From the employee's perspective, wrongful termination can be a devastating, potentially career-ending event, and even more disheartening when inaccurate information or a false accusation is the underlying reason for the termination. From the employer's perspective, a wrongful termination can affect the company's reputation – and it can be costly if the terminated employee is successful in proving her termination was unjust. While all wrongful termination cases based on false accusations aren't made public, there are lessons to be learned from cases that have been publicized.

Fired for Job Performance Rewarded With Praise and Raises?

Errors in performance evaluations happen, but when the company falsely accuses an employee of poor job performance and subsequently terminates him, that's more than a simple error. In a 2016 lawsuit, an employee argued that he was wrongfully terminated, but the employer, a Santa Barbara-based restaurant, claimed his job performance fell below expectations. When all was said and done, the employee's performance review was proof that the terminated employee had, indeed, performed his job duties to the employer's satisfaction. His work history indicated that he had no complaints of poor job performance, and in fact, had been rewarded with pay raises and bonuses based on previous evaluations of his work. The jury awarded the fired restaurant worker more than a half-million dollars (which included $400,00 in punitive damages), but it cost the employer substantially more when you factor in court costs, lawyers' fees and in-house resources required to respond to information requests and testimony throughout the litigation process and trial.

Complete Investigation Is an Employer's Best Risk-Mitigation Strategy

Employers who fire employees based on mere allegations (i.e., unproven claims) of misconduct, such as sexual harassment, are engaging in employment practices that can be extremely costly. The case involving former Tennessee congressman Harold Ford Jr., is an example, and while it is unresolved as of this publication, Ford has vehemently denied any wrongdoing.

The case involves a woman who claimed that Ford acted inappropriately after a dinner meeting. Ford's employer – Morgan Stanley, the investment firm – terminated his employment, despite Ford's statement that he has never engaged in the conduct of which the dinner companion complained. Even if it's found that Ford may have engaged in inappropriate behavior, news of Ford's termination, the tone and consistency of his denials, and the possibility that it might have been a wrongful termination, makes observers wonder if he was, in fact, innocent of wrongdoing and the company guilty of wrongful termination.

Widespread Effects of Wrongful Termination

The lives of your employees and the accuser are, without a doubt, affected by wrongful termination based on false accusations. And your company's reputation and pocketbook will be affected as well if you aren't diligent about conducting a full investigation that leads to an irrefutable, evidence-based conclusion that justifies the termination. If you must take immediate action to remove an offending employee, start with a suspension instead of rushing to terminate. While an employee who is wrongfully terminated may benefit from a lawsuit or settlement that awards back pay and damages for defamation or slander, there are far greater losses to consider: personal reputations and business reputations.