How to Stay Out of the Doghouse:  How to Handle Involuntary Terminations Correctly

Laura L. Sullivan, Sam Houston State University, lls003@shsu.edu
Anthony F. Sullivan, Boyar & Miller, asullivan@boyarMiller.com
Charles R. B. Stowe, Sam Houston State University, fin_crs@shsu.edu

Abstract

One of the least pleasant aspects of being in business or in a management position is the chore of terminating an employee.  For the employee, the experience may be comparable to a death in the family or to a divorce in terms of stress.  For the employer, the termination of an employee is fraught with potential liability and is an event for which there is little training offered in most business schools.  However, termination of employees due to economic setbacks, poor performance or worse employee impropriety or bad behavior is a reality that managers must be aware of.  This paper surveys the legal landscape of employee termination to provide present and future managers with an understanding of how to minimize their legal liability.
 

The Model Employment Termination Act defines "good cause" as either the employee's own inadequate or improper conduct or the economic or institutional goals of the employer such as the need to reorganize, discontinue functions, or change the size and character of its work force.  Such determinations must be made in "good faith."  Enforcement of the Model Employment Termination Act is limited to arbitration and judicial review of arbitration awards is only allowed for various abuses of the description or office of the arbitrators.   Employees are protected for filing a complaint, giving testimony, or lawfully participating in proceedings under the act and any retaliation by the employer can result in punitive damages.  If an arbitrator finds an employer guilty of violating the act by terminating an employee for other than "good cause", the arbitrator may award reinstatement, back pay, lost benefits or in the alternative a lump-sum severance payment plus attorneys fees.  However, the employee is not entitled to recovery for pain and suffering, emotional distress, defamation, fraud, punitive damages compensatory damages or any other monetary award.[2]  Only one state has passed the Model Employment Termination Act and that is Montana, a heavily unionized state.[3]  While legal advocates like Stanley Fischer passionately argue for the enactment of the statute, there has been little enthusiasm for the model act.  The Act creates new employee rights without offering any increase in labor productivity, potentially increases the expense of making rapid changes in personnel, and heightens potential conflict between employers and employees. 

In all but one state, it is not illegal to terminate an employee for no particular cause.  However, there are “illegal” reasons for discharge that have come about either through the common law or through specific statutes.  Without going into a treatise on legal theories, it is helpful to understand that in the US, employment is considered a contractual right and relationship.  On the other hand, there has been an attempt to curtail or redefine by statute the relationship between an employer and an employee.

As compared with France or Germany which greatly restrict employer discretion in terminating employees which has produced a workforce almost immune from economic realities but has resulted in very high unemployment, the United States has enjoyed high employment rates and positive economic growth.  The liquidity of the labor force and incentives to move where the jobs and opportunities are has enabled the US economy to reinvent itself even as competition from developing nations increases.  Many argue that one of the many reasons that the United States has a favorable climate for businesses is its long standing devotion to the doctrine of employment at-will.  Generally speaking, the doctrine of employment at-will states that any employment relationship not governed by contract or statutory provision is terminable at any time by either the employer or the employee for any reason, or even for no reason at all.[4]  Over time, however, the employment at will doctrine has been “watered down” by multiple exceptions found under federal and state statutory law and common law.[5]  In 49 of the 50 states, employment at will is still the default rule, unless one of the following statutory or common law exceptions applies.  Using Texas as an example, one can see that the modifications to the termination at will doctrine have basically not changed the overall reality that an employer is free to make changes in personnel in response to competitive market realities and that private employment is still basically a contractual relationship and not an earned property right which would require more formal criteria for alteration of property rights. 

State Statutory Exceptions

Texas Commission on Human Rights Act (“TCHRA”)

Under the TCHRA, it is unlawful for an employer to discharge or otherwise discriminate against an employee or applicant for employment, whether for compensation or terms of employment, due to race, color, disability, religion, sex, national origin or age.[6]  All states have similar laws.

Workers’ Compensation Retaliation

The Labor Code also prohibits an employer from either terminating or otherwise discriminating against an employee after the employee, in good faith, institutes a proceeding under the Act.[7]  If an employee sues under this provision, she must show that the employer’s discriminatory conduct would not have occurred “but for” her seeking protection under the Act.[8]  Therefore, the employee does not have to show that instituting a proceeding under the Act was not the sole reason for the discriminatory conduct, but instead must show the causal connection between her exercise of statutory rights and the employer’s discriminatory conduct.[9]

Jury Duty

Employers are also prohibited by statute from firing an employee because the employee serves as a juror.[10]  Employers, however, are not required to pay the employee her wages while she is out for jury duty.

