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Layoffs Likely? How to Avoid Wrongful Termination Claims

By any measure, it’s a rough economy out there, and inevitably there will be more layoffs , an emotional and complicated process, no less so during turbulent financial times.

So what do employers need to know to protect themselves from wrongful termination lawsuits before they are forced to lay off members of their work force?

The truth is that no one procedure guarantees businesses freedom from exposure to wrongful discharge liability or, even in the absence of liability, prevention of the filing of a wrongful termination action by an employee. But there are a number of things that can be done to mitigate potential issues.

Businesses should have all new employees sign agreements at the very beginning of employment that protects their status as an at-will employee.

Standardize termination procedures in a way that maximizes protection from wrongful termination suits, and ensures that the procedures are consistently applied.

Train supervisors thoroughly in the area of protecting the at-will nature of employment and be sure they follow company policies, especially related to terminations and layoffs.

If your company is considering a layoff, be sure to establish objective, nondiscriminatory criteria for selecting the employees to let go.

If termination of an employee becomes necessary, do not make the employee’s situation so miserable that he or she resigns just to get away.

If an employee feels singled out during a layoff or was unaware of performance issues before being terminated, they may also file a suit for wrongful discharge in violation of an express state or federal government public policy.

Further, be careful and consult with legal counsel before laying off employees with actual or perceived disabilities, those who have just returned from a protective leave of absence, and even those who have reported inappropriate activity such as harassment or safety violations. These employees may have or believe they have more rights than other employees. And angry employees or ones who feel wronged are more likely to sue.

In addition, the federal Worker Adjustment and Retraining Notification Act and comparable state law require businesses to provide written notice to employees before laying off a significant portion of their work force.

Unfortunately, there are literally layers of laws that deal with layoffs and terminations, which make navigating this area of employment law a potential minefield.

But if employers act in good faith, make their policies clear and offer ample notification of pending action, the likelihood of a wrongful termination lawsuit succeeding is minimal.


Jessica Hawthorne is an employment attorney at the California Chamber of Commerce. More information on terminating employment and many other workplace issues can be found at HRCalifornia.com.

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