Posted on April 2nd, 2020
It’s an employer’s worst nightmare: You’ve fired an employee and you’re hit with a wrongful termination case that could cost your company thousands of dollars, precious time, and emotional distress.
How do you know if your former employee has a strong case against you?
And how can you protect your company against future claims when you terminate an employee?
Read our guide to learn about the seven most important things to understand about wrongful termination claims.
1. What It Means to Own a Business in an At-Will State
California is an at-will state, meaning that an employer can decide at any time to terminate an employee for any legal reason without prior notice. And it works both ways. In an at-will state, employees can also leave at any time for any reason with no consequences.
Operating in an at-will state also gives employers the right to change the terms of employment at any time without notice.
However, even in an at-will state, employers cannot fire an employee for any reason that is in violation of federal or state anti-discrimination laws. You cannot, at any time, fire an employee for a reason that falls under a protected class or activity.
2. What Constitutes a Protected Class
To protect employees against wrongful discrimination, the U.S. Equal Employment Opportunity Commission has made it illegal to fire an employee based on any of the following classes:
- Race
- Color
- Religion
- Sex (including pregnancy, sexual orientation, and gender identity)
- National Origin
- Age
- Disability
- Genetic Information (including family medical history)
You cannot fire an employee for a reason that falls under any of those classes for any reason, even in an at-will state.
3. What Constitutes a Protected Activity
Similarly, employees are protected against termination after taking certain activities in the workplace. Protected activities include:
- Reporting illegal behavior within the company, like harassment or discrimination.
- Participating in an investigation or lawsuit regarding illegal practices of the employer.
- Discussing, forming, or joining a union in the workplace.
- Participating in concerted activities, like speaking with coworkers about working conditions, wages, and benefits.
Employers can, under no circumstances, terminate an employee in retaliation for these legal activities.
4. What Constitutes a Legal Firing
In an at-will state like California, a legal termination is for any reason that does not violate any of the protected classes or activities mentioned above.
Here are a few of the legal reasons you may fire an employee:
- Unsatisfactory work performance
- Issues with productivity
- Unprofessionalism in the workplace
- Attendance issues
- Theft of company property
- Embezzlement
- General layoffs or restructuring
If you’ve fired an employee for any of these reasons, they should not be able to pursue a wrongful termination case against your company.
5. How to Prepare for an Employee’s Termination
In the worst circumstances, you may have to fire an employee quickly without much prior planning. However, in most cases, you’ll have time to prepare beforehand. This can help protect you against a wrongful termination case.
If you are preparing to fire an employee, document as much as you can. Keep detailed notes about specific examples of performance issues and have written copies of any warnings you give the employee.
You’ll also want to have at least one other neutral staff member, like a Human Resources representative, present at the time of the firing who can take notes.
This will give you a witness, should the employee file a wrongful termination claim.
The more documentation you have supporting your choice to fire the employee for a legal cause, the less likely your former employee will have a case for wrongful termination.
6. The Benefits of Negotiating a Severance Package
If you’re worried about being sued, you might consider offering the employee a severance package upon termination.
By offering benefits like a severance package, you can ask the employee to sign a release document. By doing this, they waive their rights to pursue a wrongful termination claim in exchange for the benefits.
This can be a valuable tool to appease the employee and prevent a wrongful termination suit for your company, but you must take precautions that you’re following the law when offering this as an option.
You need to let the employee decide to sign the release without any hint of coercion and you must give them ample time to decide whether they want to sign. The release must also very clearly state the rights that the employee is waiving and what they are receiving in exchange.
Your best bet is to work with an employment lawyer to draft the document so there’s no question about the terms it includes.
7. Making Internal Changes Can Prevent Future Wrongful Termination Claims
As the old saying goes, “Hindsight is 20/20.” Take steps now to prevent wrongful termination claims in the future.
Operate from a place of transparency with your employees by clearly communicating your expectations from them. If an employee is not meeting those expectations, document it and develop an improvement plan that you share with the employee.
Make it clear what steps need to be taken by the employee and set deadlines for them to be completed.
This will prevent your employees from being blindsided by termination and also give you plenty of documentation should the employee try to pursue a wrongful termination claim.
What To Do If You’ve Received a Wrongful Termination Claim
Receiving a wrongful termination claim from a former employee is a drain on your company’s mental and physical resources.
You have rights as an employer and working an employment law firm can help you navigate this time and understand how to protect your company.
If you need to be protected from a wrongful termination claim, contact us today for a free 15-minute consultation with one of our attorneys.
We specialize in defending California employers and we believe in open and honest communication with our clients.
We understand that this is a stressful time for your business; let us help you get through it with ease.
