How Wrongful Termination Erodes Your Culture and Bottom Line
More than 40 years after attorney Lin Farley brought the term “sexual harassment” to the public consciousness, many people who have experienced harassment are finally getting the opportunity to share their stories and have their voices heard. But the #MeToo and #TimesUp movements aren’t just about catharsis and justice on an individual scale. In 2019, we’re witnessing a broad reckoning about what it means to have and wield power, and a shift in the way organizations across industries operate.
It’s a lot to process. If you’re a business leader taking another look at your organization and considering how to protect your team from harassment, you may find yourself in a tough and emotionally fraught situation. You’re likely to come across areas, patterns, and people you need to address—without a clear plan as to how to address them. You may feel unsure and overwhelmed, pulled in multiple directions by divergent concerns and stakeholders.
As a leader, you’ll want to take actions that swiftly and appropriately address harassment, without…
- alienating your workforce,
- implementing burdensome new policies and processes,
- harming your brand’s reputation and industry position,
or - opening yourself up to future litigation.
That last one is especially important. Indeed, retaliation against wrongful termination is one of the biggest areas of legal claims reported to the EEOC.
So, let’s help you tighten up one of your greatest areas of risk, so you can focus on running your business and keeping your most valuable resource—your employees—happy. In the upcoming weeks we’ll be outlining best practices, as well as issues to look out for, when it comes to discipline and termination. Before we dive in, let’s start at square one:
What Is Wrongful Termination?
To be wrongfully terminated is to be fired illegally. It may involve a violation of federal or state anti-discrimination laws, or a contractual breach. Every legal interpretation of wrongful termination, however, can be considered under a single, broad definition: an employee was terminated for reasons that go against federal, state, or tribunal laws.
Courts have upheld the following as defensible bases for a wrongful termination claim:
- The employer breached the employment contract.
- Constructive discharge, i.e. the employee left in response to a hostile work environment.
- The employer discriminated against the employee.
- The employer terminated the employee for refusing to commit an illegal act.
- The termination violates company policy.
- The termination violates public policy.
- The employer terminated the employee for whistleblowing.
The Impact of Wrongful Termination
Issues related to wrongful termination—including the reluctance to terminate problematic employees for fear of provoking a retaliation claim—are a major drain on any organization.
Wrongful Termination Claims eat up Time
For starters, claims consume a great deal of time. According to attorneys experienced in the field of labor and employment law, it can take up to three years to resolve a wrongful termination claim.
Wrongful Termination Claims Are Expensive
And then there’s your bottom line. Awards in wrongful termination suits range between $1 and $43 million, with a median of $134,000 and a mean of $797,000. Even if you ultimately prevail over a claim, there are still the administrative costs, attorneys’ fees, and lost revenue associated with a legal dispute.
Wrongful Termination Claims Take A Toll On Your Culture
Finally, and perhaps most important, there’s the impact on your culture. A wrongful termination or retaliation case can erode employees’ trust in management and engagement at work. The same goes for potential candidates; keep in mind that approximately 90% of job seekers say it’s important to work for companies that embrace transparency, according to a Glassdoor survey.
But an employer can’t afford to do nothing about difficult employees. Bad workers eat away at organizational culture over time, too. They also increase the probability of criminal behavior. As business researchers Stephen Dimmock and William C. Gerken write in a recent article for Harvard Business Review (emphasis added):
“Our research on the contagiousness of employee fraud tells us that even your most honest employees become more likely to commit misconduct if they work alongside a dishonest individual. And while it would be nice to think that the honest employees would prompt the dishonest employees to better choices, that’s rarely the case. Among co-workers, it appears easier to learn bad behavior than good. For managers, it is important to realize that the costs of a problematic employee go beyond the direct effects of that employee’s actions—bad behaviors of one employee spill over into the behaviors of other employees through peer effects. By under-appreciating these spillover effects, a few malignant employees can infect an otherwise healthy corporate culture.“
Termination Initiatives: What To Do
Seeing as you can’t risk doing nothing about badly behaving employees, here’s what employers should do in order to reduce their risk of post-termination litigation:
- Take a systematic approach to addressing discipline and termination. Don’t leave it up to a single person to address issues of discipline and termination alone. Use a system to track disciplinary procedures and terminations across your organization’s departments and locations. The system should be overseen by your leadership team and adhere to your organizational policy.
- Build a repeatable process. While each workplace incident prompting the discipline or termination of an employee is unique, your organization’s approach to discipline and termination should follow the same basic pattern and structure. Consistency shows courts and regulators that you give workers equal treatment regardless of each employee’s identifying characteristics or the circumstances surrounding the incident.
- Document everything. We have a saying here at KPA: if it wasn’t documented, it didn’t happen. Make sure to assiduously record every interaction and decision related to an employee’s discipline or termination in as timely a manner as possible. The goal is to be able to produce a report—that is, proof of what happened—to any inquiring party, now or in the distant future.