Voting Rights

Another statutory exception to the employment at will doctrine is contained in the Texas Election Code.  Under this statute, an employer is prohibited from preventing an employee from attending a precinct convention or a county, district or state convention as a delegate or retaliating against an employee for doing so.[11]  Violating this provision results in a Class C misdemeanor.[12]  The statute also makes it unlawful for an employer to retaliate against an employee for voting for a particular candidate or measure, or against an employee who refuses to disclose how she voted.[13]  Violation of this statute is third degree felony.[14]  Finally, the statute requires that employers give paid time off to employees who wish to vote unless the polls are open on Election Day for two consecutive hours outside of the employee’s regular working hours.[15] Protection for voting is also common in other states. 

Military Status

The Texas Government Code protests employees in both the public and private sector who have been called up to active duty.  Section 431.005 provides that public sector employees are entitled to leave for military training and during such leave; the employee must “not be subjected to loss of time, efficiency rating, or vacation time, personal time, sick leave.”  Similarly, Section 431.006 prevents private employers from terminating an employee who is called to active duty.  Further, the statute provides that upon the employee’s return, she is entitled to return to the same position held when she was called to active duty provided that she gave written notice of intent to return to employment.  There are also federal laws dealing with the protection of reservists who may be called to duty cited below. 

Employee’s Compliance with a Subpoena

“An employer may not discharge, discipline or penalize in any manner an employee because the employee complies with a valid subpoena to appear in a civil, criminal, legislative or administrative hearing.”[16]  In fact, if the subpoena is issued by a court, the employer who violates this statute can be held in contempt.[17]  If the subpoena is issued by a legislative committee or state agency, the penalty for a violation is a monetary fine, not to exceed $500.00.[18]  An employee who has been damaged because of an employer’s violation of this statute can recover up to six (6) months salary, plus reasonable attorneys’ fees.[19]

Union Membership

An employer cannot deny an applicant employment based on the applicant’s membership or non-membership in a labor union.[20]  This statute covers may of the same issues covered under the Federal National Labor Relations Act cited below.

Federal Statutory Exceptions

Title VII

Title VII of the Civil Rights Act of 1964, as amended,[21] applies only to employers with 15 or more employees.  It prohibits these employers from discriminating on the basis of race, sex, pregnancy, national origin, and religion.  The breadth of this law encompasses harassment in the workplace.  Under the Civil Rights Act of 1991, Congress extended Title VII to Americans employed in foreign countries by U.S. firms.  Recent rulings by the U.S. Supreme Court have curtailed the application of Title VII internationally.[22]

The Age Discrimination in Employment Act (“ADEA”)

The ADEA protects employees or applicants for employment over the age of 40 from discrimination.[23]   The U.S. Supreme Court has held that the "disparate-impact" theory of recovery as espoused in Griggs v. Duke Power Co., 401 U.S. 424 (1971), is now available under the ADEA.[24]  The fact that two employees are both over the age of 40 when one of them is promoted does not eliminate a cause of action under ADEA.[25]  This federal statute gives employees the right to sue an employer for age discrimination in employment actions including, but not limited to hiring, termination, promotion, and pay raises.[26]

The Americans with Disabilities Act (“ADA”)

The ADA protects not only employees, but also job applicants in all terms, conditions, benefits and privileges of employment.[27] An employer is required to reasonably accommodate the individual with a disability unless the accommodation creates an undue hardship on the employer.[28]  This controversial law was vaguely worded which has left appellate courts with the task of dealing with many legal issues such as “what constitutes a disability?” and “what constitutes a reasonable accommodation?” as well as a host of other issues.  While there is a large body of appellate court opinions, the controversy over the intent and actual impact of the law remains controversial.[29]

The Family Medical Leave Act (“FMLA”)

The FMLA applies to employers with 50 or more employees.[30]  The FMLA provides leave to employees who have worked for the current employer for 12 months and who have worked at least 1,250 hours for that employer in the previous 12 month period.[31]  Eligible employees are entitled to a maximum of 12 weeks of unpaid leave during any 12 month period for one or more of the following: (1) birth or adoption of a child or placement of a child with the employee for foster care; (2) to care for a spouse, child or parent with a serious health condition; or (3) a serious health condition of the employee that render her unable to perform her job.[32]  Upon return from leave, the employee is entitled to her prior position or an equivalent position with the same pay, benefits and other terms and conditions of employment.[33]  One other feature of the Act is to provide for “intermittent leave” that might be necessary for a cancer patient who is capable of working, but needs time off for periodic chemotherapy treatments.[34]

