Reducing the Risk of Wrongful Termination

March 14, 2012 Employment Law

Before firing an employee, employers should analyze the potential for a lawsuit or administrative claim

A common belief among many employers is that, because Arizona is an at-will employment state (i.e., in the absence of a contract, either party can break the relationship without cause), they can fire an employee without justification.

That is a risky position to take; in many cases, if you cannot articulate a good reason for the termination, you may face a wrongful termination lawsuit or administrative claim.

Thus, before firing an employee, employers would be wise to analyze whether a jury would agree that the termination was justified. To limit potential exposure of employee damages stemming from wrongful termination, you should first consider the following factors:

  • How long has the employee been with your company or organization?
  • Is there an employment contract? If there is, what does it say?
  • Can you articulate the reasons for termination?
  • Are the grounds for termination consistent with the provisions of your employee manual or employment policies?
  • Has the policy manual been changed recently?
  • Do you have evidence to support your decision?
  • Have you documented the events or employee conduct that led to your decision?
  • Did you ask the employee for an explanation?
  • Is the decision consistent with prior performance evaluations?
  • Are there circumstances in the employee’s life that make the termination decision inappropriate?
  • How have you responded to similar conduct by other employees?
  • Is your action regarding this employee consistent with actions taken against employees in similar situations?
  • Has the employee made allegations of company wrongdoing?
  • Is the employee a member of a protected category?
  • Does the employee have a serious health condition or a disability?
  • Is the employee properly classified as salaried (versus hourly wage)?
  • Is the employee’s cooperation necessary to the defense of claims in pending or threatened litigation by others?
  • Have you considered alternatives to termination (e.g., resignation, transfer, demotion, final warning, suspension)?
  • In general, would the termination be viewed as fair by a third party who knew both sides of the issue?

A detailed analysis of these factors should assist in reducing liability or in assessing the risk of a lawsuit or administrative claim resulting from an employee termination.