How To Protect Business In Wrongful Termination Claims

Bonisiwe Shabane

-Nov 1, 2025, 7:29 PM

how to protect business in wrongful termination claims

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: 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. Common Grounds for Wrongful Termination Claims: 2.

How Employers Can Protect Themselves from Wrongful Termination Claims 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. 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. 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. Call for a Consultation | (301) 441-2420 In our last blog post, we discussed situations in which an employee may have grounds to pursue a wrongful termination claim. In that post, we cited employment contracts, retaliation and discrimination as factors that could prove to be crucial in these situations. We also noted that these cases can be extraordinarily complicated.

For example, if you are on the employer side of the dispute, you may have a completely different view on the series of events that led up to a termination. To successfully prove your side of the issue, you can work with an attorney to dispute the legal claim against you and potentially have it dismissed before trial or be successful in court. Employers facing wrongful termination lawsuits can benefit from legal representation in a number of different ways. Trying to compile, organize and present documentation, witness statements and other pieces of evidence can be a time-consuming, complicated task that requires legal knowledge and experience. Without this, an employer can find it all but impossible to stay focused on a business because he or she is so consumed by the legal process. Let’s talk about one of the toughest parts of running a business: terminating an employee.

It’s never easy, and it’s almost always fraught with legal risk. A single mistake can trigger a costly and time-consuming wrongful termination lawsuit. At SKT Law, we see the fallout from these situations regularly, and we’re passionate about helping businesses avoid them. This blog is designed to be a practical guide, drawing on our experience, to help you navigate the often-complex world of employee terminations. It’s a legal term, and it’s important to understand it. Wrongful termination, or wrongful discharge, is a claim an employee makes when they believe their firing was illegal.

This could mean it violated federal or state laws, or that it broke the terms of an employment agreement. As Eliot Krieger, Co-Founder and Managing Partner of SKT Law, states, “Ignorance of the law is no defense in a wrongful termination case. Business owners have a responsibility to understand their obligations under both federal and state employment laws.” Many business owners operate under the assumption that “at-will” employment gives them free rein to fire employees. While at-will employment does provide flexibility, it’s crucial to understand that it’s not a license to ignore employee rights. There are numerous exceptions and protected categories that create a legal landscape you need to navigate carefully.

The Big Risks: Discrimination and Retaliation Two of the biggest legal pitfalls are discrimination and retaliation. Let’s break those down. 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.

How To Protect Business In Wrongful Termination Claims

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