How Small Businesses Can Avoid Wrongful Termination Claims

As a small business owner, you value your employees and strive to provide a safe, healthy and positive work environment. But you will eventually face a situation where you have to terminate an employee. It’s never a pleasant nor easy task, but it must be done.

Along with the stress of having to let an employee go, you’ll also need to consider the risks of a wrongful termination claim. The timing and the way in which you terminate your employee is crucial.

Implement Written Guidelines and Independent Reviews

Make sure that you have written guidelines in place that describes the process of selecting employees for termination when positions are eliminated, or your business is downsizing or restructuring. These guidelines should be followed consistently across the board.

To better protect your business, have your lawyer review your guidelines to make sure you’re not inadvertently taking action against a protected group which could lead to discrimination claims.

Also, have every termination decision reviewed objectively and independently.

Document Everything

Documentation can protect your business in case of a wrongful termination claim. Make sure that you’re documenting all employee performance consistently across the organization through regular employee performance evaluations.

Ensure that all employees – low, middle and high performers – receive a complete performance appraisal. Managers or supervisors should be having open and honest discussions with employees about their performance throughout the year.

“Employers cannot dismiss you without legal grounds, unless you are in the jurisdiction of a probationary period,” says Lalande Personal Injury Lawyers. “If you are fired, your employer must prove that the decision was based on solely on performance, not because of race, sex, or disability.”

Documented performance appraisals will serve as proof that your decision to terminate an employee was based on performance.

Make Sure That Employees are Clear About Expectations

An employee’s termination should not come as a surprise. Be clear about your expectations, performance standards and rules from the start to ensure that everyone is on the same page.

Create an employee handbook, and go over this handbook with your employees during training. The handbook should clearly outline your policies, expectations and standards.

Additionally, you’ll want to ensure that your employees understand that you are an at-will employer which has the right to terminate at any time.

Be Clear About the Reason for Termination

When terminating an employee, be as clear and specific as possible as to why he or she is being fired. Do not be vague in your explanation, as this will allow the employee to jump to conclusions as to why he or she is being terminated.

A clear, detailed and valid reason for termination will help protect you from wrongful termination claims.

Give as Much Notice as Possible

Whenever possible, give employees at least a few weeks of warning or notice of a termination. Giving employees advanced notice of their termination will give them time to plan their next steps and potentially secure another job before leaving your employment.

If an employee is able to move right into another job, he or she may be less likely to file a wrongful termination claim because the financial strain of the termination is eliminated.


Alex is a small business blogger with a focus on entrepreneurship and growth. With over 5 years of experience covering the startup and small business landscape, Alex has a reputation for being a knowledgeable, approachable and entrepreneurial-minded blogger. He has a keen understanding of the challenges and opportunities facing small business owners, and is able to provide actionable advice and strategies for success. Alex has interviewed successful entrepreneurs, and covered major small business events such as the Small Business Expo and the Inc. 500|5000 conference. He is also a successful entrepreneur himself, having started and grown several small businesses in different industries.