When terminating an employee, the employer needs to exercise caution while adhering to established protocols and laws. An illegally fired employee may file a claim or lawsuit against the company, and the company may face legal and financial consequences. Employers must avoid the many illegal reasons to fire someone.
What Is At-Will Employment?
Every state, except Montana, permits employment-at-will, also known as at-will employment. An employer or employee can end employment at any time for any legal reason or no reason at all. However, at-will employment does not apply to employees who work with a signed contract, under a union or in the public sector.
A signed employment contract typically replaces at-will employment. The employment contract governs the employment relationship and specifies grounds for termination.
What Is Wrongful Termination?
When you fire an employee for an illegal reason, it is called wrongful termination. It means you have violated laws, employee rights, contractual agreements or public policy in the termination. As a result, an employee may file a claim or lawsuit against the employer. This damages the employer’s reputation and may result in legal and financial penalties if proven.
Federal and State Laws
Whether a firing is legal or illegal depends on federal, state and local laws. Employment laws are enforced by the U.S. Department of Labor (DOL) and the Equal Employment Opportunity Commission (EEOC).
Equal Pay Act of 1963: The EPA protects against wage discrimination based on sex. Inequality in pay between people of different sexes applies to all forms of compensation.
Americans with Disabilities Act: The ADA protects people with disabilities from discrimination. The ADA covers a wide range of physical and mental impairments.
Other federal laws that apply when terminating employees include:
The Immigrant and Employee Rights Section: The IER enforces and prohibits citizenship status discrimination, national origin discrimination, unfair documentary practices, and retaliation or intimidation.
Family and Medical Leave Act: The FMLA allows “eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons with continuation of group health insurance coverage under the same terms and conditions as if the employee had not taken leave.” This means you cannot fire an employee for taking leave under the FMLA.
Pregnant Workers Fairness Act: Under the PWFA, employers are required to provide reasonable accommodations to employees for pregnancy, childbirth and related medical conditions. You cannot discriminate against or fire a worker for being pregnant.
The Occupational Safety and Health Act: The OSH Act requires employers to provide a safe and healthy workplace. It protects employees from all forms of retaliation, including firing for reporting unsafe workplaces.
In addition to federal laws, consult the employment laws for your state as well as laws governed by local jurisdictions. From minimum wage to severance and final paychecks, there are many state-specific employment laws. For example, New York requires discharged employees to receive all remaining wages no later than the next regular pay date. On the other hand, Florida does not specify when former employees should receive their final paycheck. The majority of states do have laws governing final paychecks.
“Some states, like California, recognize an implied covenant of good faith and fair dealing in employment relationships. Under this exception, an employer typically may not terminate an employee in bad faith,” reports Cornell Law School.
Legal Reasons To Fire an Employee
Legal reasons for involuntary terminations include incompetence, insubordination, poor attendance, violating confidentiality, criminal behavior, harassment, physical violence, damaging property, substance abuse, and other misconduct. Incompetence includes poor performance after a series of warnings. Examples of issues related to insubordination are refusing to follow company rules and dishonest behavior. Misconduct includes things like spying for a competitor, fraud or misusing company resources.
Employers should document employee infractions and provide a termination of employment letter. In termination meetings, employers should be respectful and honest about the real reason for termination. With proper advanced planning, effective communication, adhering to all laws, maintaining confidentiality, and utilizing a departing employee checklist, employers can minimize the risks associated with involuntary terminations. Help protect yourself from litigation with the proper termination tips from Thomson Reuters.
Illegal Reasons To Fire an Employee
There are many illegal reasons to fire someone. Some reasons may be easily understood, such as discriminating against protected classes. Other reasons, like retaliation and whistleblowing, may not be fully understood. Employers should never fire employees for improper or illegal reasons, which will leave them vulnerable to litigation.
Discrimination: “It is illegal to discriminate against someone (applicant or employee) because of that person’s race, color, religion, sex (including transgender status, sexual orientation, and pregnancy), national origin, age (40 or older), disability or genetic information,” states the EEOC.
Whistleblowing: The National Whistleblower Center explains that “a whistleblower is someone who reports waste, fraud, abuse, corruption, or dangers to public health and safety to someone who is in the position to rectify the wrongdoing.” Rules, procedures and protection for whistleblowers comes from the many existing federal, state and local whistleblower laws. However, since these rules can vary, it is important for employees to consult an attorney before whistleblowing.
Retaliation: An employee who reports or refuses to participate in unsafe or illegal practices is legally protected from retaliation. Employees cannot be fired for whistleblowing, filing complaints, reporting harassment or participating in legal investigations.
Breach of contract: If the firing is done in a way that contradicts the employment contract, then it is a breach of contract that could be considered a wrongful termination.
Violating labor laws: If the termination does not follow proper procedures and violates labor laws, then it is an illegal firing.
Requests for reasonable accommodations: The ADA provides protection for people with disabilities and permits reasonable accommodations. You cannot fire an employee for requesting reasonable accommodations. However, employers can deem some accommodations as unreasonable and may not approve them. If the employee is unable to perform the job with reasonable accommodations, it could be grounds for a legal termination.
Grievances: Employees have the right to report grievances and make complaints without fear of retaliation.
Medical conditions: It is illegal to fire employees because of medical conditions if they can perform their jobs with reasonable accommodations.
FMLA leave: Employers cannot fire employees for taking leave in accordance with the FMLA.
Civic duties: Employees have the right to take time off to vote and attend jury duty without fears of being fired. The Jury Systems Improvement Act (JSIA) provides protection from firing for federal jury duty. State jury duty laws provide protection for state or local jury duty. The state laws vary with regards to pay, PTO and the number of days for jury duty.
Military service: The Uniformed Services Employment and Reemployment Rights Act (USERRA) is a federal law that protects employees from discrimination, including termination, because of military service, deployments and required training. When returning from military service, employees have the right to be reinstated in their previous position or a similar position.
Lie detector tests: The Employee Polygraph Protection Act (EPPA) restricts the use of lie detector tests by most private employers. Unless a specific exemption exists, employees cannot be fired solely for refusing to take a lie detector test or based on the results if a test is taken. When lie detector tests are permitted, there are strict rules governing them.
Consequences of Illegally Firing an Employee
Wrongful terminations can have many legal and financial consequences when proven. Employers may face litigation, fines and penalties. Proper documentation by the employer and evidence provided by the employee significantly impact the outcome. Unproven accusations, government investigations, and lawsuits damage the employer’s reputation, both externally and internally.
According to Case IQ, “each legal claim an employee brings against an employer in court could cost the company between $50,000 and $250,000 in legal fees and potential settlement payouts.” Additionally, the fallout from a company’s damaged reputation may result in decreased sales and stock value.
What To Do if You Were Illegally Fired
The course of action to take when wrongfully terminated depends on why you were terminated. Your first step may be to consult an attorney and/or report it to the appropriate agency.
Report discrimination to the EEOC. You must do this before suing your employer.
For exercising your legal rights under state labor laws, report it to your state’s labor office.
For exercising your legal rights related to federal labor laws, file a complaint with the Department of Labor, either the federal office or your local Wage and Hour Division.
Consult an attorney before terminating an employee to help avoid wrongful terminations. Follow federal, state and local laws and avoid illegal reasons to fire someone. With proper planning, documentation, and compliance, businesses can protect themselves from the widespread fallout associated with wrongful termination claims.
Latest resources
Take a look at our news on Human Resources
Discover the featured news related to Business Loans. Stay in the know about our offerings and industry insights.
Table of content
Share
