Avoiding Costly Wrongful Termination Claims

There are many reasons for terminating an employee. Poor performance, gross misconduct or perhaps business needs require a reduction in workforce, and you may be faced with terminating even those who may be excellent employees.

Terminating an employee is difficult enough, but how do you avoid a wrongful termination charge?

Best Practices for Employee Terminations

  • Documentation is Crucial. Proper documentation is critical to an employers credibility regarding allegations of a pattern of misconduct—or even a single instance of serious misconduct—on the employees part. This documentation should be filed in the employees personnel file.

    Verbal warnings should always come first. You must document the verbal warnings in the employees personnel file; however, these do not require the employees signature. Written documentation, with the exception of extreme violations, should not be the first step in correcting an employees behavior. The written reprimand should mention the verbal warnings that preceded it and should be signed by the employee or a witness if the employee refuses to sign.

  • Follow Company Policy and Be Consistent. It is important to understand that “past practice” in conjunction with written policy should be considered in order to prevent claims of discrimination. It is important for companies to follow their own policies and apply those policies consistently with each employee. Employee handbooks are often the best method for communicating policies.
  • Final Wages. Regulations on whether final wages are due at the time of termination or if vacation is required to be paid vary from state to state. It is important to understand any final wage laws that may affect the timing of the termination.

[I find that] HR handles the legal issues, the benefits are priced better through Oasis, and payroll handles all of the taxes. With all of these areas being handled by Oasis, it frees up my time to focus on my business and puts my mind at ease knowing that experts are handling everything.

- Brad L. Retail Industry

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