Unless this is a contracted for benefit, this isn't a separate cost from lawsuit risk, but a mitigation of lawsuit risk: severance pay is paid to people on condition of waiving claims.

> if they're in a protected class

If you start a sentence this way, it's a clear sign you don't know what you are talking about. Except for a few special cases (“age over 40” and “veteran status”), every employment protected class is a dimension on which discrimination against any value is equally restricted, and everyone has some value on each axis (race, sex, etc.)

So, everyone is “in a protected class”. Well, several of them, actually.

> you have to go through a period (often 6 months or more) of documenting their incompetence and leaving a trail of trying to help them improve

No, you don’t, and you can’t really count this “requirement” and lawsuit risk as separate costs, since this is simply a policy companies adopt to mitigate lawsuit risk.