Unfortunately, employee termination is often a necessary part of running a successful business. Recent statistics show that the federal government collected $350,000,000.00 in fines in one calendar year for employment law violations and that the average settlement payment to a disgruntled employee in a wrongful termination suit was $25,000.00.
Business owners should familiarize themselves with the applicable laws and consult an attorney prior to any employee termination. This will reduce exposure to time consuming and costly litigation and allow business owners to continue doing what they do best: running and managing their business. They can also get insurance to cover them in the instance that the issue is based on an honest mistake being made, for example this insurance information explains how some laws can be difficult to decipher, leading to employers making decisions based on misinformation.
Generally, employees without an employment contract are considered at will. Employees at will can be fired by an employer at any time, for any reason or for no reason at all with no resulting liability. Conversely, these “at will” employees are free to end their employment at any time and for any reason.
To prevent subjecting yourself and your business to litigation regarding an employee termination, it is crucial that employers accurately and objectively document each employees performance issue that arises in the course of the employment. Employers should keep a personnel file on every employee and maintain documents concerning employee issues, problems, and discipline.
The failure to property document employee issues, problems, and discipline may subject the owner of a business to unexpected liability.