In 2019, employees in the U.S. filed a total of 72,675 charges with the Equal Employment Opportunity Commission (EEOC). Of those, the largest percentage claimed that their employers discriminated against them in retaliation (53.8 percent). The next biggest categories were discrimination due to disability (33.4 percent), race (33 percent), and sex (32.4 percent).
In some of these cases, charges were brought against employers because the employee was fired. Certainly, companies have the right to let go of staff who aren’t doing their jobs, but if they get rid of someone unlawfully, it can cost them a lot of money.
In fact, the average wrongful termination settlement is around $40,000, with many of these types of lawsuits garnering judgments as high as $100,000, if not more.
With this in mind, here are a few steps you can take to avoid being sued when firing an employee.
Develop a Termination Policy
It’s pretty difficult to fire someone if you don’t have a policy in place identifying their actions as fireable offenses. That’s where a termination policy comes in. The clearer you are about the actions that can and will end employment, the better your standing in court will be should a fired employee decide to file a lawsuit.
The Society for Human Resource Management (SHRM) goes one step further and recommends that companies institute a Separation of Employment Policy that covers both involuntary terminations (firing) and voluntary terminations (resigning or retiring). It also talks about when happens when separation is due to death.
If this is something you’re interested in creating, the SHRM offers an easy-to-follow separation template you can use. All you have to do is input your company name and you’re ready to go. This policy covers additional factors that need to be considered upon termination, such as final pay, health insurance coverage termination, return of property, the exit interview process, and whether the employee is eligible to be rehired.
Keep an In-Depth Paper Trail
If you don’t keep a good paper trail on your employees and find yourself in court defending against wrongful termination, it quickly becomes a game of he said, she said. In cases such as this, you’re less likely to win because you don’t have the necessary evidence to back you up.
When an employee does something he or she shouldn’t, place a note in their file. If what they did is serious enough, an in-person meeting in which they sign a form acknowledging that they have been counseled on the matter might be appropriate. This helps eliminate any claims that they weren’t aware that there was an issue that could lead to being fired.
You may also want to address how you’ll keep track of and deal with your employee’s disciplinary reprimands in your policy. For instance, you could spell out what type of incidents will simply be noted in the employees file, which will result in a face-to-face counseling session, and which will instigate immediate termination.
Have you ever had an employer who disciplined or fired a member of staff for something that another employee had done previously and no action was taken? Not only is this is frustrating as an employee, but the courts could also deem it illegal.
When a business establishes a precedent by responding one way to a particular action or offense, it is expected that they will respond in that same manner every time. If they don’t– if they punish one employee for something but let another one slide– the case for wrongful termination becomes a bit stronger.
This is partially where a policy comes into play because it creates guidelines for what happens in certain situations. For things not listed in the separation policy, be consistent so no one can claim that you’re taking action against them because you don’t like them.
Ideally, if you do fire someone for a specific reason not already in the policy, that reason should be added to the policy so all employees are aware that it is an offense that can cost them their job.
Consult with a Local Labor Attorney
While there are some federal laws designed to protect all employees in the U.S. from wrongful termination, state and local laws can vary. That’s why it’s always beneficial to reach out to a local attorney who is familiar with the labor laws in your area.
Learn your rights before you decide to terminate an employee to avoid finding yourself in the middle of a legal dispute. Ask when you can fire an employee and when you might have to give a second chance.
Have this attorney look over your termination policy and make sure it’s in accordance with local law. This professional can also help identify any potential problem areas, as well as bringing attention to any sections that may be missing or incomplete.
Check Your Liability Insurance Policy
Some business insurance policies cover legal representation if you’re sued for wrongful termination. Knowing this up front is a great way to help pay for legal expenses should an employee say that you illegally let them go.
If your policy doesn’t automatically cover wrongful termination suits, contact your insurance company and ask if they offer this type of coverage as a separate product. Though it may mean paying a higher premium, it might be worth it if you feel that you’re at higher risk of being sued.
The main things to remember if you’re considering firing someone is that you need to be able to document why the firing is warranted (that what they did was egregious enough to be let go), that anyone who performed that same action would be let go as well (that you’re not just singling them out), and that you have the legal right to let that person go (that the law recognizes it as a fireable offense).
As long as you can do these three things, you should be able to successfully defend yourself against a wrongful termination suit, saving your company a lot of money—and headache—in the process.