Wrongful Termination

What is the name of your state (only U.S. law)? WI

I have a family member that was "let go" from her job at a bar due to a false accusation of a bouncer stealing alcohol from the company and giving it to her. However, they certainly did not do this (they know who did do it) and the company has no proof of them stealing anything, only the word of a person who is not even an employee at the company. After that, the bouncer's paycheck of worked hours was withheld and they are rejecting unemployment for both ex-employees. My question is if this is worth pursuing legal action on the employer?

This is not a wrongful termination under the law. The employer is not a court of law and "evidence" is not required.

Regarding unpaid hours, the employee affected can file a claim (for free) with the state Dept. of Labor.

The employer does not "reject unemployment"; the state does. The employer does have the right to contest and appeal if they do not agree with the decision, the same as the ex-employee has the right to appeal. Generally, UI leans in favor of the worker. If the employer has no proof of the theft, they have a harder hill to climb.

A wrongful termination does not mean that you were fired for something you did not do; it means that you were fired for a reason that is specifically prohibited by law. No law prohibits the employer from firing an employee because they believe the employee was engaged in misconduct - even if the employer is mistaken.

The state, and only the state, will determine if the employees in question are eligible for unemployment.