Employment claims such as wrongful termination lawsuits are amongst the most common claims any business might eventually face. Essentially, wrongful termination is when an individual is fired for an unlawful reason. The risks can be a large judgment or even simply high costs of successfully defending the claim. Such suits can be extremely costly since regardless of whether you win the case or not, you are still on the hook for attorney’s fees.
In order to protect your business, be proactive and take steps to address the risk. The best first line of defense is to maintain good business insurance coverage, such as through an employment practices liability policy. Beyond a thorough liability insurance coverage strategy, there are other steps you should take in prevention:
Be aware of employment law generally:
Discrimination is often a key ingredient cited in claims. Both federal and state laws protect employees from discrimination of all kinds, including on the basis of race, sex, religion, national origin, age, disability, military service, and pregnancy. Under these laws, you can be sued for wrongful termination if an employee claims their firing was influenced by one of these factors. In addition to anti-discrimination laws, there are a significant number of federal, state, and local laws protecting employees from terminations based on a variety of other different causes, such as disparate treatment or retaliation.
Be consistent and deliberate with Company policies:
Operate with consistent policies as to your procedures for hiring, discipline, termination, and dispute resolution. If you have an employment policy handbook or manual, then be very familiar with it and only take action that is consistent with that policy. Deviating from the policies can be an easy target for wrongful termination based on the employer’s breach of the policies as an implied contract to the benefit of the employee.
Use employment agreements with every employee
No matter the size of the business, the employer should have every employee sign an employment agreement, even at-will employees. This can be a seminal document to rely upon if the day comes when the employee needs to be terminated. It is essential to evidence the understanding of the parties at the time employment was engaged. These employment agreements can be simple and should clearly detail the basic terms and conditions for the working relationship.
Document everything
If a fired employee does sue you, by far the most powerful weapon in your toolbox is complete, thorough, and timely documentation. Thoroughly documenting all employee incidents, along with the corrective measures you took, as a result, can not only provide strong evidence to defend against a lawsuit, but it might even be enough to get the claim thrown out in summary judgment. Ideally, documentation of incidents should directly involve the employee by their awareness and acknowledgment, and all incidents should be documented in writing as soon as possible following the action in question.
With these simple steps, employee claims can be greatly reduced in their impact and risk upon the employer.