The Workers Adjustment and Retraining Notification Act (“WARN”)

WARN requires employers with 100 or more employees to give 60 days advance notice to employees affected by mass layoffs or plant closings.[35]  The term “mass layoff” is defined as a reduction in force that is not the result of a plant closing and that results in an employment loss at a single site of employment, during any 30-day period, of at least 33 percent of the employees, excluding part-time employees, or at least 50 employees.[36]  In order to prevent employers from intentionally circumventing this provision, the statute provides that employment losses for two or more groups that occur within any 90-day period can be considered in the aggregate.[37]

Uniformed Services Employment and Reemployment Rights Act (“USERRA”)

USERRA prohibits an employer from considering an employee’s past, current or future military service, duty or other obligations in any decisions related to employment.[38]  The statute provides the employee with the right to time off from work to serve in the military and protects the employee from discrimination or retaliation.[39]  Although USERRA does not require employers to pay their employees for time off, it does require that benefits are continued at the election of the employee during the employee’s leave.[40]

National Labor Relations Act

The National Labor Relations Act is the federal statute that establishes the National Labor Relations Board and its authority to interpret the act and to oversee the process of organizing labor and conducting collective bargaining.  Terminating an employee for organizing a union or for advocating collective bargaining is a violation of federal law.[41] 

Common Law Exceptions

Contracts

An employer can limit the right to terminate an employee by either oral or written contract.[42]  This usually occurs when an employee is told that she will only be terminated for “cause,” or that she may only be terminated for certain specified reasons, such as poor performance.[43]

Public Policy

The Texas Supreme Court has recognized only one very narrow public policy exception to the employment at will doctrine.[44]  An employer cannot terminate an employee for the sole reason that the employee refused to perform an illegal act that would subject her to criminal liability.[45]

Promissory Estoppel

Though rare, this cause of action is usually seen in the employment context when a job offer is suddenly withdrawn after the employee already resigned from her prior employment.[46]

Designing a Termination Plan to Mitigate Lawsuits

The essential element of any termination plan is consistency.  The employer should not only have a plan but follow it consistently.[47]  The employers past practices regarding employee infractions must be followed, if not the employer runs the risk of invalidating its written policies.  A key factor to consider in the company’s discipline plan is to determine which violations are subject to a progressive discipline plan, which is discussed in Section F, below, and which violations or acts are excluded.[48]  Acts that are excluded subject the employee to immediate termination.[49]  Such acts that may include: possessing or consuming illegal drugs, working while intoxicated or impaired, theft of company property, harassment/sexual harassment, extended unexcused absences, misrepresentation of important facts while seeking employment, violation of confidentiality agreement and gambling.[50]  It is imperative that the above listed acts are stated exclusions to the company’s progressive discipline plan.  In addition, a “catch-all” category, such as employees engaging in illegal activity or breaking federal, state or local laws while on the job can include acts that are not specifically addressed.  The plan must state that immediate termination is possible for excluded acts.

Texas courts have also adopted what is known as the “same actor inference,” which employers should use to their advantage.  Under this legal theory, there is a presumption that if the same person who fires the employee also hired the same employee, no discrimination or improper motive triggered the termination.  Employers should always keep this rule in mind and, if possible, have the same manager who hired the employee also fire the employee. Terminations are unfortunately a necessary part of management.  However, if done correctly they can minimize the company’s liability and the effect on remaining employees.

The Role of Suspensions—Why You should not Terminate Immediately

As previously discussed, some actions taken by an employee must be excluded from the company’s progressive discipline plan.[51]  If an action is excluded from the plan, the employee may be terminated immediately for engaging in the activity.[52]  Examples of activities that  may be excluded are, possessing or consuming illegal drugs, working while intoxicated or impaired, theft of company property, harassment/sexual harassment, extended unexcused absences, misrepresentation of important facts while seeking employment, violation of confidentiality agreement and gambling.[53] 

Other actions and employee misconduct are to follow the company’s progressive discipline plan.[54]  Depending on the circumstances of the action taken by the employee an investigation may be necessary.  During the investigation, the employee may be suspended pending the outcome of the investigation.  In many instances, due to safety concerns it is necessary to remove the employee from the workforce until the employer can determine whether or not the claim made is valid.  During this time, the employer conducts an investigation and interviews key employees. Suspensions send an important enforcement message without termination.  Suspending employees during an investigation illustrate to all employees that the company takes safety and determining the validity of claims seriously.  Even though the suspension may cost the employer money, that safety and thoroughness of the investigation are more important.  Again, employees notice whether the suspended employee was treated fairly and with dignity.  A positive approach toward terminated employees enables the company to maintain employee morale, while at the same time demonstrating its commitment to following company policy.

