How to Reduce the Risk of a Wrongful Termination Lawsuit


Firing an employee is a necessary evil for every business. Whether your reason is due to downsizing or employee performance, there’s always a chance of your employees filing a wrongful termination claim against you. It’s something every business owner fears, but it’s also something that’s quite avoidable if you prepare for it. Here’s how you can reduce the risk of that happening.

Consult with your attorney beforehand

Before you go through with firing an employee, you’ll have to consult with a business lawyer and your HR team to make sure that you’re following the proper procedures and that everything is being done within the law. This ensures that you already have an airtight case even before your employee decides to file a wrongful termination claim against you. Although it may be costly to do so, what you’ll be paying your legal team is far less than what you would have to pay for a mishandled wrongful termination case.

Provide early warnings

Give your employee opportunities to correct their behavior if you’re terminating them on the grounds of employee performance. If the problem is downsizing, then let your entire staff know about the possibility of termination very early on, so you can give them time to search for a new job, even those who won’t likely be fired.

Reducing the instance of your employees losing their job security and giving them a chance to change their behavior before firing them lessens the risk of them filing a wrongful termination claim against you out of spite.

Consider the timing

Avoid firing someone out of the blue, unless it’s an extreme case. Always plan a head and consider the timing when terminating an employee.

Ideally, you’ll want to reserve any terminations for early in the week towards the end of the work day. This gives your employees time to immediately begin looking for a new job throughout the week, and less time to agonize about the firing over the weekend. Firing them towards the end of the work day ensures that they can pack up their belongings and leave the premises once most of their co-workers have already left for the day or are beginning to leave.

corporate event

Keep a comprehensive record of everything

Physical and digital records are your best protection against a wrongful termination suit. Make sure that you’re keeping a comprehensive record on all of your employees, particularly with regard to their performance, in case you must terminate someone on those grounds.

Keep a detailed record of emails, warnings, and write-ups you’ve issued to any of your employees, as well as documentation of performance reviews. You should also keep any documentation that shows any proof of financial difficulties in your business in case you’re terminating employees due to downsizing.

Communicate clear termination guidelines

Some wrongful termination suits may very well be caused by a miscommunication or misunderstanding about the situation. You’ll need to make sure that you have clear and concise termination guidelines in place so that your employee will know what to expect, even before they get fired. It should be easy for the employee to understand why exactly they were terminated. You can write these down in your employee handbook or release them in a memo every so often.

While there’s no guaranteed way to avoid a wrongful termination lawsuit when firing an employee, these tips will help you at least reduce the risk of it happening to you.

Share this post:

The trusted source of guidance and inspiration for solopreneurs. Our mission is to empower solopreneurs on their entrepreneurial journey by providing valuable insights, practical advice, and resources tailored to their unique needs. Whether you're just starting out or looking to grow your solo business, we're here to support you every step of the way. From productivity hacks to marketing strategies, financial management to personal growth, our content is designed to help you thrive and succeed in your solo endeavors. Join our community of solopreneurs and unlock your full potential.

Scroll to Top