Wrongful Termination Lawsuits: 8 Steps for Prevention, Part 2 

A wrongful termination claim can devastate an employer, even if it doesn’t result in compensatory damages.  On top of the cost of employment attorneys, the average award for wrongful termination lawsuits was as high as $797,000 in 2017 (per Thompson Reuters study). It’s likely even higher in 2022.  Wrongful termination settlements may be less costly and require fewer billable hours from employment attorneys, but they’re still thousands of dollars.  Beyond the cost, a wrongful termination case incurs other costs.  These allegations and legal action often significantly impact the employer brand, employee engagement, and the work environment overall.  Especially in today’s tight labor market, a strong employer brand is vital to attracting and hiring top talent.  To help employers avoid wrongful termination lawsuits, MP’s  HR experts developed a two-part series about the eight steps to preventing wrongful termination lawsuits.  

4 Key Steps to Prevent Wrongful Termination Lawsuits 

 
 1. Utilize a progressive disciplinary process reflective of the disciplinary policy.

Train managers and ensure they follow the disciplinary policy. These steps should almost always be applied (unless the violation is too severe and requires swifter action).  

• A verbal warning: Tell an employee privately that behavior is problematic or they are falling short of performance requirements. Share relevant employee handbook policies if applicable. Write a note about this conversation and add it to the employee’s file. The employee should sign this note to indicate receipt.   
• A written warning: Meet with an employee privately to share a written warning. List the consequences if their actions don’t improve or change. Outline a performance plan with deadlines. Include the specific employee policies that have been violated.  Ensure the employee signs the warning. Give a copy to the employee and add a copy to their file.   
• A final written warning: Meet with the employee privately.  Have them sign a document stating they received a final written warning and may be terminated if their performance or behavior doesn’t improve.  If they’re now on probation, add this information. The employee should sign a copy. Managers should add it to the employee’s file, and the employee should also keep a copy.   
• Terminate the employee: In a private meeting, tell the employee they will be terminated. Ensure there is at least one witness.  Review the reasons for the termination. Provide paperwork documenting this action. Let the employee know what will occur next, including how to return company property, when the employee leaves the premises, when their benefits will end, when they’ll receive their last paycheck, etc.   If there is an appeals process, share it with the employee.  Have the employee sign the paperwork and, as before, give them a copy and keep one in their file.   
   

2. Document any disciplinary actions.

Train all managers to document any disciplinary actions taken against employees. It’s also essential to have the employee sign all of this documentation to confirm receipt.  Note that the signature doesn’t indicate that the employee agrees with the warnings or admits guilt.  If the employee refuses to sign, the manager should write on the document, “Employee refuses to sign.” It will be harder for employees to bring a wrongful termination lawsuit, knowing that there’s comprehensive documentation of their disciplinary experiences and termination. If the former employee still brings a lawsuit, the documentation will help protect the employer in court or settlement talks. Organizations may want to use HR software or performance management software for this documentation, depending on the situation’s specifics.   

  

3. Review all termination plans.

Before terminating employees, review all termination plans with the HR department, HR experts (like those at MP), and a law firm specializing in labor law. Ensure there are no other options available to resolve the situation. If termination is necessary, managers should focus this review on whether there are grounds for the employee in question to file a lawsuit for wrongful termination.  Consider any extenuating circumstances that may make the termination appear to be retaliation, such as a recent medical leave, experiences or reports of sexual harassment, paid, or unpaid family leave, etc. Keep in mind where the employee works, especially if they’re remote. Ensure their termination wouldn’t violate local labor laws, Equal Employment Opportunity Commission (EEOC) regulations, or their employment contract.   
  

4. Terminate employees with empathy and compassion.

Former employees will be far less likely to bring a wrongful termination lawsuit if organizations perform the process with care and sensitivity. This could be shown emotionally by attempting to reduce the employee’s emotional distress. However, organizations may also demonstrate it with financial support. Employers could soften the blow of termination with these measures, which will cost significantly less than legal fees for wrongful termination lawsuits: 

• A severance package 
• Lead time before the termination takes place 
• An offer to provide a reference for the employee’s job search (if it’s possible to do so honestly) 
• Extended access to benefits for a short period 
• And more