A wrongful termination lawsuit is a nightmare for any employer. Worse, the law surrounding wrongful termination is vast, and can be hard to understand.
Fortunately, there are a few steps you can take to protect yourself. While they won’t stop a determined employee from filing a lawsuit, these tips will make the ensuing legal battle a little bit easier.
In this context, an “employment contract” refers to any agreement made with an employee that limits your ability to fire them.
A contract doesn’t have to be written down. Oral and implied agreements are also “contracts” according to the law. Even the act of promising an employee a “permanent position” could be legally binding.
If your employee does have a contract, you need “good cause” to fire them. You can find lists of examples of good cause online, but it’s best to consult with a lawyer to make sure.
If your employee doesn’t have a contract, in most states that means they work “at will.” You still need to follow federal and state law in firing an employee who works at will.
Federal and state law prohibit firing employees for a number of reasons. The most common violations relate to discrimination, retaliation, and public policy.
Federal law prohibits firing someone based on a number of categories. These include the individual’s race, religion, sex, disability, citizenship status, and age, among others.
Individual state laws can add to this list.
Finally, be aware that individual cities and counties can add protected classes. For example, many places prohibit firing individuals based on their sexual orientation.
Retaliation means punishing an employee because they’ve complained about harassment or discrimination. Note that the employee doesn’t have to prove that discrimination has taken place. They only have to show that you fired them for complaining or taking legal action.
If you want to fire an employee who has made complaints, you should contact a lawyer. Even if your reasons for firing them are unrelated to the complaints, you might still be risking a lawsuit.
Firing someone “in violation of public policy” is a little more complicated. Essentially, it means that you can’t fire someone for reasons that are obviously illegal or unethical. For example, you can’t fire an employee for refusing to break the law.
This is another one that varies from court to court. If in doubt, contact a lawyer.
Once you’ve determined that you want to fire your employee for a legal reason, document it. Find the specific company policies that the employee has broken, and list them in a formal termination letter. Then, gather it together with performance reviews and all other records of their employment.
If a specific event has led to the employee’s firing, talk to other employees present at the event. Document all the details they give you, and write a formal incident report.
A severance agreement is essentially a signed promise that the employee signing it won’t sue you. It also states that you will give the employee a benefit in return for their promise. Usually this means a monetary stipend, but other benefits might qualify. The specific language of the agreement is best left to a lawyer.
If you decide to present a severance agreement, give the employee plenty of time to consider it. Never rush or threaten an employee into signing an agreement. Doing so could invalidate the entire agreement.
Offering severance agreements can cause your other employees to expect them when they leave. Try to save them for situations where you expect the employee to take legal action.
Never fire an employee over a phone call or email. Instead, hold a private meeting between you, the employee, and one additional representative. The representative should usually be another senior manager.
It’s possible that the employee will want to bring a lawyer to their termination meeting. If that happens, it’s probably best to just send the employee their separation notice and ask them not to come back to work. In either case, many states require a written separation notice, either delivered in person or through the mail.
Try to be very clear during the meeting. Lay out exactly why the employee is being fired. Remain focused on the actions of the employee, and avoid attacking their personality or personal traits. Try to be as emotionally neutral as possible.
Finally, be sure to address the matter of the employee’s final paycheck. Different states have different laws on how this should be handled. For example, in Virginia, Va. Code § 40.1-29 states that you must deliver an employee’s final paycheck by their next scheduled payday.
After the severance meeting, your most important job is to inform other senior staff as to what happened and why. Make it clear that you fired the employee because of their behavior, not due to personal dislike, discrimination, or retaliation.
Depending on the circumstances in which the employee left, you might need to follow up on requests for references. Similarly, you may have to handle claims for unemployment insurance. Respond to each as quickly as possible. Once again, contacting your lawyer might be the best option to avoid a lawsuit.
Throughout the termination process, treat your employee with dignity and respect. Clearly show that the decision wasn’t based on personal preference. Instead, focus on the employee’s own actions, and violations of policy—this is a business decision every boss occasionally has to make.
Finally, never be afraid to contact a lawyer. There’s simply no substitute for the value of a one on one consultation with an attorney to avoid costly and exhausting complications.
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After graduating from law school and passing the bar, I struggled to find work, pay my bills, and make ends meet. That's when I decided to take control of my future and start working for myself. Now, several years and a handful of companies later, I'm sharing how I launched a successful business, and how you can do it too.