Firm News

Financial Impact Of Wrongful Termination On The Employer

 The top of a piece of paper with the words wrongful termination typed at the top. A pen sits on top of the paper, and a pair of glass is on the dark wood table above the paper.Wrongful termination is a contentious subject that has serious legal and financial implications for a business. Even an unproven accusation could place a company's reputation and finances in serious jeopardy. If you would like to learn more about the possible issues surrounding this issue, reach out to the labor and employment attorneys with Schwab & Gasparini. Call their New York offices at (315) 422-1333 (Syracuse), (518) 591-4664 (Albany), or (914) 304-4353 (White Plains and Hudson Valley) to schedule a consultation. What Are the Consequences of Unlawful Termination?

No employee is going to be an ideal fit for every company. When an employee’s work or conduct while on the job does not meet the documented standards of a workplace established in their employment contract and employee handbook, the business may have the right to fire the worker. However, there are circumstances in which employees are let go for illegal reasons. Wrongful termination is any termination that violates any federal, state, or local labor law. 

The following are common examples of illegal termination, according to

  • Termination based on an employee's race, gender, age, religion, disability, national origin, or other protected characteristics
  • Retaliation for reporting workplace harassment, discrimination, safety violations, or participating in labor union activities
  • Termination that does not follow the terms and conditions of employment (frequently these are enumerated in a contract or onboarding document)
  • Dismissal for an employee’s refusal to participate in illegal activities
  • Retaliation for reporting illegal or unethical activities within the organization
  • Any termination that fails to provide adequate notice, conduct proper investigations, or afford employees their rights 
  • Constructive discharge by creating a hostile or intolerable work environment to force an employee to resign rather than directly terminating them

Employers who engage in unlawful termination could face both legal and financial consequences. Violations of labor and employment laws can result in fines, penalties, and costly litigation. In other words: Wrongful termination does not just harm the affected employees; it can damage a company's reputation and its bottom line.

What Are the Odds of Winning a Wrongful Termination Lawsuit?

The likelihood of succeeding in a wrongful termination lawsuit relies on several factors. Each case is unique, and results can vary. However, as always, evidence is the cornerstone of any claim. If the former employee claiming a grievance has substantial evidence, they have a more favorable chance of winning the case. Some of this evidence can include:

  • Documents
  • Emails
  • Witness testimonies
  • Records that support their termination claims

The importance of proper documentation cannot be overstated. All employers should maintain records of employee performance, conduct, and disciplinary actions as well as the employment policies for those things. In the absence of evidence backing up the employer's claims that the termination was legal, a judge or jury could decide in favor of the plaintiff.

What Is the Negative Impact of Termination?

Along with the immediate legal and financial repercussions, wrongful termination lawsuits can negatively impact employers in a variety of ways. When a company is embroiled in a workplace lawsuit, its reputation can suffer with both the public and its (remaining) employees. No matter the industry, public perception plays a role in the success of any business. Illegal firings can damage a company's image, making it less attractive to potential employees and customers.

Additionally, wrongful termination can have an adverse effect on employee morale and productivity. When employees witness their colleagues being unfairly dismissed, the employer’s actions can decrease morale and create a toxic work environment. Productivity may also plummet. Current employees may worry about job security and satisfaction instead of focusing on the tasks for which they are responsible. If you are concerned about these potential consequences of a wrongful termination lawsuit, reach out to Schwab & Gasparini today.

What Happens When an Employer Terminates an Employee and Lies About It?

In some instances, employers may fabricate justifications for an employee's dismissal. This type of unscrupulous behavior creates both legal and financial consequences. When employers falsify the reasons behind an employee's termination, they expose themselves to legal action for misrepresentation. They could face a number of potential consequences.

Wrongful Termination Lawsuits

When an employee believes they have been wrongfully terminated and knows they have the evidence to substantiate their claims, they may file a wrongful termination lawsuit against the employer. The employer may be sued for damages, which can include back pay, front pay (pay that would have been earned had the individual remained employed), emotional distress, and even punitive damages in some cases.

Breach of Contract Claims

If the employee had an employment contract specifying the terms of their employment or outlining reasons for termination, providing false reasons can lead to a breach of contract claim. Employers may be required to compensate the employee for any damages resulting from the breach.

Employment Discrimination Claims

If the reasons for termination are related to an employee’s protected characteristics such as age, race, gender, the employer may face discrimination claims. The employer may be subject to fines and penalties for violating state and federal anti-discrimination laws in these cases.

Defamation Lawsuits

When false and damaging information is provided during the termination, it can lead to defamation claims. An employee may sue if they can demonstrate that the reasons given for their termination were false and have caused harm to their reputation.

Government Investigations

If an employee believes they were wrongfully terminated, particularly for discriminatory reasons, they may file a written complaint with one or more state or federal agencies. The Equal Employment Opportunity Commission (EEOC) or the New York Department of Labor may investigate the employer. These investigations can lead to fines and penalties if wrongdoing is substantiated.

Compliance Protects Employers

Any of the above scenarios can result in detrimental financial consequences for the employer. When adhering to any labor law, transparency is vital. All the reasons for termination should be well-documented and valid. Otherwise, a business may find itself facing litigation. 

Do You Have Other Questions Regarding Wrongful Termination?

A claim of wrongful termination can carry serious negative implications for employers. Violating employment laws and engaging in unlawful dismissal can lead to legal consequences, financial burdens, and reputational damage. If you have been accused of illegally terminating an employee, you may want to talk to an experienced business litigation and employer defense attorney about your legal options. Consider scheduling a consultation with one of the experienced labor and employment attorneys at Schwab & Gasparini. Call (315) 422-1333 (Syracuse), (518) 591-4664 (Albany), or (914)304-4353 (White Plains and Hudson Valley) to schedule a consultation.

Sun Feb 11 2024, 12:00am