A wrongful termination claim (also known as a wrongful discharge or wrongful dismissal) is a legal term for a situation in which a person's employment is terminated by an employer for reasons that are discriminatory or unlawful, or in which the employer violates its own employment policies or an employment contract.
Defending against a wrongful termination suits can be incredibly expensive for an employer. Estimates range anywhere from $75,000 to $125,000 for cases decided in a summary judgement, or $175,000 to $250,000 for cases that go to a jury trial.
Protecting your business from wrongful termination claims
Sound disciplinary action and termination policies are the best way to protect your organization from wrongful termination claims. So what does a sound employee discipline and termination policy look like?
There are four elements employers should incorporate into an effective discipline and termination policy:
Clarity of communication
Like any policy found in an organization's employee handbook, discipline/termination policies are only effective (and defensible) when applied consistently. Applying policies consistently is not only a basic tenet of workforce management best practices, but also helps protect employers against unfounded discrimination-based wrongful termination claims.
Clarity of communication
A lot of issues in successful wrongful termination claims stem from a lack of clear communication. Most commonly, employees will cite the following issues in a wrongful discharge claim:
He/she did not know the expectations
The employee did not know the consequences for the failure to meet expectations
He/she did not know that a performance problem existed
An effective discipline and termination policy should clearly establish performance management expectations and guidelines, as well as the consequences for failing to meet the documented standards.
Consequences for not meeting performance expectations should always be proportionate to the problem. Double standards, special exceptions and overreactions are not only confusing and demoralizing to employees, but also increases the likelihood of an employee filing a complaint or even a wrongful termination claim.
Employers shouldn't write disciplinary and termination policies as absolutes. Rather, these policies should be written in a way that provides the employer with discretion in applying them. Before making an exception, however, employers should make sure they fully understand the reason they're making the exception or offering an employee special consideration.
While consistent inconsistency is practically an engraved invitation for a wrongful termination claim, consistency shouldn't come at the expense of compassion.