An employee who is terminated can make a claim that he or she was discriminated against or was otherwise wrongfully terminated. Discrimination and wrongful terminations are detestable, illegal, and properly cause employers heavy sanctions.
Unfortunately, it is relatively easy for a disgruntled employee to make a claim. So caution is important.
There are a couple of basics to know: First, most employees are employed on an “at will” basis. (Unless employees are employed pursuant to an individual contract for a specified term, or through a union contract, or have tenure rights, they are probably “at will” employees.) “At will” means that the employees may generally be terminated for any reason, at any time. There are, however, limits to a boss’s ability to fire an employee. The most significant of these limitations is that the reason cannot be discriminatory. Federal and state laws provide protection to individuals from being terminated (or from having other adverse job actions taken against them) on the basis of age (persons 40 years old or more), race, sex (or gender, and this includes discrimination based on pregnancy), sexual orientation, color, religion, national origin, and disability. There are other laws that protect employees. For example, if the termination violates public policy or if the employee is terminated because of collective action, it may be illegal.
Second, an employer is prudent to proceed cautiously before firing an employee. This means first and foremost that you should check in with your lawyer before taking any action. Big companies have experienced and skilled human resources departments that have the resources to analyze and process employment decisions; smaller and medium-sized businesses do not have those resources in-house and should obtain guidance before acting. It is also a good idea for an employer to make it clear to its managers that the owner, and the owner alone, has the power to fire. And terminations should never be done in a hasty manner. Instead, the employer must carefully review the situation to make sure that there is a clear and reasonable basis for the termination and also considering whether the employee has any potential claims against the company. This is especially critical if the employee has expressed any concerns or complaints regarding discriminatory treatment, because a termination that follows such a complaint can easily appear to be an act of retaliation.
Third, documentation is very important. If the reason for the termination is poor performance, is there documentation, prepared contemporaneously with the performance problems? If the reason is poor attendance, have you documented that? If the reason is abuse of sick leave days, have you documented that? In addition, do you have clearly-stated policies governing these topics? Bear in mind that the law does not require that you have records of misconduct — but having those records can be great insulation against a complaint of discrimination becoming a successful suit against you.
Finally, another important element arises from the Americans with Disabilities Act and the Family Medical Leave Act. If the employee has told you anything (or if you know anything) which suggests that the employee has a disability or a medical issue affecting someone at home, that creates a burden on you to consider whether the employee is eligible for benefits under the ADA and/or the FMLA.
Bear in mind that the law does not require that you have records of misconduct — but having those records can be great insulation against a complaint of discrimination becoming a successful suit against you.