There’s no way around it: When you fire someone who has been harassing other employees, he may sue. Accept that fact and carefully document the investigation that led to the termination.
Recent case: Fordley Small had trouble getting along with a transgendered co-worker and another co-worker whom he believed was gay. When Small left anti-gay fliers in the workplace, the company terminated him for harassment, including yelling, screaming and cursing at co-workers.
Small sued, alleging that it had been he who was harassed. Small claimed his co-workers wanted him to become a homosexual, and he interpreted workplace comments as part of that effort.
The court threw out his case, concluding that the comments he described might be offensive but were far from severe. (Small v. KS Engineers, No. 08-3458, DC NJ, 2010)