I hope you enjoy this valuable piece from StaffingU Adjunct Faculty member Diane Geller, Esq., of Gentry Locke.
One of the inevitable consequences of managing a business is having to discharge employees from time to time. The decision to terminate an employee may result from a variety of factors including poor performance, inadequate productivity, excessive absenteeism or lateness, dishonesty, insubordination, substance abuse, or illegal conduct. However, the employer must always be careful to ensure that the decision to terminate an employee is for job-related and nondiscriminatory reasons. Moreover, the employer must be sure that the employee’s termination does not violate any contractual commitments and that the termination complies with applicable federal, state, and local laws and, of course, company policies and procedures.
Unfortunately, even the most careful employer may terminate employees for all the right reasons and still be be sued. There are, however, various precautions an employer can take to minimize the number of suits that will be brought by former employees, and to minimize exposure if suits are brought.
Documentation, the “Silent Witness” Employers May Eventually Need
Although there are no laws requiring employers to document their dealings with employees, employment lawsuits often focus on the reasons for an employee’s termination. The employer’s records can be important evidence in its defense of a termination decision. Indeed, there is typically far greater deference and weight given to contemporaneous writings than to testimony based on memory. Therefore, documentation of the termination decision should normally begin well before the employee is discharged and should include the following: the employer’s disciplinary policies and performance standards; any eyewitness accounts of serious employee misconduct; the supervisor’s memos in which performance deficiencies are recorded in objective terms; performance evaluations; and warning memos to the employee.
The purpose in documenting employee performance is twofold:
- first, it is to facilitate accurate, clear communication between the employer and the employee about the employee’s job performance so as to prevent or solve problems and
- motivate good performance; and second, it is to ensure an accurate, complete, preservable record of such communication.
An employer’s records can be vital evidence in the defense of a disciplinary decision. An employer should be able to produce written documents that support its version of the events. It is important that care is taken in the development of this “paper trail”:
Documents That Damage
Documents that may hurt because they contradict the employer’s position, as in the case of the employee who is denied a promotion but was rated outstanding on the most recent performance appraisal, or the employee who is terminated for inadequate performance and whose most recent salary review reflects a raise for “merit.” Documentation can also hurt when it contains unfortunate wording, such as making reference to an older employee’s inability “to keep up with company’s vigorous new approach,” or to a female employee’s “overly aggressive personality.”
An employer’s discriminatory, arbitrary, or inconsistent treatment of similar situations is always dangerous. Retention policies should also be in place, assuring that these documents will not be inadvertently destroyed and that legally mandated documents will be retained for the required period.
If the employee was terminated for unsatisfactory performance, documentation showing that the employer counseled the employee and made an effort to improve his/her performance is also important.
Termination documentation should show that:
- the employer had a standard or policy governing the behavior in question;
- the employee knew of the standard or policy and of the consequences for violating it (dissemination of a policy to all employees, including new hires, should be assured);
- performance problems were clearly communicated and the chance for corrective action existed;
- the employer applied the standard and policy consistently and uniformly (documentation of performance related situations should not be ad hoc or selective as to a person or an event. Uniformity is very important to dispel notions of setting someone up or singling them out); and
- the employee violated the policy or failed to meet the standard or take corrective action.
Reviewing a Proposed Termination
Because of the potential for legal challenge by the discharged employee, it is generally a good idea for employers to establish review policies for all termination decisions. The goal of a review policy is not so much to restrict the authority of supervisors to make decisions as to ensure that those decisions are legally defensible.
Generally, it should be the responsibility of the human resources manager to review termination decisions. If, however, no such position exists in an organization, termination decisions should be reviewed by a higher-level manager or by the employer’s counsel.
Regardless of who undertakes the termination review procedure, the following steps should be taken:
- Determine whether there is a valid, job-related reason for terminating the employee, such as a violation of company policy, poor attendance, excessive tardiness, or a problem with the employee’s conduct, attitude, or demeanor.
- If the termination recommendation is due to a specific incident, determine whether the incident has been properly investigated and documented in writing. Determine whether there are any questions that remain unanswered about the incident.
- Ensure that the employee was made aware that his behavior or job performance was unacceptable.
- Ensure that the employee’s overall work record has been reviewed.
- Look into whether there are extenuating circumstances (such as abusive or unfair treatment by a supervisor) that may have contributed to the employee’s unsatisfactory performance.
- Look for any evidence of sexual harassment, racial harassment, or illegal retaliation for an employee’s exercise of legal rights such as reporting wrongdoing or health or safety violations.
- Be sure that the discharge recommendation is not merely the result of a personality conflict with the supervisor or a result of exercising of a protected right.
- Determine whether the termination recommendation is consistent with prior actions where the factual circumstances are similar. If the determination reveals that there are some inconsistencies, check to see whether the supervisor making the recommendation to terminate the employee has job-related reasons why the decision to terminate should be different under these circumstances.
- Have the recommendation to terminate reviewed by an individual familiar with employment discrimination laws and unjust dismissal theories (such as outside employment counsel) to ensure that there is no legal problem.
- Ensure that the employee has received all rights conferred by company policy, such as progressive disciplinary procedures.
- Explore alternatives to termination such as transfer, counseling, or demotion before making the final decision.
- Can you prove what you know?
Communicating the Termination Decision
Terminating an employee can be the most difficult task a supervisor faces. Unfortunately, some supervisors feel such emotional conflict about firing a subordinate that they handle the matter badly. This can cause problems for a number of reasons, but most notably because an employee whose termination has been poorly managed is more likely to take legal action against the employer. The termination meeting is critical because it often dictates the employee’s course of action. It is wise, therefore, for the employer to invest in a careful, concerned approach, which would include offering the employee counseling services, outplacement assistance, and even an agreement with a release.
Clear communication of a termination decision begins well before the employee is actually terminated (unless the employee is being terminated for improper or illegal conduct such as theft or assault). Firing an employee who has been repeatedly warned to improve his/her performance is generally much easier for both employee and employer than firing an employee who was totally unaware that her job might be in jeopardy. Honest performance evaluations and written warnings about inadequate performance are all-important components of communicating the termination decision. The termination communication should also be confidential and made with a third person present.
Employers should additionally be cautious about having guards present to escort the employee out to avoid defamation, false arrest, assault, battery, and invasion of privacy claims. Guards should be used only as a last resort after other precautions are taken.
As part of the termination, the company may want to consider providing severance pay. Providing severance pay to terminated employees is generally not a statutory issue. There is a considerable amount of litigation by employees claiming entitlement to severance pay based on a company policy or practice. It is recommended that the company review its policies, letters, etc., regarding severance pay prior to termination.
When drafting policies, carefully reserve the right to provide severance pay to employees on an ad-hoc basis. Consider modifying policies to require the execution of a release prior to the payment of severance benefits.
It is often beneficial to the company to induce an employee to give up his or her right to sue the company in exchange for a benefit that they would not otherwise be entitled to receive.
It is important to note that the company cannot demand that the departing employee sign a waiver. Taking that action would create the evidence that the employee might need to challenge the release on the basis of coercion. Further, you cannot put employees in a position that would result in loss of benefits if they do not sign the release.
Document, Review, and Communicate
Terminating employees is never a pleasant task, but following the guidelines in this article can lessen the likelihood that the employee will bring a suit against the company after the fact. In every situation, be sure to document performance issues well before an employee is terminated, review any proposed termination for potential problems, and communicate the decision to terminate clearly and carefully.