The US today is very litigious. Income inequality pushes some people to sue individuals and companies for their assets. Sometimes, lawsuits are fair, but sometimes they’re not.
If you’re a business owner or employer, you may have to face wrongful termination lawsuits. You might not even be at fault. You could always follow the rules as you understand them but get served a lawsuit by a former employee who sees things differently.
The first step to protecting yourself and your company is knowledge. Find out more about wrongful termination lawsuits, how they can affect you, and how to protect yourself and your company.
What Is Wrongful Termination?
Wrongful termination usually involves an employee being fired in a way that violates his or her contract with a company or violates public laws.
If an employee didn’t have a contract, though, it’s usually safe to fire him or her for any or no reason. But that changes if the termination goes against public laws, such as anti-discrimination laws, or if the termination is motivated by revenge.
Wrongful termination may also occur if an employee is fired in a way that goes against the company’s manual or against company policies, even if those policies are only implied.
Disagreements over Gray Areas of Wrongful Termination Lawsuits
It’s easy for employees and employers to disagree over the fairness of a given termination. Some ex-employees want to sue a company over any firing or over perceived unfair treatment on the job.
Just because a job doesn’t work out the way an employee wanted doesn’t make a lawsuit valid. However, you should watch out for these reasons for wrongful termination lawsuits, which are becoming increasingly common:
- Sexual harassment
- Mental anguish and emotional distress
- Breach of contract
- Invasion of privacy
- Negligent hiring, promotion, retention, and supervision
- Discrimination based on religion, age, race, sex, or other reasons
Be Sure of the Legal Grounds for Termination
You and your managers should always be very sure you have excellent legal grounds for termination. Gray areas can be very difficult to resolve. For example, an employee could quit but then sue you because of an alleged pattern of your giving her dangerous assignments that pushed her into quitting.
Or you might fire an employee legally and within his contract but then be served a lawsuit for supposedly inventing the reasons for his termination in order to hire a new employee at a lower salary.
These types of cases happen. You could benefit if an experienced firm like Legally Mine reviews your business and helps you select ways to protect your company, such as employment practices liability insurance.
How Wrongful Termination Lawsuits Can Hurt You and Your Company
Wrongful termination lawsuits can be expensive to your time, capital, reputation, and culture. Even out-of-court settlements can average about $40,000. Some cases that go to court can lead to settlements of $1,000,000 or more.
Most cases that go to court end up awarding the plaintiff (the ex-employee) some amount. Plus, the legal fees and manpower costs, even before a settlement is reached, are rising constantly. That’s a good reason to get liability insurance.
Damage to Morale and Reputation
Finally, as a lawsuit drags on, it can lower the morale of your current employees. They might start to think the company really is in the wrong. Also, prospective employees might avoid applying for work with you. Finally, investors and customers might look at you unfavorably.
All in all, it’s wise if an outside set of eyes like Legally Mine reviews your company’s records and helps you prepare. The costs of insurance and legal advice should be much lower than the cost of a potential lawsuit. So, protect your company from damaging wrongful termination lawsuits.