What Is Considered Wrongful Termination?

Sometimes you have to let an employee go. But if you don’t do it correctly, you could end up making things worse for yourself.

There is a huge push to protect workers’ rights nowadays, and it’s often for good reasons. One of the ways to protect workers is through laws that spell out what is considered wrongful termination. These laws exist to ensure that employees are not fired for illegitimate or unfair reasons.

But what is considered wrongful termination? To keep yourself from a serious lawsuit, here is all the information you need.

What Is Wrongful Termination?

Wrongful termination is the act of firing an employee for reasons that are either illegal or that constitute a contract violation. Laws for what constitutes wrongful termination vary from state to state, and in most states, the relationship between employee and employer is considered to be at will. This means either party is free to terminate the relationship without cause.

But there are exceptions to this rule, including the ones listed below.

Wrongful Termination Checklist:

• Breach of contract
• Constructive discharge
• Discrimination
• Asking an employee to commit an illegal act
• Violating company policy
• Violating public policy
• Whistleblowing

Firing employees in these circumstances could lead to a wrongful termination lawsuit. There are several other reasons an employee could sue for wrongful termination. In some cases, the former employee can sue even if they left voluntarily.

For example, if an employee left the job because the employer made a job unbearable, this could be grounds for a wrongful termination suit. This would entail allegations that an employer created a work environment that no reasonable person would continue to work in. An employee could also sue if they felt that they were unfairly denied a promotion.

While most states will respect the “at-will” relationship between employer and employee, that doesn’t mean that an employee suing for wrongful termination won’t cause you severe trouble. You need to prepare for this situation.

Dealing With Possible Wrongful Termination Suit

To keep yourself from the frustration of a lawsuit, you need to have some protective measures in place. This includes having employment practices liability insurance.

This liability insurance guide can explain more, but essentially it is a form of insurance that protects businesses when they are facing serious allegations such as wrongful termination. The insurance covers several costs from these lawsuits, including legal fees, lawyer fees, settlement costs, legal judgments, administration costs, and other court costs. 

This insurance works on a claims-made basis, which means the incident leading to the claim needed to occur while the business was under insurance coverage. This is why it’s important to keep your business continually covered.

Aside from having insurance, employers must be familiar with laws and guidelines in their state for firing employees. Never fire an employee without just cause. This is a gateway to a courtroom.

What Is Considered Wrongful Termination

Now you know exactly what is considered wrongful termination. Knowing the laws of your state and ensuring you terminate employees with just cause and as a last resort will lower your chances of ending up in front of a judge. Know the employment rules of your state and follow them accordingly.

For more on legal matters in business, check out some of our Law articles.