Review and Investigation of Facts

Employers should take employee complaints seriously.  Complaints should be investigated carefully.  It is important that the employee feels that he or she is treated fairly.[55]  Not only is this imperative so that the investigated employee can continue productive employment after the investigation, but it also will illustrate to all employees that the employer treats everyone fairly.

The employer first needs to make clear what exactly is the complaint against the employee.[56]  The second step is to research whether or not there is a company policy addressing the issue at hand.[57]  If so, how has a violation of the policy been handled in the past?  It is imperative that the same or similar situation be handled in the same manner.  If an employer does not handle the situation similarly, the employer has just invalidated its company’s policy.  The third step the employer must take is to interview only employees who witnessed the complained of event or employees listed in the complaint.  This is essential in order to guard the privacy of the accused employee and also reduce the distraction an investigation will likely cause in the workplace.

The fourth step involves addressing the complaint with the employee directly.  This involves allowing the employee to explain his or her side of the complaint.  The final step the employer must take is explaining to the employee the outcome of the investigation.  If the complaint is valid, the employee must be advised of the discipline process.  If the complaint has no basis, the employee must also be notified that the investigation found no wrongdoing on his or her part.  The key during the final step is communication.  The employer must effectively communicate with the employee.  Proper communication with the employee will create a feeling of fairness, even if the outcome resulted in termination.

Conducting Interviews With the Employee and Witnesses

First and foremost, when conducting an interview with the employee and any witnesses, make sure that it is never done alone.  Whoever is conducting the interview should have along a member of management and/or someone from human resources.  Aside from giving the appearance of the seriousness of the situation, this will help to ensure fairness and create an extra witness to the investigation in case the employee later complains that the investigation itself was improper. Another key in conducting interviews is to make sure that management only interviews key employees or witnesses to the complained of event.  By limiting the interviews the company not only protects the privacy of the employee, but also limits the distraction created by the investigation.  This is important as the employer will want to minimize the disruption created by an internal investigation.

One thing to keep in mind, does the employee being interviewed have a bias towards the complained of employee?  Or did the employee being interviewed participate in the event in question?  The employer will need to know the extent of the employee’s knowledge.  How detailed is the employee’s account of the events giving rise to the lawsuit?  The employer will need to use a common sense approach to interviewing fellow employees.  All information obtained should be analyzed weighing the information provided against the quality of the information.

Progressive Discipline and Documentation—Critical Elements You Cannot Afford to Miss

“Progressive discipline” is a practice by which employers attempt to change employee behavior through the use of a range of disciplinary consequences that are applied based on the nature of the misconduct of the employee and the history of that particular employee’s misconduct.  These consequences, or disciplinary steps, typically include: verbal warnings, written warnings, formal probationary periods, suspensions (with or without pay), demotions and terminations.  Notably, having a progressive disciplinary policy does not mean that an employer cannot fire an employee for a first offense—some misconduct is of such a serious nature that an employer is justified in immediately terminating the employee.  But most behavior does not warrant such harsh discipline.  Rather, some lesser discipline is more appropriate.  The point of a progressive discipline policy is that if the same behavior repeats itself, the discipline gets progressively more severe, ultimately leading to termination. 

Why should a company have a formal progressive discipline policy?  As a preliminary matter, most companies, whether they realize it or not, already practice progressive discipline.  The alternative is a “no-tolerance” policy whereby any misconduct or undesirable behavior will result in termination, no matter how minor.  Practically speaking, such a policy is not feasible in most companies.  Progressive discipline policies establish expectations and predictability, apply consequences fairly and consistently, aims at correcting undesirable behavior and/or poor work performance, and can protect against complaints and lawsuits.

