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3 Things Entrepreneurs Get Wrong About Wrongful Termination

The legalities that fall under the phrase “wrongful termination” aren’t so clear-cut since it is defined differently from state to state. Know what wrongful termination is and how to protect your company from such claims.

Wrongful termination is one of the most common cases filed against business organizations, which can sometimes happen because of mishandling processes or a deficiency in understanding employment laws. The legalities that fall under the phrase “wrongful termination” aren’t so clear-cut since it is defined differently from state to state.

For instance, an employee who was laid off due to the expression of their political beliefs in California, Connecticut, Louisiana, and South Carolina will have a legal basis for pursuing a wrongful termination claim. However, the claim may not stand in other states. These four states have statutes protecting the right to express political views, but other states do not have the same policies.

With companies settling claims by employees to the tune of $37,200 on average, wrongful termination is indeed a costly battle that can affect a company’s bottom line. You need to know what wrongful termination is and how to protect your company from such claims.

Wrongful Termination Defined

Wrongful termination, also called wrongful dismissal or wrongful discharge, means that an employer has broken a law in firing an employee. Whether terminating the employee involves a company violating their own policy or public policy, or if the company violated any terms within the employment contract, it is considered as wrongful termination.

Some common examples of wrongful termination include being terminated for being a whistleblower, raising complaints about the workplace, or refusing to do an illegal act at the employer’s bidding.

An employee fired for being discriminated against based on their race, nationality, religion, sex, gender, age, or sexual orientation can also file for wrongful dismissal under the Equal Employment Opportunity Act.

The following laws and acts may also apply based on the circumstances surrounding an employee’s termination:

  • Title VII of the Civil Rights Act of 1964
  • Age Discrimination in Employment Act
  • Occupational Health and Safety Act
  • Equal Pay Act
  • Americans with Disabilities Act
  • Family and Medical Leave Act
  • Genetic Information Nondiscrimination Act
  • Fair Labor Standards Act

3 Things Entrepreneurs Get Wrong About Wrongful Dismissal

It can be hard to determine if something qualifies as wrongful termination when dealing with particular cases. Here are three things most entrepreneurs get wrong about wrongful termination.

  1. An employee dismissal that appears unreasonable or unfair is grounds for a wrongful termination claim

You may think that an employee who disagrees with your reasons for firing them or who wasn’t given a reason for their dismissal has a valid claim when filing for wrongful termination. This can only be true if they were not employed at will.

Most employees in the United States are employed at will, meaning employees can change jobs without prior notice if they choose, and their employers can terminate their employment for any reason or none at all – as long as the reason for firing them is not discriminatory.

If you hired your worker at will, you have the right to fire your employee for any reason or none at all as long as it is within legal bounds.

It can be considered wrongful termination if it is proven that an employer’s motivation for firing an employee is based on discrimination or retaliation if a worker is engaged in protected activity (e.g. asking for accommodations for a disability)

2. Employees who quit their jobs do not have the right to sue their employers

One of the most common misconceptions about wrongful termination is that an employee who resigns cannot file a lawsuit.

Former employees who can prove that working conditions have become intolerable for them because employers have created an environment that would compel them to resign (e.g. insults, humiliation, or discrimination), can sue employers. In this case, employers will be held liable for wrongful constructive discharge, which is a modified claim of wrongful dismissal.

3. Independent contractors cannot sue employers

Even independent contractors are protected from wrongful termination. If complainants can prove that they have been misclassified as independent contractors so that employers can avoid filing taxes or paying benefits, they will have the same rights as employees. Those that are correctly classified as independent contractors have legal claims in specific scenarios, such as when employers violate the terms of their contract with the independent contractors.

It could be especially challenging for small business owners to gather all necessary resources to become experts in employment laws that cover human resources, hours and wages, and other legal concerns. Promoting a culture of equality and diversity and being committed to protect your employees from discrimination will set you on the right path to avoiding one of the most common causes for wrongful termination.

Take concrete, proactive steps by reviewing your policies and procedures to ensure that all terms are consistent with your company practices, and are compliant with state and federal employment laws. Creating a worksheet that identifies required documentation as well as all vital steps in the termination process will also give you a better view of how to modify the procedure as needed.

In Closing

Employers who are proven to discriminate against employees, violate one or more terms in a worker’s employment contract, fail in upholding whistleblower protection, or violate provisions in federal or state employment laws can be liable for wrongful termination.

Staying professional when speaking to an employee about their upcoming dismissal can go a long way to reducing the risks of being sued for unlawful termination. Decreasing this risk further requires having a system that ensures regulatory compliance and consistency with company policy implementations. To ascertain that your business decisions concerning employee termination are within legal bounds, seek advice from reliable resources and employment law experts who can guide you on appropriate steps to take.

Written By

Jeffrey is a writer by profession and an artist at heart. He is currently a content strategist and consultant for Shegerian & Associates and aims to make employee rights information more accessible. When he's not writing, Jeff can be found working on abstract pieces in his art room.

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