21 Tips to Avoid a Wrongful Termination Lawsuit

What is a wrongful termination lawsuit? As HR consultant Christy Hopkins wrote in an issue of Business Law, “A wrongful termination, also known as a wrongful discharge or a wrongful dismissal, is a legal term that describes a situation where an employee was fired and the reason for the firing appears to be against the law. Specifically, wrongful termination usually involves a breach of the employment contract or breaks federal or state employment discrimination law.”

Most wrongful termination suits occur when an employee has been fired, also called “involuntary termination” or “discharge.” The following 21 tips will help you avoid missteps in the termination process and help prevent a wrongful termination suit.

1. Communicate your expectations to employees, both orally and in writing, on their first day of employment.

2. Consistently enforce and document workplace policies and disciplinary action.

3. Develop an established employee-termination procedure, follow it consistently and make sure employees are aware of it. State the potential grounds for terminating an employee. Have employees acknowledge and sign a written copy of the policy.

4. Ensure that your supervisors and managers have received training in appropriate employment practices, workplace policies and your company’s process for handling terminations.

5. For companies that do not have an entire human resources department, both the owner/manager and anyone assisting with HR efforts (internal or external) should be aware of federal and state employment laws.

6. All employment posters should be up to date and posted conspicuously in the workspace.

7. Regularly review and update your employee handbook to communicate your company’s policies and expectations around job performance and workplace behavior. When policies are revised, everyone needs to sign an acknowledgment form to ensure they understand the changes. Keep the signed acknowledgment forms for personnel files and provide a copy to the employees.

8. Conduct regular performance evaluations of all employees and keep records of the results.

When Firing Needs to Happen

Once the decision has been made to fire an employee, a cannabis company should take legal and practical actions to ensure protection from potential lawsuits.

9. Have a written process for leadership review of all employee termination requests.

10. Provide ample warnings and document them. Conduct timely investigations of violations of company policy and document findings.

11. Be clear about why you’re terminating an employee. Legitimate employee behaviors that warrant dismissal include:

• Frequent tardiness;
• Consistently missing work or shifts without adequate notice;
• Disregarding your company’s confidentiality policy;
• Violating workplace safety rules;
• Misrepresenting qualifications or experience;
• Stealing, destroying or purposely misusing company resources, such as product, intellectual property, supplies or cash;
• Making threats or acting in a way that causes physical harm to others;
• Participating in sexual harassment or creating a hostile work environment.

12. Know the law in the state where you operate regarding wrongful termination. Each state’s department of labor maintains a website of state-specific resources to ensure compliance with complex federal and state labor laws and regulations. The U.S. Department of Labor has an online Employment Law Guide that describes major federal laws (bit.ly/LaborLawGuide).

13. The owner/manager should determine when it is appropriate to terminate an employee. There are reasons not to initiate the termination process, especially if the owner/manager is not positive that a thorough and careful review of all facts has been conducted. For example:

• Evidence based on “he said/she said”;
• Previously established and documented record of satisfactory performance;
• Absences/tardiness associated with taking leave under the Family Leave Medical Act (FMLA);
• Subjective reasons not substantiated by written documentation;
• If there isn’t an Employee Handbook, or the company cannot assure that the employee has read, understands and has been provided a copy of company workplace procedures.

14. Remove emotion from the decision-making process and have a plan. Prepare documents in advance such as:

• A written notice for involuntary termination (most states require this);
• Appropriate health insurance and COBRA forms, if the employee is receiving company health benefits;
• The employee’s final paycheck and final paycheck acknowledgment form;
• Acknowledgment of return of company assets.

15. The employee’s computer and company network access should be revoked. This is to ensure an angry employee doesn’t delete valuable information or make unauthorized copies of files.

16. The company’s security officer should escort terminated employees from the meeting room to pick up their personal items, then escort them from the building. This is the best way to avoid confrontations, other employees getting involved or opportunities to leave with company property.

17. The meeting with the employee being terminated should occur in a private. Never fire an employee in front of coworkers. Also, do not fire someone by text or voicemail; it isn’t the right thing to do, and it could leave the company open to a lawsuit.

18. Always conduct the dismissal meeting with at least one witness present, such as your HR support person or another manager. By having a witness, misunderstandings and any accusations by the employee that they were mistreated or misrepresented during the termination process can be avoided.

19. Follow the rule of “the fewer words, the better” during the meeting. Tell the truth. Don’t use phrases like “business is slow” or “you didn’t work out.” List the behaviors or issues that led to the termination decision. While it is important to show empathy and respect, be careful not to use language that might imply a possible different outcome. Convey that the decision has been made to terminate the employee, nothing can be done to change the decision, and the employee’s performance has not met company’s standards.

20. Give the employee the termination notice and keep a copy for records. Tell the employee how final pay will be handled and when a final paycheck will be issued, if not on the day of dismissal.

21. Let the employee know they will be escorted to their work area to pick up personal items and then escorted from the building as part of your company’s termination policy.

While there is no guarantee that a fired employee won’t pursue a wrongful discharge lawsuit, following these simple guidelines will help positively defend your company against any wrongful termination claims.

Note: This article is not to be considered as legal or financial advice, nor does it address all HR regulatory actions that may impact your business.

Maria Denzin is the owner of MJ HR Strategic Solutions, an HR consulting firm that specializes in talent strategy and development for the cannabis industry. She can be reached at mariabdenzin@gmail.com.