Companies fire employees for a wide range of reasons. However, if terminations are done for the wrong reasons, they’ll end up facing a wrongful termination case. If you own a business, you must be able to protect it against this risk.
What is wrongful termination?
Wrongful termination is firing an employee in violation of the fundamental principles of your state’s policy. There are several risks when your company faces wrongful termination. A terminated employee may file a legal suit against you. This will result in costly legal fees.
If ex-employee holds a grudge, the company may end up losing crucial property, files, and confidential information. The remaining employees will feel threatened and pressured. This will result in retaliation and poor performance. He may also brand the company negatively and destroy its reputation via social media. Lastly, he may secretly disclose confidential information or trade secrets to competitors.
When can you not fire an employee?
- Employee refuses to engage in any illegal activities, i.e. perjury and unlawful discrimination of other employees;
- Employee performs a statutory investigation, i.e. filing a report of suspected child abuse that has happened within the office;
- Employee exercises statutory right or privilege, i.e. filing a compensation claim and union membership;
- Employee reports a violation of the law popularly called as “employee whistleblowers,” i.e. to report a workplace safety violations to the appropriate government entity.
How can you avoid wrongful termination case?
Here are some really simple things you can do to avoid wrongful termination and protect your business:
- In the employment agreement, note that you are an at-will employer and you have the right to terminate the employee at any time. This valid unless you are in Montana or working with a labor union;
- Give out employee handbook where policies are written down and communicated properly;
- Conduct performance reviews for the employee to know how they are doing according to company expectations;
- Keep employee write-up forms and progressive discipline policy. This serves as the most valid documentation you can use against an employee;
- Store personnel files with all information regarding the employee, from the onboarding process to his present performance and work statistics.
To further protect your business from a wrongful termination case, you might want to contact EPLI or Employment Practices Liability Insurance in advance. They can help shoulder wrongful termination costs as the insurance is designed to cover wrongful termination, discrimination, sexual harassment, hostile work environment, and wage dispute.
As a business owner, you need to make sure you properly protect your company from employees that will try to abuse their rights. If you don’t have a legal team working for your company, you should at least make sure that you have a legal adviser. This may not stop an employee from attempting to sue you, but it will prepare your company.