Mitigate the Legal Risks of Terminating an Employee

Back Web Only Sep 25, 2017 By Marcus L. Turner

It’s unpleasant, but at some point during a career, every business owner or supervisor will eventually come face-to-face with the reality of having to terminate an employee. Thousands of employers are summoned into court each year because an ex-employee claims they were fired illegally — and many of those ex-employees who turn courtroom plaintiffs end up winning substantial judgments against their former employers.   

Employment relationships in California are commonly referred to as being “at-will,” which essentially means that subject to certain exceptions, the employee can be terminated at any time, for any reason, or no reason at all. Some primary exceptions include employees who are party to employment or collective bargaining agreements, or more commonly, when an employee is terminated because he or she is a member of a protected class (e.g. someone with a disability), or has engaged in some sort of protected activity (e.g. refusing to participate in an unlawful act or act that they believe to be unlawful).

When an at-will termination is at issue, there are certain steps to take and considerations an employer should evaluate to minimize the risk of later becoming the target of a wrongful termination lawsuit. It’s essential that an employer not inadvertently create a fact pattern where a legitimate at-will firing can be interpreted by a plaintiff’s attorney as an improper or wrongful termination that could be legally actionable.  

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First: No termination-related fact pattern is ever exactly the same, and an employer that is not 100 percent certain of their legal obligations with regard to the specific situation is strongly advised to seek legal advice prior to terminating an employee. A single hour’s worth of pre-termination legal advice can potentially avoid hundreds of hours in legal fees defending a wrongful termination suit.  

Second: Any employer involved in a termination could stand to benefit from adhering to the old WWII idiom, “Loose lips sink ships.” It is all too common for employers defending a wrongful termination suit to find themselves having to explain away offhand comments or having to correct statements they made that were misinterpreted by people who that had no legitimate reason to discuss the matter in the first place. Employers should attempt to keep any information related to a termination confidential, and only disclose to others on a need-to-know basis. Holding information close serves an additional purpose: It protects the privacy of the employee and allows them to leave with dignity. Often, wrongful termination lawsuits are born out of a haphazard termination that caused an employee to be embarrassed, disrespected or disparaged in some way.

Third: The employer must make a critical decision on whether or not to provide the employee with a reason for termination. Many legal experts will often advise not to give any reason, the basis for which is simple: Defense counsel doesn’t want to be handcuffed by what likely will be portrayed as a limiting admission from an employer.

For example, some employers attempt to gently let their employees go by stating the decision had nothing to do with the employee’s performance and was simply made because the employee was not a “good fit.” Some time later, when the employer is now sitting in front of an arbitrator, a judge or a jury, they learn that those words, which were previously meant to be offered in kindness, did not result in any good will with the employee and instead armed the plaintiff’s attorney with documentation to support a compelling theme — “The employer’s records don’t lie, and the reason we are here today has nothing to do with the plaintiff’s performance; in fact, the only reason is that my client was “not a good fit” for this employer — and what that really means is my client refused to play ball with an employer who was engaged in _______ (and you can fill in the blank with any alleged illegal/discriminatory/retaliatory conduct you want).

Conversely, there are occasions when an employer should strongly consider providing the reason. For example, when the termination is based on some form of actual malfeasance, a well thought-out and carefully crafted memo setting forth the basis for the termination can be substantially beneficial, including deterring any potential future attorney considered by the terminated employee from taking on a marginal case.

Regardless of whether or not an employer chooses to notify the employee of the reason for termination, the employee should not be allowed to alter that decision. If an employer has decided not to inform the employee of the reason for his or her termination, the employer should not give in to the employee’s request to know why. If an employer does decide to give a reason for termination, an employer should take care not to be pulled into an argument by the employee.

Finally: Employers should ensure that all wage-related obligations are satisfied at the time of termination or it will arm the plaintiff with the ability to seek prevailing party attorneys’ fees because unlike wrongful termination claims, wage claims typically include a statutory basis for recovery of attorney fees.

There’s a lot to think about when considering terminating an employee. Employers need to be mindful of protecting their business against potential litigation down the line, regardless of the relationship with the employee in question, and if there’s any question about how to proceed with any action related to termination, it’s always a good idea to consult with an experienced employment attorney as early in the process as possible.

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