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How to Avoid Wrongful Termination – 6 Strategies to Reduce Your Risk

Contributor: Evita Lara, HR Consultant

March 29th, 2023 | 5 min. read

By Tony Calavitta

How to Avoid Wrongful Termination – 6 Strategies to Reduce Your Risk

“You’re Fired!”

Two words that no employee wants to hear and, frankly, no employer wants to say, especially after spending time and investing resources into the recruitment, onboarding, and training process.

But the fact of the matter remains that, in the world of employment, termination is not avoidable.

Wrongful termination, however, is.

Here at Combined, our HR experts have helped countless employers, just like you, develop a compliant approach to termination. We can help you put the proper procedures in place so that you are protected from disputes and damages following employee dismissal.

In this article, we will discuss the proper process for parting ways with an employee. By reading it, you will learn 6 strategies to reduce your risk of wrongful termination claims.

Wrongful termination: The most common employment lawsuit

In the United States, though limitations apply, all 50 states recognize at-will employment.

This means that an employer can terminate an employee at any time, for any reason, and without any warning – the caveat, though, is that termination cannot reflect discrimination, retaliation, or deviation from the law.

Wrongful termination refers to a case in which this at-will caveat is not observed and, therefore, can encompass employee allegations ranging from bias to breach of contract to harassment and so on.

Considering this, it makes sense that wrongful terminations result in more lawsuits than any other employment action.

Considering that, you should make sure your termination procedures protect you from wrongful termination claims.

6 strategies to reduce your risk of wrongful termination claims

Again, termination is unavoidable.

But with these 6 strategies, you can avoid it becoming a case of wrongful termination.

1. There’s no stock in shock – Keep consistent documentation

Maintaining detailed employment records can be a safeguard against wrongful termination claims.

By keeping consistent records, your employees will always know when they are meeting and when they are missing the mark.

Think of an academic report card – When you are taking a course, your grades are regularly reported so that you are mindful of your standing in the class. With this in mind, if your progressive scores are consistently below passing, you have no reason to expect to pass the course when the final grade is released.

Documentation is an on-the-job report card – Over the course of employment, it provides employees periodic insight into whether they are satisfying position expectations. In the case of termination, this record will show consistent underperformance, misconduct, etc. And, as with an expected grade, your employee won’t be surprised when this course of action is taken.

By removing the element of surprise, you immediately de-escalate the termination process and reduce the risk of a wrongful termination claim.

But should your employee file a wrongful termination claim anyway, remember that they have to substantiate the reason for their termination as untrue or unlawful. Well, documentation is a legal record proving otherwise.

So, with proper employment documentation, the deciding authority won’t be shocked by your decision either.

2. Risk is not rewarding – Assess compliance risks

Compliance laws change frequently and, it is your job as an employer to make sure your business policies are updated in accordance with applicable federal, state, and local mandates.

Since wrongful terminations are a legal matter, if you do this, you already reduce your risk of wrongful termination claims.

However, it is important to assess potential compliance risks for every individual termination – Could discrimination, retaliation, or deviation from the law be labeled a factor in the termination?

When reviewing liability, ask yourself this question from the perspective of an objective third party:

Is the termination reasonable, fair, and warranted?

Just because you have a logical and legitimate reason for termination, does not mean a disgruntled employee won’t find a basis to file a discrimination claim. And, if they do, an objective third party will evaluate the termination decision and answer that same question.

By assessing the potential compliance risks, you will be prepared should this happen.

3. Proceed with procedure – Stick to protocol

Consistently following a written company policy is critical to reducing your risk of wrongful termination claims.

Where documentation was like a class report card, an established company policy is like a course syllabus – it is designed to clearly communicate rules and can be referenced for standard recourse should they be broken. In the same way that a class syllabus would outline the consequence of cheating, your written policy can guide a fair and uniform approach to workplace concerns.

And in the case of a wrongful termination claim, you won’t have to worry about protocol discrepancies.

A comprehensive employee handbook is a great tool to ensure that your employees read, understand, and agree with your company policies and procedures. It can also be used as a legal document to protect your company in the event of a wrongful termination claim. To learn more about how to develop an employee handbook as this ideal procedural resource, read 7 Employee Handbook Best Practices.

4. Prepare with purpose – Plan out the meeting

Again, no employee wants to hear “you’re fired!” No matter how the message is conveyed, a termination meeting is still a delivery of unpleasant news.

The purpose of it is to part ways with an employee.

You should prioritize respectfully achieving this purpose in your meeting preparation. Don’t let a termination meeting take a wrong turn into becoming an emotionally charged disciplinary discussion – because the meeting is to end employment, there is no reason to revisit problems that led to it happening in the first place.

By properly and purposefully preparing, you reduce the risk that the meeting itself contributes to a wrongful termination claim.

Here are a few preparation tips to help you steer a termination meeting in the right direction.

  • Schedule the meeting:
    By scheduling it, you will have more authority to direct the meeting intentionally and purposefully. When scheduling the meeting, make sure that all appropriate company representatives are available to be present for it.

  • Meet in person: 
    A termination meeting has a significant impact on the life and livelihood of the employee being let go. Conducting it in person shows that you understand the serious nature of it and value the employee enough to have a personal conversation.

  • Lead with the reason for termination: 
    Since the purpose of the meeting is to end employment, start by addressing why it is the meeting objective. State this clearly, concisely, and answer any questions about this reason in the same manner so that there is no confusion around it.

  • Outline what happens next:
    Discuss all formalities involved with the termination from accrued pay to unpaid overtime to benefits eligibility. This is your opportunity to make sure that no loose ends are left untied.

  • Resolve all questions and concerns: 
    By the end of the meeting, there should be no unresolved issues or ambiguity.

5. Honesty is the best policy – Be understanding but also up-front

Because termination is an uncomfortable situation for all parties involved, it can be tempting to try and break the news gently. The problem here is that an attempt to do so can be misconstrued and fuel a wrongful termination claim.

Leave no room for confusion in the termination meeting.

Approach the meeting with empathy, but be candid and make sure that the reason for termination is clearly communicated, precisely explained, and fully understood.

6. Don’t make debt a regret – Pay final wages

The final box on your termination checklist: comply with final pay requirements.

By following guidelines for issuing the final paycheck following termination, you’ll be at a lesser risk of wrongful termination claims.

What should this paycheck compensate for?

  • Unpaid hours worked
  • Unpaid overtime wages
  • Unused, accrued time-off pay
  • All Commissions (if applicable)

When should this paycheck be issued?

Laws surrounding when you have to pay a terminated employee their final wages vary by state.

If you are cutting an employee loose, make sure you cut them their final check according to the legal conditions of your location.

Why follow final paycheck guidelines?

If you don’t comply with final paycheck requirements, you could not only end up paying three times the amount owed but you are more likely to receive a wrongful termination claim.

Next steps to reduce wrongful termination claims

Termination is not an easy process to tackle.

Are you struggling with wrongful termination claims?

In this article, you learned 6 strategies that can help you tackle it with a reduced risk of wrongful termination claims.

Do you need help implementing them?

Here at Combined, our HR experts can help you put the proper procedures in place so that you are protected from disputes and damages following employee dismissal.

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Schedule an appointment with an HR specialist to build your business a customized, compliant, and tactful approach to employee termination.

Schedule a Meeting

 
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If you are not yet ready to speak with a team member, you may find these resources helpful:

 

This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.