A critical, and probably the most important, element of a progressive discipline policy is its uniform and consistent application by the company.  It almost goes without saying, but if you’re going to have a policy in place, you better follow that policy.  The effectiveness and fairness of the policy will be destroyed if it is not followed on a consistent basis.  In that regard, if a step is skipped in the level of consequences, make sure that the policy allows for it.  In addition, any and all rule violations must be dealt with immediately.  Delays may cause employees to think that the company does not care about the violation, that the policy is mere “window dressing,” or both.  Also, only use the policy in response to genuine violations.  Rules should not be bent as an excuse to penalize an employee in retaliation for other actions or behavior. 

Similar offenses should also be dealt with in the same way.  Some offenses or undesired behavior should not be overlooked because employees may sense favoritism, or even worse, discrimination.  This is not to say, however, that there is no latitude in the discipline used.  The circumstances surrounding the behavior must also be taken into consideration in order to apply discipline that is appropriate to the offense.  For example, the following things should be considered:  seriousness of the offense, number of offenses the individual employees has, consistency of applying discipline to similar offenses, impact on overall employee morale, any mitigating circumstances, the offender’s performance history, length of service and willingness to correct the problem.
 

Generally, a progressive discipline policy will include a verbal warning for a first time offense and progress until the employee is terminated.  Communication with the employee at issue is the crucial element of any discipline plan.  The first offense should require that the employee will be given a verbal warning for his or her actions.[58]  Even the verbal offense must be documented, signed by both the manager and the employee and placed in the employee’s file.[59]  During the verbal warning meeting the manager should inform the employee of the issue at hand.[60]  The manager must provide the employee with the proper corrective actions that he or she needs to take to resolve the issue and provide a reasonable time frame in which the employee is to resolve the problem.[61]  Finally, the manager should inform the employee of the consequences if corrective action is not taken.[62]  In addition, depending on what the infraction is, the employer may offer training or additional resources to get the employee back on track.  Discuss the situation with the employee.  The manager must stay focused on the employee’s responsibilities.[63]  Listen to the employee; does he or she have a legitimate barrier to meeting the set expectation?[64]  Again, the key is communication.  Set the employee up to succeed.  During the verbal reprimand, the employee is clearly informed of the violation and provided with the necessary steps he or she must take to get back on track.  If done properly it takes the shock out of the next meeting between manager and employee.

After the verbal reprimand if the employee does not chose to meet set expectations, subsequent meetings will be necessary.  The subsequent meetings should be done in written form.  The specific policy that the employee violated should be included in the written reprimand form.  The form should also include the timeframe by which the employee agrees to correct the actions at issue.[65]  Finally, the document must include the next step in the progressive discipline plan.[66] During the meeting it will important to note any positive behavioral or performance changes.[67]  This demonstrates to the employee that the manager is not only looking for violations in performance but also is observing modifications in behavior.  This is essential if you are trying to actually retrain and keep employees on discipline plans. 

Inevitably some employees will refuse to change their behavior or performance issues.  It is imperative that the termination be done in person.  Preferably by the manager that hired the individual.  It is much more difficult for an employee to claim discrimination if he or she was fired by the person that actually hired him or her.  The company must keep in mind, employees watch very carefully how the company treats those employees that are terminated.[68]  Employees that are left behind understand performance issues. However, they will not understand when the company treats an employee without dignity.  Terminations should be done quickly and concisely.  The meeting should take place between the manager, human resource representative and the employee.  The termination should always have at least two managers in attendance.[69] The manager should briefly explain why the employee is being terminated.[70]  If the progressive discipline process has been followed, this should not be a surprise to the employee.  In addition, have the employee’s final paycheck, any expense reimbursements and information about benefits ready.[71]  The manager will also want to collect all company property in the possession of the terminated employee.  It is imperative in today’s technology age, that the manager immediately contacts the company’s computer services department and terminates the employee’s access.  The final step in the termination process is to inform remaining employees that the employee is no longer employed by the company.  The company does not need to elaborate on the reason.[72]  Remaining employees notice when a termination is done with dignity.  This helps maintain the morale of those who remain.

Finally, remember the goal of progressive discipline is to improve the performance of the employees.  Therefore, after applying the policy, the employee must be given an opportunity to correct the problem and/or behavior.  Terminating an employee immediately for a first-time offense should only be used for company-specified violations and/or violations of the law.

Eliminating Liability When Conducting the Termination Session

Although there is no guarantee that a disgruntled employee will not file a lawsuit after being terminated, there are several steps that the employer can take during the termination session itself that can eliminate liability from a future lawsuit.

