications are not contractually binding. Additionally, avoid making any oral promises or reassurances to employees about their continued employment. You may simply wish to reassure a needlessly worried employee, but avoid unconditional statements.
Retaliation is understood in this sense as any action taken by an employer in response to complaints or grievances filed by an employee about harassment or discrimination taking place on the job. As with a harassment or discrimination suit, retaliation claims can be filed against actions that were unintentional. This means extra precautions need to be in place to prevent such occurrences. Here’s a list of common causes for retaliation claims:
· Refusing to agree to a lie detector test: Simply put, it’s illegal for an employer to ask employees to take a polygraph and it’s illegal for them to fire an employee for refusing to take one.
· Retaliation against a whistleblower: Anyone who reports illegal or unlawful activities of a company or activities harmful to the public or public interests is protected from being fired for such reporting.
· Filing a Complaint with OSHA: Just as with whistleblowing, an employee who reports workplace violations to OSHA is legally protected from retaliation by their employer.
· Mishandling Employee Complaints: Any response to an employee complaint must be carefully considered in terms of retaliation. Ask of any course of resolution: is there a way this solution could be viewed in a court of law as retaliation against the employee who filed the grievance? If the answer is yes, then a new line of action that protects you and your company is recommended instead.
The best way to protect your business against all of these claims is to document, document, document. It cannot be stressed enough how confronting issues head on with the proper documentation can nip issues in the bud that could one result in litigation of this nature.
It is illegal in the US to fire any person because of their nationality, sex, religion, or race and has been since the Civil Rights Act of 1964. Beyond this, many states have additional laws protecting other things like political belief or affiliation and sexual orientation. There are also a few lesser known laws that discrimination can result from:
The Immigration Reform and Control Act (IRCA) of 1986
Any employee that is legally able to work in the US is protected from being fired on the grounds of their alien or citizenship status or their national origin.
The Genetic Information Nondiscrimination Act (GINA)
This act protects employees from discrimination on the basis of their genetic information.
The Americans with Disabilities Act (ADA)
This act protects all American employees from being discriminated against because of a current or former disability – including those that are simply perceived to have a disability even if they do not.
The Age Discrimination in Employment Act (ADEA):
This act specifically protects employees over the age of 40 from being discriminated against in the workplace.
While these federal acts typically only apply to certain businesses of a specific size or more in a specific industry, there are state level policies that cover these same areas in most states. An important fact to remember when it comes to discrimination is that the discrimination does not have to be intentional for your business to be at risk for a discrimination suit.
The best way to protect yourself is to document all disciplinary actions of all employees with particular attention to any employees you are laying off. At such times, an unnoticed pattern may put your business at risk of litigation.
4. Defamation of Character
This is an issue that can come up at any time – even years after an employee has been fired. In essence, if a former employee can prove that you or someone representing your business defamed their character in such a way as to prevent them from gaining employment, they can file a defamation lawsuit.
The best way to protect yourself is to be diligent in all correspondence with and concerning all of your former employees – no matter what the terms of their severance was. When giving a reference, you must be honest as a lie can put you at risk. If you feel at risk or do not want to answer honestly for any reason at all, it’s best to decline to respond instead of risking litigation.
5. Firing for any reason that violates Public Policy
Though this area can be a bit muddier than some – the essence is that if an employee is fired for any reason that is unethical, immoral, or illegal on the part of the employer, the employer is at risk of a wrongful termination suit. Since morals and ethics are often subjective, litigation works on public policies concerning such things. These policies differ in each state, but some general violations hold:
· It’s a violation to fire an employee for refusing to commit an illegal act
· It’s a violation to fire an employee for disclosing illegal activities by the company
· It’s a violation to fire an employee because they must take leave for military commitments or jury duty
This is fairly straight forward: don’t require employees to do illegal things and don’t pressure them to do anything they find unethical. This is sound business ethics and should be part of your businesses modus operandi. Additionally, work to remain aware of civil, military, and familial obligations your employees have and respond appropriately – which includes, as usual, documenting everything.
6. Breaching implied “Good Faith and Fair Dealing”
Though this may not apply to you directly, some states have laws concerning the “implied covenant of good faith and fair dealing” as it pertains to employer-employee relationships. Typically, any of the following can be construed of breach of such implied covenants:
· Fabricating evidence of inappropriate or poor performance to justify firing.
· Firing just prior to a career event like retirement to prevent paying out promised benefits.
· Firing in order to prevent an employee from receiving commission or a promised bonus.
Research the laws that pertain to your business to ensure you are acting well within the guidelines for implied covenants like this. Communicate with employees at all times about where they stand on performance and other issues, and document thoroughly.
To sum it up…
Here’s a quick check list of things to do to ensure you are protecting your business from a wrongful termination suit:
· Stay compliant thoroughly in all aspects of your business.
· Research the state laws and regulations that your business is require to follow.
· Display all state and federal labor laws in a conspicuous area of your business – and make sure to stay up to date on them.
· Have fired employees sign a “Termination and Release Agreement” where the employee agrees to release potential claims.
· Potentially consider offering employees severance packages in order to appease any hard feelings they might have. Part of this agreement is to release potential future claims.
· Do everything you can to create a rewarding, positive, and sympathetic work environment where employees are happy and where termination and claims of wrongful termination are a low risk.
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