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Wrongful Termination Law: Avoiding a Lawsuit

By Cynthia Hsu, Esq. | Last updated on

As a small business owner, knowing some of the intricacies of wrongful termination law can be vital to preserving your business. Illegal firing of employees for reasons you may believe are justified might just land you in a costly wrongful termination lawsuit.

Most employees are "at will" in the U.S., meaning that they can be fired for whatever reason you want. Of course, that reason must be a legal reason.

So what are some of the common originators of wrongful termination suits? And, what should small business owners be aware of?

Discrimination: Discrimination is one of the biggest originators of wrongful termination suits. In 2008, the EEOC received about 95,402 workplace discrimination complaints. Firing an employee because of their race, gender, national origin, disability, religion and age are all illegal. So is firing someone who is in a "protected class," such as a worker who is fired just because she is pregnant or recently gave birth. Some states have also included sexual orientation as a protected class.

Retaliation: You cannot fire an employee for asserting their legal rights under federal or state law. For example, if your employee files a lawsuit against you alleging discriminatory pay, you cannot later fire her - even if the lawsuit is found in your favor.

Violations of Public Policy: Employees can also bring a wrongful termination suit against you if you fire them for something that the public would think is morally reprehensible or ethically wrong. What does this mean? This means that if an employee refuses to do something illegal, and they are fired for it - this is a reason that is "morally reprehensible."

The above are some of the most commonly found wrongful termination laws. Each state may also have different variations on these laws, so checking up on local statutes is a good idea.

Employers who are concerned about illegal firing and wrongful termination law might consider offering employees a "release" when they are fired - such as a severance package, in exchange for the benefit that the employee will not bring a wrongful termination suit. Of course, it is up to the employee if they wish to sign over their legal rights.

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