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Employment Terminations - How To Avoid Legal Problems

You Can Fire Employees Legally and Ethically

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The decision to terminate an individual’s employment carries with it the risk of a possible legal challenge. Depending upon an employer’s policies or whether an employee has an employment contract, an employee may, for example, have a breach of contract or wrongful discharge claim.

An at-will employer - that is, an employer who reserves the right to terminate employees without cause - generally does not need to worry about such claims. Like all other employers, however, an at-will employer still must be concerned about many other possible claims.

Possible Claims of Discrimination Upon Employment Termination

All employers need to be cognizant of possible discrimination claims arising from employment termination. To prevail, the former employee would have to prove that he or she was terminated, at least in part, because his or her employee’s protected status (gender, religion, race, national origin, age, disability, etc.).

In addition, discharged employees could claim that their former employer defamed them by:

  • making false, disparaging comments about them to coworkers or other parties;

  • treated them in a manner intended to cause emotional distress;

  • invaded their privacy by improperly disclosing the reason for an involuntary termination; or

  • terminated them in retaliation for exercising a legal right, such as reporting discriminatory or other unlawful employment practices or taking a leave under the Family and Medical Leave Act or the Military Leave Act.

Legitimate Business Reasons for Employment Termination

Even though at-will employers may terminate employees for any reason – or for no reason at all – terminations are easier to defend when they are justified by a legitimate business reason. Legitimate business reasons could include problems, misconduct, a reorganization resulting in elimination of the employee’s position, or financial considerations.

Regardless of the nature of the employment relationship, an employer should consider establishing work rules that list conduct that could result in discipline or termination.

At-will employers should include a disclaimer in the rules making clear that the existence of company rules does not nullify or in any way change an employee’s at-will status.

Moreover, employers (at-will or otherwise) should include a disclaimer stating that the reasons listed are not all-inclusive and that the employer retains the right to terminate employees who, in the employer’s discretion, have either engaged in misconduct or who have not performed at an acceptable level.

In addition, if progressive discipline is provided for, the employer should retain the flexibility to discharge employees immediately when circumstances warrant.

Questions Employers Need to Ask Before Employment Terminations

Before deciding to terminate an employee, the employer should ask themselves the following questions:

  • Does the employee have a legitimate explanation for his/her actions or poor performance? Before deciding whether to terminate an employee, conduct a thorough investigation of the events in question and get the employee’s version or explanation. Consider whether a neutral third person would find the employee’s explanation plausible.

  • Does the punishment “fit the crime”? Consider whether a neutral third party would agree that termination was fair given the nature of the conduct or the seriousness of the performance problems.

  • Is the decision to terminate inconsistent with previous actions of the company? For example, has the employee recently received a favorable performance review, promotion or pay increase? If yes, this would make it more difficult for an employer to justify terminating an employee for performance related reasons.

  • Is the decision to terminate premature? Determine whether alternatives to termination are more appropriate, such as giving an employee a “last chance” or placing the employee on a “performance improvement plan.”

  • Does the employee have any pre-termination rights? Ensure that any pre-termination procedures provided for by the company are followed (Note: special procedures may exist for public sector employees who have certain due process rights not accorded to private sector employees).

  • Has the company administered discipline in a consistent manner? Ensure that members of a protected classification are treated the same as employees outside the protected classification who engaged in similar conduct, under similar circumstances (severity of conduct, prior offenses, length of employment, etc.).

Interested in the questions an employer should ask themselves after employment terminations?

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