4 Strategies For Protecting Your Business Against Wrongful Termination

Bonisiwe Shabane

-Nov 1, 2025, 10:54 PM

4 strategies for protecting your business against wrongful termination

Navigating wrongful termination claims can be a minefield, especially in states like California, where employment protections are robust. For businesses trying to thrive, protecting themselves against such legal risks isn’t just smart, it’s essential. Here’s how to build a strong defense strategy that not only shields your organization but also reinforces fairness and credibility. Most U.S. states, including California, operate under an at-will employment framework. It means you can terminate an employee without cause, but not for illegal reasons such as discrimination, retaliation, or other public policy violations.

Employees can still pursue wrongful termination claims under certain exceptions, including discrimination (such as age, gender, or religion), retaliation (such as whistle-blowing), or violations of public policy. Clearly understanding these exceptions is the first step in building a strong defense. "Document or it didn’t happen” isn’t just a saying; it’s often how juries perceive it. Keep thorough records of all performance issues, disciplinary actions, and communications. When terminating, provide written reasons and attach supporting documentation. It not only strengthens your defense but also demonstrates fairness and transparency.

Selective enforcement is a red flag. If only one employee is disciplined for a violation while others aren’t, you may open the door to claims of discrimination or unfair treatment. Ensure progressive discipline, and any termination is applied evenly across all employees in similar situations. Wrongful termination claims can be costly, time-consuming, and damaging to a business’s reputation. Employers must take proactive steps to protect themselves from lawsuits while ensuring compliance with state and federal labor laws. Understanding what constitutes wrongful termination, implementing best practices, and preparing for potential claims can help businesses avoid legal risks and maintain a fair workplace environment.

Wrongful termination occurs when an employee is fired in violation of federal, state, or contractual employment laws. While most states, including Michigan, follow the at-will employment doctrine—allowing employers to terminate employees for any legal reason—there are several exceptions that protect employees from unfair dismissals. A well-drafted employee handbook outlining company policies, code of conduct, and disciplinary procedures can serve as a legal safeguard. The handbook should clearly state that employment is at-will, except where contractual agreements state otherwise. One of the most effective ways to defend against a wrongful termination claim is to maintain thorough records. Employers should:

Many wrongful termination claims stem from improper actions taken by supervisors. Employers should: The goal of a termination is not to punish the employee but to protect your business. BY SHAYNE FITZ-COY, CO-FOUNDER OF SABOT FAMILY COMPANIES Wrongful termination claims cost businesses financial resources and management time. With the median EEOC claim over the last six years exceeding $450,000, based on my calculations, the financial stakes couldn’t be higher.

Although I rarely hear that someone who was let go at one of our portfolio companies has filed a legal claim for wrongful termination, when filed, these claims take up valuable management time and... The “wrongful” part varies, but the common denominator is that the person wants more money. I re-learned this lesson the hard way recently with an employee we’ll call “Jay.” He regularly slept at his desk and disappeared for hours during the workday. His performance issues were obvious during his brief six-week tenure. But when we terminated his employment we faced an uphill battle defending our decision because we had failed to properly document these incidents, resulting in money paid to the employee. Wrongful termination lawsuits are a serious concern for businesses, as they can damage a company’s reputation and result in significant financial losses.

To minimize the risk of such claims, employers should strive to draft employment contracts carefully and follow best practices that protect their legal interests while maintaining fairness for employees. Wrongful termination occurs when an employee is fired in violation of the law or their employment agreement. This could include discrimination, retaliation, breach of contract or firing someone in violation of public policy. Employers can minimize risks by ensuring employment contracts are clear, legally compliant and aligned with their business policies. A well-drafted employment contract is your first line of defense against wrongful termination claims. Employment contracts should ideally contain:

In most states, employment is presumed to be “at-will,” meaning either the employer or the employee can terminate the relationship at any time, for any lawful reason, or no reason at all. Explicitly including an at-will employment clause in the contract reinforces this understanding and minimizes confusion. However, at-will clauses must be carefully worded. Avoid language that implies job security unless it’s intentional, as that could create a basis for breach of contract claims. On Behalf of Pincus & Currier LLP | Dec 10, 2024 | Employment Law For Employers | Every business owner needs to be careful when terminating an employee’s contract.

