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Lululemon CEO Resigns Over Misconduct

By Ceylan Pumphrey, Esq. on February 06, 2018 | Last updated on March 21, 2019

Usually when people are fired, it's because of their work performance. Maybe they took lunches that were too long or kept showing up late to work or simply couldn't perform the job up to the company's standards. But sometimes, it's also possibly to fire an employee for off duty conduct.

It appears that this may have happened in the case of Lululemon's CEO, Laurent Potdevin, who resigned over misconduct. It's not clear exactly what Potdevin did, but according to reports, Lululemon expects "all employees to exemplify the 'highest level of integrity and respect for one another,' and Potdevin failed to meet these standards." But, what's the best way to fire an employee to avoid a wrongful termination lawsuit down the line?

Firing Employees the Right Way

First it's important to note that Potdevin resigned, although it appears that it was a forced resignation. But, even if he had been fired, breaking a company's code of ethics is generally a valid reason to fire someone. It's also generally acceptable to fire an employee who commits a crime, especially if the crime involves the employer.

The most important part of firing an employee is to ensure that there's documentation of the reasons for termination. Even though Lululemon hasn't publicly explained the specific reasons for forcing the CEO to resign, it's safe to assume that the company has documentation of the actual misconduct. Even when an employee works "at will" -- meaning an employer can fire the employee can fire him or her for any reason -- documenting the reasons for terminating his or her employment can help a company in the event that it needs to defend itself in a wrongful termination lawsuit. After all, while the company's reasons for terminating an employee may not be illegal, the employee may claim that the reasons were illegal.

In the case of Lululemon's CEO, a wrongful termination suit is highly unlikely because as per a separation agreement, he'll be receiving $3.35 million upfront and $1.65 million over the next 18 months, which probably softened the blow of losing his job so suddenly.

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