If an employee is successful at proving constructive discharge, your business may face a five- to six-figure lawsuit. Other than preventing costly litigation, avoiding wrongful termination lawsuits is important because it’s the right thing to do. By preventing and investigating harassment and discrimination in your workplace, you create an environment that is safe for everyone. As a result of your efforts, you can also decrease the odds of having and losing a wrongful termination lawsuit. 

What Is Constructive Discharge? 

In a landmark case involving the National Labor Relations Board (NLRB), constructive discharge was first created as a legal doctrine. Back then, employers in the 1930s used harassment and intimidation to get employees to quit rather than having to fire them. In the 1938 Foods v. NLRB case before the Supreme Court, this method of effectively firing workers was deemed illegal.

In a Mission to Grow podcast on avoiding wrongful termination lawsuits, Brian J. Shenker, principal in the Long Island, New York, office of Jackson Lewis P.C., talked about constructive discharge in the United States today. According to Shenker, “The Supreme Court has defined this doctrine as an employee’s reasonable decision to resign because of unendurable working conditions so that it’s equated with a formal discharge by the employer.” 

The Equal Employment Opportunity Commission (EEOC) defines a constructive discharge to be any time when you’re effectively forcing an employee to leave by making work conditions so intolerable that they can’t stay. 

The Main Requirements for Proving Constructive Discharge 

To fit the doctrine of constructive discharge, three key facts must be true. 

• A reasonable person would consider the actions hostile. 
• Discriminatory actions involving a protected class led to a hostile work environment.
• The employee’s involuntary resignation was directly caused by the intolerable working conditions.

If you have reporting policies and procedures for managing discrimination complaints, courts will generally expect employees to take advantage of these policies before they are allowed to pursue legal action. 

What You Can Do To Avoid Wrongful Termination Lawsuits 

Fortunately, there are ways to prevent wrongful termination lawsuits. The right documentation and processes can help you disprove wrongful termination lawsuits if they do occur. Because a typical wrongful termination lawsuit can easily cost your company five- to six-figure sums, prevention should always be the primary goal. 

Create Good HR Practices 

Your HR practices are your first line of defense against a wrongful termination case. Training workers on reporting measures and giving them reporting options is a good first step. 

Good HR practices are consistent HR practices. You should treat each worker the same way for promotions, demotions, performance improvement plans (PIPS), and raises. If someone does complain in the future, you must be able to demonstrate that your company treats every person the same way and immediately responds to any complaints. 

Train Managers on Reporting and Preventing Harassment

In many cases, managers are a part of the problem when it comes to wrongful termination and harassment. Because of this, it’s important to train your managers on discrimination and harassment. They should be taught how to spot discrimination and that they are required to report any instances they see. Then, managers should be instructed on how the reporting process works.

Develop a Complaint Process 

In general, courts expect employees to take advantage of any complaint procedures or reporting mechanisms that are available to them before filing a lawsuit. By creating complaint procedures and informing your workers about them, you can learn about discrimination issues and wrongful termination issues before they lead to a court case.

Update Your Employee Manual

Adding anti-discrimination policies and complaint reporting procedures to your employee manual isn’t just a good way to show employees that harassment and discrimination are prohibited. These policies can also help you document your company’s measures to combat discrimination. If there is a wrongful termination lawsuit based on constructive discharge, your employee manual will be a part of the documentation you use in your case.

Investigate Every Complaint

Next, your company needs to have procedures in place for investigating every complaint you receive. Even if you are aware before the investigation that the complaint doesn’t involve harassment, you still must investigate the matter.

Additionally, it’s important to remember something that Shenker pointed out, “What do we do when we get a complaint? We document it and investigate. And one part of that that shouldn’t be forgotten about is how we protect the person who made a complaint.” To ensure a fair workplace and effective anti-discrimination policies, all workers must feel like they will be protected if they come forward with a complaint. 

Discipline and Document With Care

It’s important to be proactive about documenting disciplinary actions. However, you should also remember that PIPs aren’t the best option in every case. If you’re giving a PIP with performance goals and expecting that you’ll have to fire the employee at the end of the PIP’s duration, you’re likely better off just laying off the worker.

Don’t Try To Get Out of Unemployment Costs

Sometimes, employers will try to save money on unemployment costs by not firing an underperforming employee. Instead, the employer will make the worker’s day-to-day life so intolerable that they decide to leave. 

This type of behavior can quickly lay the groundwork for a constructive termination case. Risking the costs of a lawsuit isn’t worth the small amount employers might save on unemployment insurance taxes. 

Keep Employment Records

Employment records, like PIPS, email chains, correspondence, and meeting notes, are an important way to prove your case. If you are unsuccessful at preventing a wrongful termination lawsuit, these documents will help you demonstrate performance and behavior issues. Additionally, you’ll want to have documentation of company policies that address harassment and discrimination complaints. 

Records from other employees can also be effective in the courtroom. If you can demonstrate that a similar employee was treated the same way following behavior or performance issues, it will bolster your case.

What Happens If the Employee Can Prove Wrongful Termination? 

If an employee is successful in proving their wrongful termination case, you’ll end up paying more than your own attorney’s fees. You may also be required to pay the following costs. 

Front and Back Pay: Employers may have to compensate for lost wages or future earnings.

Lost Benefits: The company may have to compensate the plaintiff for lost health or retirement benefits.

Additional Costs: The employer may have to pay for other costs, like attorney fees and job-hunting expenses. 

Pain and Suffering: The court may decide to compensate the employee for their pain and suffering. 

Punitive Damages: If the treatment was particularly harsh, the company may have to pay punitive damages to the plaintiff.

What Are the Other Kinds of Wrongful Termination Lawsuits? 

While we’ve largely focused on wrongful termination lawsuits that focus on constructive dismissal, wrongful termination can occur due to many other causes as well. The following are just a few of the potential reasons why these cases happen.

– Retaliation against an employee

– Firing a worker for exercising their rights, such as their leave rights under the Family and Medical Leave Act (FMLA) – Terminating a worker who refused to do something illegal

– Firing a whistleblower 

In all these cases, consistent HR processes, good documentation, and a fair investigation can help you avoid a wrongful termination lawsuit. Following the law protects your company from litigation and ensures a safe, supportive working environment.

Prevent Wrongful Termination Lawsuits in Your Workplace

Through the right HR practices, you can prevent wrongful termination lawsuits from costing your company money. To learn more about how you can improve your HR practices, reach out to Asure’s team of small business HR experts today.