Ensure Proper Employee Terminations Avoid Wrongful Discharge Claims

Bonisiwe Shabane

-Oct 30, 2025, 6:49 AM

ensure proper employee terminations avoid wrongful discharge claims

Proper employee termination is a critical aspect of human resources management. In today’s workplace environment, avoiding wrongful termination claims is more important than ever. A poorly handled termination can lead to legal consequences, financial strain, and damage to your company’s reputation. Below, we’ll explore effective strategies for ensuring proper employee terminations, helping you avoid the pitfalls of wrongful discharge claims, and maintaining compliance with employment laws. Wrongful termination refers to an unlawful dismissal that violates federal, state, or contractual regulations. Employees may claim wrongful termination if they believe they were fired due to discrimination, retaliation, or breach of contract.

Such claims can lead to costly litigation, settlements, and negative publicity for your company. According to estimates, the average settlement for wrongful termination cases in the U.S. is between $40,000 to $45,000. However, more complex cases, particularly those involving discrimination or retaliation, can result in settlements over $100,000 - (USA.gov). An effective way to prevent wrongful discharge claims is by using an employee termination checklist. This checklist should ensure that:

Before making any termination decision, conduct a thorough internal investigation. Interview witnesses, review documents, and gather evidence related to any misconduct or performance issues. This investigation will help ensure that you have legitimate reasons to terminate an employee. Rash or unverified decisions can open the door to legal claims. Documentation is your best defense in a wrongful termination case. Provide clear and concise termination letters that outline the reason for the termination, reference previous performance issues, and any disciplinary actions taken.

Make sure you follow all internal policies regarding documentation, even if the termination is for an at-will employee. In a perfect world, employees perform optimally, enjoy high job satisfaction, and stay with one company until retirement. This type of perfection rarely exists. According to the U.S. Bureau of Labor Statistics, the median employee tenure with a single company is 3.9 years. While some staff members resign voluntarily, others are involuntarily terminated.

Improper or illegal terminations expose companies to consequential legal issues and financial risk. Employers must attempt to close all possible doors to post-termination litigation to avoid lengthy and expensive legal battles, adverse publicity, and any detrimental impact on employee morale. Make sure your employees understand their job responsibilities, the company’s policies and code of conduct, any performance issues, and ways to improve their performance. That said, the most important way to avoid litigation is by adhering to all applicable federal, state, and local laws concerning employment. Never fire an employee for an improper or illegal reason. Doing so leads to accusations of discrimination, retaliation, or breach of contract.

Emotions run high following an involuntary discharge and some ex-employees are just looking for a fight. While nothing can totally bar former workers from pursuing legal action, employers can take steps to take the wind out of these individuals’ litigious sails. Get a free trial of Practical Law, the how-to resource with termination best practices, protocols and practical tips for employers on legal risks. The best way to escape a lawsuit it to avoid its inception. Implementing and following proper termination practices minimizes the risk of encountering a wrongful termination claim. Before initiating a dismissal process, employers must understand all applicable federal and state employee termination laws and policy requirements.

To protect confidentiality, only include critical individuals in discussions. Federal and state agencies have laws about how and when employees can be fired. Follow these policies and your company guidelines to avoid wrongful termination claims. All states, except Montana, allow "at-will" employment. This means that an employer or employee can end the employment at any time, for any reason. However, the reason for termination cannot be illegal.

This includes: At-will employment may not apply to everyone. It does not include employees who work: These government resources can help you make sure you are following termination rules: Ask a real person any government-related question for free. They will get you the answer or let you know where to find it.

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. Home U.S. Labor Laws How to Terminate an Employee

Master employee termination with this step-by-step guide for compliance and business safety. Ensure fair, respectful, and legally sound terminations. In September 2024, 5.2 million employees separated from their jobs in the U.S., with 1.8 million of these due to layoffs or discharges. This high rate of turnover underlines the importance of handling employee terminations carefully and in compliance with U.S. labor law to protect your business. Terminating an employee is one of the toughest tasks a manager can face.

Beyond the emotional and interpersonal challenges, there are complex legal requirements to follow. In the U.S., both federal and state laws regulate the termination process, requiring businesses to adhere to guidelines under U.S. labor law to avoid wrongful termination claims. 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.

In today’s workplace environment, avoiding wrongful termination lawsuits is crucial for both employees and employers. Employers should prioritize clear documentation of performance-related issues and maintain open lines of communication with employees. This proactive approach not only safeguards against legal disputes but also fosters a positive workplace culture. Understanding the legal landscape surrounding termination is essential. Employers must be aware of local labor laws and ensure that their practices align with these regulations to minimize the risk of litigation. By implementing fair and consistent policies, they can better protect their organizations from potential claims.

Training managers and HR personnel on best practices can further reduce risks. Equipping them with the tools to handle employee grievances effectively can prevent misunderstandings that may lead to costly lawsuits. Taking these steps is vital for maintaining a healthy work environment and ensuring legal compliance. Wrongful termination covers various illegal employment practices. It can happen when an employee is let go for discriminatory reasons or in violation of established laws or regulations. Recognizing what constitutes wrongful termination is crucial for both employees and employers.

Wrongful termination occurs when an employee is fired in violation of federal or state laws, contractual agreements, or public policy. Examples include dismissals based on discrimination due to race, gender, age, or religion. Additionally, it can apply when an employee is terminated for exercising legal rights, such as reporting illegal activities or filing for workers’ compensation. 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.

Ensure Proper Employee Terminations Avoid Wrongful Discharge Claims

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