You’re a business owner and you’ve just been notified that you and your company are being sued by a former employee for wrongful termination. You know the termination was justified, but you have to respond to the lawsuit, taking up valuable time and resources. What can you do to avoid it in the first place?

Wrongful Termination Lawsuits

When you are a business owner, you are also a manager of people. You may have a number of people who report to you, who have various management styles as they lead their teams. It is critical that you provide them (and yourself) with proper goal setting to make sure you are all on the same page. You need to set goals, communicate them well, and check-in with your employees so they understand how you feel they are doing in their jobs and where they might need to improve. Oftentimes, we will take the path of least resistance, and not let the employee know they are not meeting our agreed-upon expectations. Then, when they are let go, they run to an attorney’s office to file a wrongful termination lawsuit.

The statistics bear this out. According to Bright Hub, the number of wrongful termination lawsuits is growing, and the outcomes aren’t looking good for employers. It cites a white paper from Legal Landmines, and the authors comment that “Employee lawsuits have risen 400 percent in the last 20 years.” Almost half of these are private employers with between 15-100 employees.

The paper cites a case from June of 2011 when a car wash employee was awarded $80,000 for employer violations. Tack on the legal fees, also ‘awarded’ to the employers, and that takes a chunk of change out of your bottom line. Also, according to the white paper, if an employment lawsuit goes to trial, employees are more likely to win: 67 percent of the time in state courts and 63 percent in federal courts.

Do you know how much it costs, on average, to settle an employee lawsuit? Back in 2001, the average was just more than $130 thousand. Fast forward only 5 years, and the average cost is almost $311 thousand. Close to a three-fold increase in 5 years! Just two years later, in 2008 when the economy crashed we saw the most significant peak in wrongful termination lawsuits ever filed.

On What Grounds Can They File?

Oftentimes, an employee’s claims are groundless, but they will generally gravitate to one of these areas:

• Discrimination
• Harassment
• Wage and Hour Violations
• Unsafe Working Conditions
• Workers’ Compensation Claims

It is critical to maintain proper performance management and communicate job expectations, then follow it up with regular documentation when an employee isn’t hitting the agreed-upon goals. Why do employees sue you?

• You haven’t given them a reason for letting them go. The reason for termination needs to be crystal clear. You fire them for poor performance, but they have been given good performance reviews. Again, you need a paper trail to document work history.
• You fire them after they have filed an internal complaint against you. The timing will allow the employee’s lawyer to draw conclusions about your motives in front of a jury.

Your company has great HR policies, but you aren’t following them, and that lack of paper trail can end up costing you in court.

You need a team of attorneys who can help you navigate through these treacherous waters. Hackler Flynn & Associates help employers manage their risk, and fight for you in court. Contact us to see how we can be of service to you so you can get back…to business!

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