Protecting Employers from Discharged Employees

“Employees are your biggest asset.” A simple quote that has been repeated by employers for decades, and to this day holds true. However, as big of an asset an employee can be, they can also be the employer’s biggest liability. There will come a point for every business owner where they are not satisfied with their staff. How one goes about handling the matter can prove to be invaluable. Having an employee leave on bad terms can potentially cost an employer in the future by way of frivolous lawsuits, wrongful termination threats, slander, social media defamation, directly competing, etc. Discharged employees can make claims that their former employer harassed them, terminated them as retaliation, or discriminated against them for unlawful employment practices.

Although Michigan is an “at-will” state, meaning an employer does not need to have a reason to terminate an employee, employers should still be mindful of a few points when discharging an employee because it is always easier to defend a termination when they are justified and backed by a legitimate business reason. Examples of a legitimate discharge are employee misconduct, theft, diminished productivity, financial, violation of company policies, etc.

To ensure an employer is taking the protective steps, below are a few questions every employer should ask themselves, and should answer truthfully:

  1. Is there a legitimate reason for the termination?
    Before terminating an employee, the employer should consult with their attorney and discuss the reasons for termination, and the proper approach in informing the employee. Often times the reasons employers use to justify termination can be handled by other means, such as temporary suspension without pay, putting the employee on an improvement plan, etc.  

  2. Has the employer maintained proper documentation?
    It is strongly advised for every employer to maintain proper employee personnel files. They become vital at times of termination. One of the first documents asked in any employment termination suit is a copy of the employee’s file. By having sound documentation it can be the difference of justifying a termination or being accused of wrongful termination.

  3. Is the termination of said employee inconsistent with the company’s previous actions?
    If the discharged employee recently received a raise, promotion, or favorable performance evaluation, only to be followed up by a termination letter, there should be a clear and justified explanation on the termination.

  4. Is the employer following the company policy for termination?
    If the employer carries an employment manual or a company handbook, often times the procedure of termination and reasons for termination are listed in the manual. It is critical for the employer to follow the steps laid out to avoid allegations of failing to comply.

Consulting with your legal team before terminating an employee is always strongly advised. That fifteen-minute conversation can prove to save future headaches.

JKY Legal Group, P.C.
(517) 381 - 2663
Adil Daudi is an Attorney atJKY Legal Group, P.C., focusing primarily in Business Law, Health Care, and Estate Planning. Mr. Daudi has experience in a wide range of business related transactions, including business formation, buy/sell agreements, employment agreements and the necessary corporate documents for protection.