1.  Consult with the company’s labor and employment lawyer. Before terminating, review reason(s) for termination to ensure no violations of state, federal or common law, as discussed in section A, above.  Further, make sure that all company policies have been and are being followed.
 

2.  Review the Personnel File of the Employee. Make sure that your ducks are in a row when it comes to documentation before the termination meeting.  Have important paperwork with you, such as past performance reviews, warnings (oral and written) and any other relevant personnel material.  If the termination is based on ongoing performance issues, rather than a single act of serious misconduct, was the employee’s last performance review positive?  Does the documentation in the file support the decision to terminate the employee?
 

3.  Decision Must Be Consistent. Make sure that this particular decision is consistent with not only previous decisions by this employee’s supervisor, but also with decisions by other supervisors or members of management in the same or similar circumstances.
 

4.  Giving Notice of the Termination. It goes without saying, but the person communicating the termination should be courteous and professional.  Get right to the point—if the decision has already been made, just say it.  The reason for the termination should be communicated to the employee honestly (i.e., give the real reason for the termination).  State only facts supporting the termination if they can be proven. Do not get into too much detail as that can be unprofessional and have latter legal repercussions.  Do not make accusations of serious misconduct that cannot be proven.  Such accusations can lead to a defamation lawsuit.  Let the employee respond, and listen politely and carefully, making note of anything said that may be useful in defending a lawsuit.  Have another interested supervisor or member of management present as a witness.  Should the employee decide to sue, a witness can corroborate the events of the meeting.  Finally, make sure that you document the meeting and follow up with a letter to Human resources confirming the details of the termination meeting.

5.  Confidentiality. Any written documentation is subject to discovery in the event of a lawsuit.  In addition, any witnesses to discussions relating to the terminated employee can be subjected to subpoena and/or deposition.  Therefore, you should not discuss the reasons for termination of an employee with any inappropriate people or coworkers.  In fact, the people in the company who you should discuss this information with should only be those who require the information, such as human resources and the employee’s department head and/or supervisor.

Signs That an Employee Lawsuit may be Imminent

While the federal labor laws preclude employers from asking certain questions of employees, they do not take away an employers eyes, ears and common sense.  An obvious sign that an employee lawsuit may be on the horizon is when the employee files a complaint with the EEOC.  It is critical to take the charge seriously, responding timely and accurately to the charge, while keeping in mind that whatever is in the response can be used later in a lawsuit.

There are plenty of not-so-obvious signs that are more likely to occur that employers should be aware of.  Many of these signs are accompanied by a sudden change in behavior by the employee.  For example:

Soon after a counseling session with the employee about his or her performance, the employee files a written complaint

• The employee suddenly requests to look at the contents of his or her employment file

• The employee begins to make written complaints about events that occurred in the past (long ago), that were never complained about near the time of the alleged occurrence

• The tone of the employee’s emails, other written communication or even verbal communication suddenly changes.  In that regard, watch out for an email that you suddenly get from an employee that starts, “As I’ve told you before…” or “As we’ve discussed in the past…” 

Certainly, this is not an exhaustive list, but the point is to show that usually if an employee decides to file a lawsuit, he or she will try to make sure there is a sufficient “paper trail” to substantiate the claims that will be made.  Usually, it’s easy to see the employee’s intent with hindsight, but it is very important to keep an eye out for such signs and “connect the dots” early.  This way, the employer can protect itself from the complaint or lawsuit before it occurs, instead of looking back in time and realizing that the employee was getting his or her ducks in a row to sue.

Conclusion

The title "how to stay out of the doghouse" might have been "how to stay out of the courthouse" in terms of handling involuntary terminations.  However, most business owners and managers consider the courthouse to be a doghouse.  The costs of litigation reduce a business's net profit and generally does not result in some future gain of profitability like a capital investment in equipment.  Being attentive to the improper reasons for dismissal or termination and being sensitive to the advice on how to handle cases of employee impropriety or even outright theft can reduce the expenses a firm might have in battling a case in court.  Even the most recalcitrant employee will have to think twice before pursuing a claim against an employer who has been meticulous in documentation and handling of the investigation and termination.  If the employee does insist on pursuing legal action, a judge or jury may be positively inclined toward the employer who has established, implement and documented policies and procedures in handling terminations in accordance with the law.  In addition to this overview of the law concerning terminations, employers might be well served to obtain proper training for the management personnel who must carry out a termination in order to soften the emotional trauma of the employee and may well want to consider severance and other benefits where merited. 

Footnotes