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Avoid Wrongful Termination Lawsuits

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There’s no enjoyable way to fire an employee, but there is a right way, and knowing the distinction could keep you out of trouble.

“It’s a very litigious society,” says Chuck Sujansky, an HR consultant with more than 30 years of experience as the president of AutomotiveHR. “Employees who feel they have been wrongfully terminated don’t really hesitate to go into a government agency and file some kind of charge.”

While you can’t stop anyone from filing a charge, following the proper steps can help protect your shop from wrongful termination lawsuits.

“It’s very important that owners take very careful, measured steps in documenting and disciplining poor performance,” Sujansky says.

Taking those steps rests on three key actions: document, discipline and discharge. Sujansky outlines the steps that every shop owner needs to know to avoid costly litigation.


Set expectations. Make sure you are clear regarding what’s expected of employees and what constitutes good and poor performance. Sujansky recommends this be done at the time the employee is hired. Employees need to know the rules, he says, so that it’s clear if they have broken them.

He also suggests having employees sign either a policy manual or a form acknowledging that they have read and will comply with the policies.

Keep a clear, comprehensive policy manual. To properly set those expectations, a comprehensive policy manual is essential. Address the basics like harassment and discrimination, drugs and alcohol, code of conduct, absences and tardiness, and any daily practices like breaks and work hours.

While Sujansky says it’s difficult to include every policy, err on the side of caution and include as much as possible. The more detail, the better, Sujanky says, so that the standards of exceptional and poor performance are crystal clear. Have an employment law attorney look over the manual and add his recommendations.

Hold performance reviews. Sujansky says the easiest way to keep track of performance is by having at least one performance review each year with each employee. He says those reviews should be based on the SMART (specific, measurable, achievable, relevant and time-based) method of goal-setting.

Have a frank discussion about the employee’s performance and identify reasons for why they may be underperforming in one area.

“You need to try to coach them to meet the expected performance level,” he says. “If they continue to not meet the standard, then you have to start the disciplinary process.”

Document problems and action. After conducting the performance reviews, Sujansky says to document the conversation with a summary that includes a date, evaluation checklist, and, if possible, signatures from both you and the employee acknowledging what was discussed in the review.

If an issue comes up throughout the year, write down the problem and any action taken. Sujansky says it can be as simple as a short memo with the date noted and what happened. He says that it is also advisable to have the employees sign off on the memo.

“Investigators are much more demanding on the employer when it comes to documentation of substandard performance or violation of the work rules,” he says. “Employees can make exaggerated claims but they hold the employer to a higher standard.”


Be truthful. Sujansky says that although employers often dread having frank discussions with employees about how they are doing, it’s absolutely necessary.

“I’ve seen many times where an owner just doesn’t want to give employees bad news,” he says. “They don’t want to say anything negative so they gloss it over, and down the road, when there’s a problem and they want to terminate, they don’t have any documentation.”

Addressing the problem early on also increases the chances of resetting expectations and improving performance.

Coach employees. Before terminating an employee, owners should first try coaching the employee to improvement. After discussing their substandard performance, outline a path for them to meet the expected performance level and allow a reasonable amount of time for improvement. Poor performance can sometimes be caused by lack of training, a task beyond their skill level, or lack of interest.

“The shop owner needs to take the time and help the employee improve,” he says.

Put a progressive discipline policy in place. If an employee continues to fall below standards after coaching, Sujansky says to follow the progression of a verbal warning, written warning, suspension/final warning, and then termination.

“It should be no surprise to the employee if you terminate them. They will have had several meetings with you,” he says.

Document each warning, explaining how they’ve fallen short and how you have tried to help them. Then give them a copy of each warning.


Be clear about why you’re firing. If letting an employee go is the only available step, Sujansky says to be honest and straightforward about why they’re being fired.

“Have a very frank discussion and be very clear about what the problem is,” he says.

Review the history of their performance, the warnings they have received and the steps you have taken to help them attempt to correct the problem.

He also says to tell employees the truth, so they do not misinterpret the reasons for their discharge, which could result in a wrongful termination lawsuit.

Check and balance. Sujansky suggests having another manager or supervisor present during the termination to act as a witness and vouch that the employee was treated fairly. He also recommends talking to an attorney, paralegal or human resources professional to ensure that you have taken the proper steps and precautions and that the employee was given an opportunity to improve.

“With a small repair shop, usually you’re not going to find an HR department,” he says. “If it’s something that you would anticipate could be a legal issue, I would recommend contacting an independent HR consultant.”

Don’t get emotional. Remain calm during the conversation.

“Nothing good happens if either or both parties are angry,” Sujansky says. “Making a decision when you’re emotional is not a good decision.”

If necessary, ask the employee to take the rest of the day off and come back tomorrow when both parties have calmed down. Minimize embarrassment by terminating the employee in private and toward the end of the day. Although other staff members may be curious about why the employee left, Sujansky says to stay vague and limit details. 

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