How Employers Can Avoid A Wrongful Termination Lawsuit

Bonisiwe Shabane

-Oct 29, 2025, 2:39 PM

how employers can avoid a wrongful termination lawsuit

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. 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. Wrongful termination lawsuits represent one of the most significant legal risks facing employers today. These claims arise when employees believe they were fired for illegal reasons, such as discrimination, retaliation, or violation of employment contracts. The financial and reputational costs can be devastating for businesses of all sizes.

I've found that employers can significantly reduce their exposure to wrongful termination claims by implementing clear documentation practices, following proper termination procedures, and ensuring compliance with federal and state employment laws. Most employment relationships operate under at-will principles, but numerous exceptions protect employees from illegal dismissal based on discrimination or retaliation. The key to protection lies in understanding what constitutes wrongful termination and taking proactive steps before problems arise. Proper termination procedures and adherence to employment laws form the foundation of any effective risk management strategy. I'll walk you through the essential strategies that can help safeguard your organization from costly litigation. Wrongful termination occurs when an employer fires an employee in violation of federal or state laws, contractual agreements, or public policy.

The legal requirements and frameworks vary significantly by jurisdiction and can result in costly litigation for businesses. Wrongful termination refers to dismissing an employee for illegal reasons or in violation of established legal protections. Most states follow at-will employment, meaning employers can terminate workers for any reason or no reason at all. If an employee is successful at proving constructive discharge, your business may face a five- to six-figure lawsuit. Other than preventing costly litigation, avoiding wrongful termination lawsuits is important because it’s the right thing to do. By preventing and investigating harassment and discrimination in your workplace, you create an environment that is safe for everyone.

As a result of your efforts, you can also decrease the odds of having and losing a wrongful termination lawsuit. In a landmark case involving the National Labor Relations Board (NLRB), constructive discharge was first created as a legal doctrine. Back then, employers in the 1930s used harassment and intimidation to get employees to quit rather than having to fire them. In the 1938 Foods v. NLRB case before the Supreme Court, this method of effectively firing workers was deemed illegal. In a Mission to Grow podcast on avoiding wrongful termination lawsuits, Brian J.

Shenker, principal in the Long Island, New York, office of Jackson Lewis P.C., talked about constructive discharge in the United States today. According to Shenker, “The Supreme Court has defined this doctrine as an employee’s reasonable decision to resign because of unendurable working conditions so that it’s equated with a formal discharge by the employer.” The Equal Employment Opportunity Commission (EEOC) defines a constructive discharge to be any time when you’re effectively forcing an employee to leave by making work conditions so intolerable that they can’t stay. To fit the doctrine of constructive discharge, three key facts must be true. Unlawful terminations are a prevalent reality in many industries. It happens when you fire an employee for an illegal cause or when the dismissal doesn’t adhere to termination policies.

Other than Montana, all states in the US follow an at-will employment system. It’s the default employment arrangement where employees can leave their jobs anytime, and you can terminate them for any reason and at any point. Unless the employment contract specifies the termination causes, both parties can end it for any or no reason without incurring legal liability. But not all terminations in at-will employment arrangements are legal. In certain situations, terminating an employee could violate a state or federal law. Lawsuits involving wrongful terminations can be costly, regardless of whether or not you win the case.

Alistair Vigier of Clearway says that “Terminating an employee is hard enough without the additional stress of dealing with wrongful termination lawsuits. Too often, many employers expose themselves to unnecessary liability. This article highlights some tips to help you avoid legal liability for wrongful terminations.” Accusations of wrongful termination can be a significant liability for the company, exposing it to potential reputational and financial damage. For this reason, taking proactive steps to prevent it is essential. On Behalf of Cameron & Mittleman, LLP | Oct 19, 2021 | Business And Commercial Law, Commercial Litigation |

Employers have the right to make their own personnel decisions. However, it seems that every business will have to deal with former employees who claim that they were wrongfully terminated. Even in “at-will” states, employers are prohibited from terminating an employee for legally impermissible reasons. Wrongful termination lawsuits can come as a big surprise to a business, or it may be clear from an employee’s exit that there could be trouble. Regardless of how the employee left and the reasons for the employee’s termination, employers can take several steps to protect the company against such claims. Businesses can generally terminate an employee for any reason, or no reason at all, unless it violates their employment agreement or the civil laws that protect individuals here in the United States.

Examples of wrongful terminations include: Here are five actionable items that businesses can use to protect themselves:

How Employers Can Avoid A Wrongful Termination Lawsuit

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