Bad News Can Be Good For a Wrongful Termination Lawsuit

An employer may build a stronger defense against a problem employee by digging up more evidence of misconduct.

Posted by Dawn Lomer in Human Resources on November 22nd, 2011

Ask employers to list their least favorite tasks and firing an employee is bound to be at the top. It’s difficult, awkward and stressful for everyone concerned. Replacing an employee is expensive, time-consuming and hurts productivity, and the possibility of a lawsuit for wrongful dismissal makes it even more worrisome. So it’s no wonder that employers are reluctant to terminate staff even in cases of blatant employee misconduct.

Keeping on bad employees is bad for morale, but equally important is the fact that the discovery of one termination-worthy incident may be only the tip of the iceberg.
But hanging onto a problem employee is a bad idea, no matter how unpleasant it may be to let him or her go. In most cases, it’s better to remove a problem employee as quickly as possible. Keeping on bad employees is bad for morale, but equally important is the fact that the discovery of one termination-worthy incident may be only the tip of the iceberg. In fact, some employment attorneys feel that the discovery of one fireable offense could indicate that there are others.

“Most difficult employees cause problems across the board,” wrote Toronto employment lawyer Howard Levitt in a recent article in the Ottawa Citizen. “When a client comes to me with one reason to terminate someone, I am always alert to the possibility of more,” he wrote.

Secondary Misconduct as a Defense

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The good news is that this can sometimes work in the employer’s favor in the case of a wrongful termination lawsuit. If an employer discovers, while preparing a wrongful termination defense, that the employee engaged in misconduct other than that for which he or she was fired, the newly uncovered misconduct can be used in the defense of the lawsuit, and this applies in both the US and Canada.

“Ultimately, employers can rely on the results of later investigations if the evidence establishes that the problems existed at the time of dismissal,” wrote Levitt.

“In the US, federal and state law usually permit the use of ‘after-acquired evidence’ in defending employment discharge and discrimination cases,” says Charles Krugel, a Chicago labor and employment lawyer.

In fact, the employer could end up successfully defending a wrongful termination case that he or she might have lost, had the secondary misconduct not been uncovered.

“More specifically, this means that although there is an alleged illegal action by the employer, if newly obtained evidence of employee misconduct justifies firing or disciplining that employee anyway, then the employee can’t be compensated (awarded damages) even if the employer’s actions, prior to obtaining the new evidence, are illegal,” says Krugel.

Dig for Dirt to Reduce Damage

“The newly obtained evidence should warrant termination or discipline so long as such action is consistent with company policy or practice, is illegal or is otherwise so extreme that the employer can’t justify retaining that employee (eg, violence, theft, vandalism),” says Krugel. This evidence may not be a complete insulator from liability, Krugel says, but it may help to reduce damages.

It makes sense then, for employers faced with a wrongful termination lawsuit to spend considerable time and effort digging through the dismissed person’s employment history to find any other evidence of serious misconduct.


Dawn Lomer
Dawn Lomer

Managing Editor

Dawn Lomer is the managing editor at i-Sight Software and a Certified Fraud Examiner (CFE). She writes about topics related to workplace investigations, ethics and compliance, data security and e-discovery, and hosts i-Sight webinars.