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Wrongful Termination: What Employers Need to Know

By Mariah Collins, SHRM-CP on Jan 05, 2023
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Axcet HR Solutions Wrongful Termination

When it rears its ugly head, a wrongful termination claim can be an employer’s worst nightmare. If you’re facing a wrongful termination claim brought by a disgruntled employee, you can take comfort in the fact that most wrongful termination claims are not meritorious. Of those that make it past the preliminary legal stages, the vast majority of claims settle outside of court—in other words, it’s rare that a wrongful termination claim will go to trial. 

Whether you’re wrangling with a wrongful termination claim at present or looking to protect your company in the future, I’ll walk you through what you, as an employer, need to know about the concept. In the end, you’ll have a clearer picture of what constitutes wrongful termination and how your business can take steps toward avoiding these types of claims in the future. 

RELATED: Time to Say Goodbye? 15 Tips for Effective Terminations >>

What is Wrongful Termination? 

The phrase “wrongful termination” has two meanings, though both meanings reference the same concept. An action for wrongful termination is a type of claim brought by an employee against their former employer. Wrongful termination claims allege that an employer has either broken the law in some way or has breached the contract existing between the business and its employee. 

The act of wrongful termination itself refers to the illegal firing of an employee. While there are many legal reasons to fire an employee, there are still many, many illegal reasons to fire them, as well. (I’ll cover these below). 

Types of Wrongful Termination Claims 

Employees can bring wrongful termination claims against their employer for a wide range of reasons, though some reasons are far more common than others. Some of the most frequent causes for filing suit originate with the following issues: 

Discrimination

Whether based on race, age, gender or any other of a host of characteristics, an employee may believe they’ve been wrongfully terminated for a discriminatory reason. 

RELATED: Preventing Age Discrimination at Work >>

Harassment and/or Hostile Work Environment

The rise of the #MeToo movement has seen an influx of harassment and hostile work environment-based wrongful discrimination claims. An employee may assert they’ve been fired after not succumbing to harassment at work or for speaking up against a coworker or supervisor who created an uncomfortable environment. 

Breach of Contract

This type of wrongful termination claim is unique; as opposed to claims that are based on the allegation that an employer has broken a federal or state law, these claims assert an employer has violated a clause in the contract between the company and the employee. 

Retaliation 

At a national level, the federal government has instituted protections for “whistleblowers,” or employees who have reported rule violations by their employers, whether internally or externally. Employers may not retaliate against these employees by firing or demoting them. Many wrongful termination claims that originate from allegations of retaliation very often involve OSHA (Occupational Safety and Health Administration) violations, FLSA wage and hour violations, or other violations of federal statutes. 

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Violation of Laws Surrounding Protected Leave 

If an employee’s permitted leave time (whether paid or unpaid) is mandated by federal or state law, employers must honor those leave protections—meaning the employee’s job must be there for them when they get back. If an employee has been let go after taking a leave of absence protected by, for example, the Family and Medical Leave Act (FMLA), you could have a wrongful termination claim brewing against you. 

RELATED:What Employers Need to Know About Whistleblowers and Retaliation Claims >> 

How Can Employers Avoid Wrongful Termination? 

Create severance packages, especially for employees terminated without cause. Upon any termination, employees should receive written notification of their severance from the company. Many companies find that offering a sum of money, whether at once or over a period of months, can reduce the chance that an employee will accuse the company of wrongful termination.

In some cases, your company may be able to contract with the employee for the exchange of severance pay in return for the employee’s waiver and release of the company for any liability associated with the termination. Consult with your PEO or outside legal counsel before integrating any such language into a severance agreement. 

Make sure you haven’t given anyone an implied contract. You might not have a written employment contract with an employee (many small to mid-sized businesses do not). However, you could still have unknowingly created an “implied” contract in the eyes of the law.

Implied contracts are common in offer letters, employee handbooks, or anywhere where an employee policy has been put on paper. A frequent example of this involves a schedule of disciplinary actions in an employee handbook.

If, for example, you’ve specifically stated that employees will receive a verbal warning and/or written warning before termination for a specific offense, the law in some states may require that you stick to your policy. If you don’t, you could face a wrongful termination claim. 

If you’re located in an at-at-will employment state, emphasize your right to terminate employment at will (and vice versa). This right should be stated as often as possible: in offer letters, in salary or wage updates and in notifications of compensation structure changes.

If your company has the right to fire an employee without cause, the employee also has the right to leave at any time, too. Highlighting the duality of this relationship not only reminds the employee that meritorious causes for wrongful termination claims are limited, but it also serves to reinforce the balanced nature of their employment. 

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Can an Employee Bring a Wrongful Termination Claim in an At-Will Employment State? 

Your business might be located in an at-will employment state, but that doesn’t mean an employee can never bring a claim for wrongful termination after they’ve been let go. Many states, including Kansas and Missouri, are “at-will” employment states.

“At-will employment” is an employer-friendly legal doctrine allowing employers to hire and terminate an employee "at will," that is, for any reason, or for no reason at all, so long as the reason isn't related to one of a few key, federally protected traits, such as: 

  • Race
  • Ethnicity
  • Color
  • Religion
  • Sex, including pregnancy, sexual orientation, or gender identity
  • National origin
  • Marital status
  • Age (40 or older)
  • Disability
  • Genetic information, including family medical history

While the concepts of at-will hire and wrongful termination are not the same thing, "at-will" hiring and firing often comes up as a defense to the cause of action an employee could have for wrongful termination. In short, employees can (and often do) bring claims for wrongful termination in at-will employment states. 

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Kansas Wrongful Termination Law

The Kansas Department of Labor has shared that “Kansas is an employment-at-will state which means [an] employer can fire [an employee] for any non-discriminatory and/or non-retaliatory reason.” No state statutory or regulatory provisions specifically offer more rights to Kansas employees than to U.S. employees, generally.

However, a line of Kansas case law will, in rare circumstances, serve to protect an employee who was acting in the interest of “public policy.” Kansas also honors implied employment contracts, whether created purposefully or inadvertently. 

Missouri Wrongful Termination Law 

According to the Missouri Department of Labor and Industrial Relations, Missouri is another example of an at-will employment state. Missouri is remarkably employer-friendly in terms of its wrongful termination case law. In this state, courts often find that oral assurances and even employee handbooks do not serve to create implied contracts upon which wrongful termination claims can be brought (though it could still be possible).

RELATED: Handle with Care - Layoffs & Terminations >>

Axcet HR Solutions: Your Employee Relations Experts

Most small to mid-sized businesses simply aren’t large enough to support a full team of HR experts, but that doesn’t mean you should go without employee relations expertise. Consider outsourcing HR functions to an experienced professional employer organization (PEO).

Working with a PEO provides your business with access to employee relations and HR experts that can help your company thrive. As a trusted and certified PEO, Axcet HR saves you time, money, worry, and stress, so you can concentrate on growing your core business. 

Do you have questions about wrongful termination or your current employee policies? We have answers. Schedule a time to speak with our experienced team today >>

Axcet HR Solutions Employee Relations

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