How to Avoid a Wrongful Termination Lawsuit

Many businesses think that if they operate in an at-will state, they can dismiss an employee without notice for any reason at all. This is not the case: according to Workplace Fairness, an employee can never be dismissed from a job due to discriminatory practices or as retaliation for whistleblowing. If the employee suspects they have been discriminated against, you can be hit with a wrongful termination lawsuit even if it was an at-will position. This means it’s vital for every business owner to know how to avoid a wrongful termination lawsuit.How to avoid a wrongful termination Lawsuit

Even if you know your reason for firing that employee was justified, you might end up having to prove that in a court of law. It’s much better to put systems in place to prevent things from ever getting that far. Here’s what you need to know about how to avoid a wrongful termination lawsuit for your business.

The Progressive Disciplinary Process

The first step in learning how to avoid a wrongful termination lawsuit is getting a handle on your company’s disciplinary policy. You need a multi-step plan in place to handle disciplinary action and document it in case you need to reference it later on. While the steps might vary for your business, here’s a general outline of how the process should look:

Step 1: Verbal warning. Talk to the employee in a private setting about the problem, citing company policy if necessary to make sure they’re aware of where they’re falling short. There should also be a written note added to the employee file about this conversation which the employee should sign.

Step 2: Written warning. During this meeting, there should be clearly written consequences of what will happen if corrective actions are not implemented. Usually, a performance improvement plan is outlined so that the employee can see an example of how they can succeed. The document should be secured in their file and a copy given to the employee. The employee should sign the written warning as well.

Step 3: Suspension and final written warning. The employee should be told that they are now on probation and that any further violations are cause for termination. The employee should sign a document stating their violation and their understanding that the next step in the process is termination, which should be kept in their file.

Step 4: Termination of employment. Review the reasons for termination with the employee and have them sign any necessary paperwork. Keep this documentation in their file.

Implementing Your Disciplinary Plan

Before you finalize your plan, have a lawyer look it over to make sure it’s per state and federal laws. I have a post about how to choose a lawyer for your business if you’re stumped. It’s a good idea to have a lawyer in mind in case you do end up facing a wrongful termination lawsuit as well.

Keep your disciplinary policy on display and include it in your company handbook, so it’s highly visible. Include it as part of your onboarding paperwork and have each employee sign a copy when they start the job.

If you have to make any changes to the policy down the line, send an email to your staff including the updates to make sure everyone is on the same page. As long as every employee is aware of the policy, they shouldn’t be surprised if and when they receive a warning.

The purpose of the policy should be to guide underperforming employees to improvement, not to punish them for making mistakes. As long as this attitude is part of your company culture, you won’t have to worry about employees taking it personally if they need to be corrected.

It’s not hard to figure out how to avoid a wrongful termination lawsuit—it’s all in the way you manage the situation. Managing employee performance is a critical function of leaders. If you would like to learn how to do this more efficiently, fill out my contact form and let’s schedule a complimentary video call.

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Dave Schoenbeck
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