One wrong move could lead to an expensive lawsuit. However, implementing proper procedures can safeguard your business. Here’s how you can protect your business from wrongful termination claims. Strong documentation is your best defense against legal claims. When managing employee issues, maintain clear records of employee performance issues, all disciplinary actions taken, violations of company policies, and discussions about work concerns. These detailed records become invaluable evidence if termination decisions are questioned later.

A professional disciplinary system builds a foundation for legally sound terminations. This process typically begins with initial verbal warnings, progresses to written performance warnings, includes performance improvement plans when needed, and concludes with final written notices before termination. Using these steps consistently helps demonstrate fair treatment of all employees and protects against discrimination claims. You must understand that certain employee actions are legally protected. Termination decisions cannot be based on discrimination complaints, workplace safety reports, approved medical leave, or wage and hour concerns. Being aware of these protections helps prevent costly retaliation claims and ensures compliance with employment laws.

As an entrepreneur or business owner, you understand the plethora of threats that can jeopardize your business's financial stability and reputation in the marketplace. Among these risks, employment litigation looms large, capable of inflicting significant damage to your business. To safeguard your business from such perils, preemptive measures are essential. Let’s explore how to minimize exposure to wrongful termination lawsuits so you can have peace of mind while running and growing your business. Prevention has always been the preferred course of action, and it holds true when it comes to potential lawsuits. Investing in a comprehensive employee handbook or policy manual can be a cost-effective solution to ward off expensive legal battles.

However, the stakes go beyond mere financial implications. Consider the potential reputational damage that can occur when the public becomes aware of lawsuits against your company. A negative perception can strain relationships with customers, suppliers, and even employees and potential employees, resulting in a decline in morale and a toxic work environment. To minimize the risk of wrongful termination lawsuits, proactive steps can be taken. First, you must establish clear policies that outline employee conduct, rules of the business, performance expectations, and termination procedures. These policies should be well-documented, distributed and readily accessible to every employee.

Additionally, maintaining meticulous records of each employee's performance and adherence to key performance indicators provides a solid foundation for demonstrating lawful and legitimate terminations. In larger companies, disciplinary actions are typically conducted by managers rather than the business owner. It becomes crucial to ensure that managers are well-versed in handling performance issues and that their actions align with state and federal laws. Providing comprehensive training on relevant regulations can empower managers to make informed decisions that mitigate legal risks. Consulting with experienced employment lawyers can further fortify your business against wrongful termination claims. These legal professionals can offer guidance on developing solid policies, procedures, and documentation systems.

In addition, they can advise on offering severance packages, wherein terminated employees accept compensation in exchange for releasing any liability and refraining from filing lawsuits. Fresno 559-421-7000Bakersfield 661-616-1360San Luis Obispo 805-296-5007Hanford 559-421-7000 Fresno559-421-7000Bakersfield661-616-1360San Luis Obispo805-296-5007Hanford559-421-7000 On Behalf of Sagaser, Watkins & Wieland PC | May 7, 2025 | Employment Law Wrongful termination claims can be costly and damaging for employers, but the good news is that there are steps you can take to reduce the likelihood of facing such a claim. By following certain guidelines and maintaining fair and consistent practices, you can help protect your business from legal action.

Let’s dive into some effective strategies. A well-structured employee handbook is essential for protecting your business. It sets the tone for workplace expectations and provides clear guidelines on discipline, performance, and termination. Ensure that your policies comply with California’s labor laws and are regularly updated. Providing employees with a copy of these policies and having them sign an acknowledgment can also prevent disputes down the road.

4 Strategies For Protecting Your Business Against Wrongful Termination

People Also Search

Navigating Wrongful Termination Claims Can Be A Minefield, Especially In

Employees Can Still Pursue Wrongful Termination Claims Under Certain Exceptions,

Selective Enforcement Is A Red Flag. If Only One Employee

Wrongful Termination Occurs When An Employee Is Fired In Violation

Many Wrongful Termination Claims Stem From Improper Actions Taken By