Terminating an employee is sometimes necessary, but even a justified decision can lead to a wrongful termination claim. A former employee may allege that the company violated an employment contract or fired them for an unlawful reason, such as discrimination or retaliation.
Employers can defend against these claims. However, the strength of the defense often depends on whether the company can clearly explain why the employee was terminated and provide evidence supporting that explanation.
Was the employee under contract?
Some employees, particularly executives and other high-level employees, work under written employment contracts. These agreements may limit when and why the employer can terminate the employment relationship.
For example, a contract may permit termination for cause if the employee engages in misconduct, fails to perform required duties or violates company policy. If the employer can show that the employee’s conduct met the contract’s definition of cause, the termination may not constitute a breach of contract.
The employer should preserve the contract, performance reviews, disciplinary records and any communications related to the termination. It is also important to follow any notice or procedural requirements contained in the agreement.
Did it involve an at-will employee?
Most employees are employed at will, meaning either party can end the working relationship at any time. However, at-will employment does not give an employer the right to fire someone for an illegal reason.
An employee may claim that the termination was based on their race, religion, disability, age or another legally protected characteristic. They could also allege retaliation for reporting harassment, requesting protected leave, raising concerns about unlawful conduct or participating in an investigation.
An employer may be able to defend against such a claim by showing that the termination resulted from a legitimate business reason, such as:
- Repeated attendance problems
- Poor job performance
- Workplace misconduct
- Violations of company policies
- Elimination of the employee’s position
- Financial or operational changes
Documentation can be critical. Written warnings, performance evaluations, attendance records and emails may help establish that concerns existed before the employee engaged in any protected activity.
Consistency also matters. If employees who engaged in similar conduct were treated differently, it may be harder to defend the decision. Employers should apply their policies fairly and investigate alleged misconduct before taking action.
Because wrongful termination cases often depend on the employer’s reasons and supporting evidence, legal guidance can be valuable both before an employee is terminated and after a claim has been filed.