How to Avoid Wrongful Termination Suits

A terminated employee seeks an attorney

Employees who believe they were wrongfully terminated are sometimes motivated to sue.

I have a few former clients and others I know who were on the receiving end of a wrongful termination suit. (The client firms became clients AFTER they had settled their wrongful terminations suits!) Wrongful termination suits are not as rare as we would like to believe. Any employee who is fired and believes he or she was not treated fairly can file a suit. Whether or not they win depends on whether you did treat him or her fairly…and more importantly, on whether you have documentation of that!

Documentation is crucial!

Many small and medium business owners settle wrongful termination suits because they fire someone for poor performance but have no or nearly no supporting documentation. For ALL matters related to employee coaching, censure, promotion, raises, training, and performance discussions or reviews, you and your managers should document all conversations.

Performance-related documentation is critical!

Furthermore, it is absolutely critical to document conversations related to performance – not just poor performance but all performance. Why? If you reward someone for great performance and fire someone for poor performance, what record do you have of either of these? If the poor performing employee claims his or her performance matched the high performing employee, but you have no documentation of either, how do you prove it? How do you demonstrate that employees were clear about what constituted great performance, average performance or poor performance? The answer is, without documentation for all performance levels, you cannot.

What type of documentation is needed?

If you, as the owner, or one of your managers need to reprimand an employee or discuss poor performance, do this via a face-to-face meeting. Not only does this show respect to the employee, but it also provides an environment in which both sides can listen and discuss. The meeting should culminate with documentation (a 1-pager is sufficient) indicating the nature of the discussion, which both parties sign. Keep this information in your employee’s file.


Follow the same process when you provide an employee with a promotion or raise. Remember, as I stated earlier, not only do you need information regarding poor performance, but you need information on high performing employees to support your case.   If your employee’s performance improves and no additional follow-up is needed, wonderful. However, if the employee’s performance doesn’t improve or it decreases, you, as the owner, have a history of documentation that supports you or your manager’s termination (or other formal censure) decision.