How to Avoid a Wrongful Termination Lawsuit

Many businesses believe that operating in an at-will state allows them to dismiss an employee without notice for any reason, provided the reason is not discriminatory or otherwise unlawful. 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 an employee suspects they have been discriminated against, they may be able to file a lawsuit for wrongful termination, even if the position was at-will. This means it’s vital for every business owner to know how to avoid a wrongful termination lawsuit.

Even if you know your reason for firing that employee was justified, you might have 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 avoiding a wrongful termination lawsuit is understanding your company’s disciplinary policy. You need a multi-step plan to handle disciplinary action and document it in case you need to reference it later. While the steps might vary for your business, here’s a general outline of how the process should look:

Step 1: Verbal warning. Discuss the issue privately with the employee, citing company policy if necessary, to ensure they’re aware of where they fall short. There should also be a written note added to the employee’s file about this conversation, which the employee should sign.

Step 2: Written warning. During this meeting, there should be written consequences of what will happen if corrective actions are not implemented. Typically, a performance improvement plan is outlined to provide the employee with an example of how they can achieve success. The document should be secured in their file, and a copy should be given to the employee. The employee should also sign the written warning.

Step 3: Suspension and Issuance of a Final Written Warning. The employee should be informed that they are now on probation and that any further violations will result in termination of their employment. The employee should sign a document stating their offense and acknowledging that the next step in the process is termination, which should be kept on file for future reference.

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 finalizing your plan, have a lawyer review it to ensure it complies with both 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 also face a wrongful termination lawsuit.

Keep your disciplinary policy on display and include it in your company handbook so that it remains obvious. Please include it in your onboarding paperwork and have each employee sign a copy upon commencing their employment.

If you need to make any changes to the policy in the future, email your staff with the updates to ensure everyone is on the same page. As long as every employee is aware of the procedure, they shouldn’t be surprised if and when they receive a warning.

The policy should guide underperforming employees in improving, rather than punishing 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.

Coach Dave