What is a Wrongful Termination Lawsuit?

Termination

Firing an employee is not something that any HR team or business owner enjoys doing, but sometimes it is necessary to fire an employee in order to build the company and focus on the future.  However, there is always the risk of a lawsuit for wrongful termination.  The process of a wrongful termination lawsuit can be a nightmare for any business.

Wrongful Termination Lawsuits

  1. The wrongful termination.  Once an employee is terminated, they can sue for any number of reasons. For example,  you can be sued for implying to your former employee that he or she will not be fired; discrimination related to race, ethnicity, religion, age, sexual orientation, or for any disability; retaliation of the employee’s rights and whistleblowing.  Every state has different rules, which may be different from federal rules. 
  2. Are you at risk?  One of the first things you need to ask yourself should be “Is my business or organization at risk for wrongful termination lawsuit?”  Before you try and answer, there are some things you need to know.  You can be sued for a number of reasons, including violating anti-discrimination laws, sexual harassment, not following through on written or oral agreements, or breaking labor laws.  There are a number of ways a company can be sued after firing an employee, so it’s important to think through the firing carefully and consult with a lawyer just in case.
  3. They’re costly.  The average cost to fight a wrongful termination lawsuit is $250,000, and there are a number of additional costs involved with firing and rehiring a replacement.   In addition, if your company is deemed liable or found to have violated any labor law, then you can most certainly bet that you will pay much more.

  4. What all can the fired employee be compensated for?  This can be something that varies from case to case.  You could be accountable for paying any benefits lost, possible pay compensation, punitive costs, emotional distress, and most importantly, the fees it took to hire the lawyer.  It is wise for you (the owner) or any HR team to weight the benefits when it comes to firing an employee.
  5. They’re time-intensive.  If you thought your 10 hour day the other week was long, then brace yourself; the wrongful termination lawsuit process will be lengthy.  Why is this?  Your former employee obviously noticed something in your firing process that indicated that you may have done something incorrectly.  This means you will need to gather all documentation and start fine tuning any piece of documentation to support your firing decision.  Time spent on this process is money lost.
  6. Settlement costs are high. One out of ten wrongful termination lawsuits end in million dollar settlements. For the rest, the average costs are $40,000 to settle a wrongful termination case. This is just the settlement money paid to the plaintiff, which is in addition to costs related to defending against the lawsuit.
  7. How could you lose?  There are various ways in which you can lose a wrongful termination lawsuit and it all comes down to your documentation.  As a business owner or HR team, it is vital that everything is documented accurately and effectively so that risk to the business is low. Unsure of how to document? See which corrective action process is right for your business.

Bambee helps make sure your business is protected from wrongful termination lawsuits by helping your company’s managers give you the documentation and insight you need about employee performance and behavior. Find out more at www.bambee.com.

-The Bambee Team

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