Fire Smartly: Avoiding Wrongful Termination Lawsuits

Firing an employee is never an easy task, but when performance doesn’t meet expectations, drastic measures must be taken. Some employers delay firing to avoid the fallout of termination and the threat of a lawsuit. But delaying the inevitable can cause problems to escalate and make termination even more difficult.

Employee termination notice

Taking steps to proactively avoid the threat of a wrongful termination lawsuit can help you make smarter hiring and firing decisions.

Hold Performance Evaluations Regularly

Document the performance of all employees across the entire organization. Employees of all levels should receive complete performance evaluations on a regular basis.

Evaluations provide supervisors with an opportunity to communicate performance issues, so employees understand the expectations that must be met.

Make sure that supervisors are engaging in open and frank discussions with employees about their performance.

Put Hiring, Firing and Performance Guidelines in Writing

Be clear and transparent about your hiring, firing and performance guidelines. Employees should know what’s expected of them, and the internal process of hiring and firing employees.

Ensure that you also have written guidelines for when the company is downsizing, restructuring or eliminating positions. These guidelines should be followed and understood across the entire organization.

Think Carefully Before Taking Action

Before making any rash decisions or taking action, think carefully about your decision to terminate an employee.

Ideally, every termination decision should be reviewed objectively by a senior manager or HR leader. It may also be wise to have a lawyer review your recommendations before firing an employee to ensure that your decision to make sure it does not have unintended adverse action against protected groups.

Don’t Be Vague When Firing an Employee

Some employers are vague about their reasons for termination, as they feel the less information they provide, the less fuel the employee has for taking legal action. But being vague has the opposite effect.

If you aren’t clear and specific about your reasoning for firing employees, they’ll jump to their own conclusions, which can lay the groundwork for a potential wrongful termination lawsuit.

Make Sure Employees Understand Company Policies

If you haven’t done so already, ensure that you have an employee handbook. That handbook should include human resources guidelines and company policies. These written policies will serve as a defense for your actions should you have to terminate an employee.

It’s difficult to use company policy as a defense if there’s no written policy in place.

Every new employee should be given a copy of the employee handbook, and they should sign a document stating that they understand the company’s policies and that they received the handbook.

Consider consulting with a lawyer who specializes in employment law when creating your employee handbook.

Investigate Claims of Discrimination and Wrongful Termination Promptly

Take all allegations of discrimination or wrongful termination seriously and act promptly when claims are made. Conduct a thorough investigation even if the employee has already been terminated.

Consult with your attorney to determine the best course of action to take.

Give Notice When Possible

Whenever possible, give employees ample notice of termination, particularly if the termination is due to downsizing or restructuring.

Informing employees of the termination ahead of time will give them time to seek employment elsewhere while remaining employed. Former employees are less likely to threaten legal action if they can simply transition to a new position.

If possible, consider offering placement assistance and a severance package to ease the financial burden of losing employment.

If your company is downsizing or restructuring and will be discharging multiple employees, consider also offering workshops on interviewing skills and resume writing. Providing affected employees with training to aid them in their job search can also go a long way in protecting your organization from wrongful termination claims.

Making an effort to ensure your employees have prospects of new employment or aiding them in their search can help reduce the risk of wrongful termination claims.


Wrongful termination can be costly for a business, particularly a small business. Providing clear, written guidelines for performance, hiring and firing can protect your company. Ensuring that you have written company policies can also serve as a defense for your actions. But ultimately, maintaining open and direct communication about performance will help employees understand what’s expected of them and may help you avoid terminations that could have been avoided.


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