4 Quick Tips To Avoid or Finance A Wrongful Termination Suit

Wrongful termination suits typically occur when an employee feels their firing was unjust. We will cover 2 of the most prevalent reasons employers are sued for wrongful termination as well as 4 quick tips to mitigate the loss.

The first is when terms in the employee handbook alter the “at will status” of employment. The “at will status” refers to the fact that the employer/employee relationship can be terminated by either side at any time and for any reason. You can read more about it at the New York State Department of Labor’s website. Ultimately all that matters is what you put in writing. So if an employee feels the handbook implied a contract he or she may have grounds to sue. This brings us to our first tip:

Tip 1: Be careful of what you write in your employee handbook. Feature a clear disclaimer statement, stating the employer’s intention that the policies are not intended to alter the at will employment relationship.
 

Tip 2: Once your policies are written follow them precisely.

The second reason suits typically occur is because employees feel that their employers did not adhere to the “good faith” exception. This rule states that once an agreement of employment is made the employee must be given a reasonable amount of time to perform up to expectations. An example of a wrongful termination would be if Bob is from New York and accepted a job in Florida. He moved there just to find out that his position was filled because the company found a better candidate. Here the company would most likely be in the wrong due to the good faith exception, and would likely face a suit from Bob.

Tip 3: Once a definite offer is made and accepted, give your employee a reasonable  amount of time before making a decision to let them go.
The good faith exception depends on the situation so there is no clear answer for the amount of time before an employee contract can be terminated.

Tip 4: Purchase Employer’s Professional Liability Insurance or E.P.L.I. to help defray the cost to defend your company if a suit is brought against your company. The premiums are very reasonable, and can be a huge net income loss saver for many small to mid sized business owners. According to Richard Landau of Jackson, Lewis LLP, a noted labor relations defense attorney located in White Plains N.Y. the vast amount of cost for these law suits are defense related. When a small business purchases the additional employers professional liability coverage the legal expense which would otherwise be paid from either cash reserves or current cash flow is then paid for by the insurance company. Some insurance companies like The Hartford can include it on many of their Spectrum Class Insurance products which were designed for the small business owner. If the employee prevails in the litigation quite often the insurance carrier will also pay the court imposed judgement. That said over 90% of these types of law suits never see a courtroom according to Richard Landau. Usually a settlement is arrived at before an expensive trial commences.

We hope you found this information helpful. If you have any questions or would like a quick quote on how much Employers Practice Liability Insurance would cost your business please call or contact one of our Risk Advisors at Metropolitan Risk Advisory.