Terminating the service of an employee is never a pleasant task, but many employers fail to fully understand the process and its inherent risks. This article is intended to educate employers on the difficult task of terminating employees, and how to do so without liability.
Employment Relationship
The first issue an employer must confront is what type of employment relationship exists between the employee and the company. In many states, the relationship may be “employment at will” which allows either party to terminate employment with or without reason or notice, as long as it is not discriminatory or a wrongful discharge. Employers should be aware of their state’s laws regarding ‘at will’ employment.
The employment relationship may also be governed by a contract of employment. Generally, such a contract requires notice as to the termination along with specific reasons or grounds for unilateral termination of the agreement (i.e., incapacity, misconduct, and for cause). Employers should be aware that a simple “offer” and “acceptance” letter may create a contract of employment under the laws of their state.
Finally, the employment relationship may require progressive discipline of the employee (i.e., verbal, written, and final warning) prior to termination as required by company policy in an employee handbook or as required in a collective bargaining agreement (in the case of union employees). It is mandatory that employers check to assess whether progressive discipline is required prior to termination to avoid any liability.
Disciplinary Policies
Developing and administering disciplinary policies and procedures ensure that disciplinary matters are handled uniformly and objectively. Employers can encourage superior performance through such policies or, minimally, lessen the need for a drastic measure such as a termination and avoid the risk of costly and disruptive legislation.
With effective disciplinary procedures in place, employees know what offenses will be punished and the steps that will be taken. In addition, it may increase employees’ sense of job security and protect them from the unsafe actions of their coworkers. Finally, documented disciplinary procedures will give employees who violate rules the opportunity to improve.
As previously discussed, “employment at will” does not require a reason. However, business necessity along with employment laws (i.e., unemployment and anti-discrimination) may require a legitimate business reason for termination. The most common include job performance, reduction in force, attendance issues, and misconduct, along with expiration of medical leave of absence, inability to work, and fitness for duty issues.
Top Ten Termination Pitfalls
Following is a list of common mistakes employers make when terminating an employee, which can have catastrophic repercussions. Here are ten situations to avoid, as they can lead to unnecessary rancor and/or a lawsuit:
Disparate Treatment – conduct for which other employees were not terminated
Misinformation – based on poor investigations, with insufficient or inaccurate facts
Insensitivity – humiliating an employee, which can lead to a “revenge” lawsuit
No Warning – for things an employee had no reason to believe would cost him/her the job
Poor Documentation – where little or no documentation exists or when documentation was not shared with the employee, particularly in cases of unsatisfactory performance or cumulative events
Unilateral “Crack Down” – after an employer decides, unilaterally, to get tough on misconduct or unsatisfactory performance that has been tolerated in the past
Poor Timing – reason for termination comes six months after misconduct has occurred; or, even for legitimate reasons, after an employee engages in some form of protected activity
Miscommunication – failing to tell the employee why he/she was discharged or calling a termination by some other name: e.g., “layoff” or “suspension,” etc.
Wrongful Termination – so blatantly unlawful that the employee knows it before seeing a plaintiff’s lawyer
The Litigious Employee – some people simply will not accept responsibility for their conduct and will sue, blaming the employer for their termination.
Terminating the service of an employee is never a pleasant task, but many employers fail to fully understand the process and its inherent risks. This article is intended to educate employers on the difficult task of terminating employees, and how to do so without liability.
Employment Relationship
The first issue an employer must confront is what type of employment relationship exists between the employee and the company. In many states, the relationship may be “employment at will” which allows either party to terminate employment with or without reason or notice, as long as it is not discriminatory or a wrongful discharge. Employers should be aware of their state’s laws regarding ‘at will’ employment.
The employment relationship may also be governed by a contract of employment. Generally, such a contract requires notice as to the termination along with specific reasons or grounds for unilateral termination of the agreement (i.e., incapacity, misconduct, and for cause). Employers should be aware that a simple “offer” and “acceptance” letter may create a contract of employment under the laws of their state.
Finally, the employment relationship may require progressive discipline of the employee (i.e., verbal, written, and final warning) prior to termination as required by company policy in an employee handbook or as required in a collective bargaining agreement (in the case of union employees). It is mandatory that employers check to assess whether progressive discipline is required prior to termination to avoid any liability.
Disciplinary Policies
Developing and administering disciplinary policies and procedures ensure that disciplinary matters are handled uniformly and objectively. Employers can encourage superior performance through such policies or, minimally, lessen the need for a drastic measure such as a termination and avoid the risk of costly and disruptive legislation.
With effective disciplinary procedures in place, employees know what offenses will be punished and the steps that will be taken. In addition, it may increase employees’ sense of job security and protect them from the unsafe actions of their coworkers. Finally, documented disciplinary procedures will give employees who violate rules the opportunity to improve.
As previously discussed, “employment at will” does not require a reason. However, business necessity along with employment laws (i.e., unemployment and anti-discrimination) may require a legitimate business reason for termination. The most common include job performance, reduction in force, attendance issues, and misconduct, along with expiration of medical leave of absence, inability to work, and fitness for duty issues.
Top Ten Termination Pitfalls
Following is a list of common mistakes employers make when terminating an employee, which can have catastrophic repercussions. Here are ten situations to avoid, as they can lead to unnecessary rancor and/or a lawsuit:
Disparate Treatment – conduct for which other employees were not terminated
Misinformation – based on poor investigations, with insufficient or inaccurate facts
Insensitivity – humiliating an employee, which can lead to a “revenge” lawsuit
No Warning – for things an employee had no reason to believe would cost him/her the job
Poor Documentation – where little or no documentation exists or when documentation was not shared with the employee, particularly in cases of unsatisfactory performance or cumulative events
Unilateral “Crack Down” – after an employer decides, unilaterally, to get tough on misconduct or unsatisfactory performance that has been tolerated in the past
Poor Timing – reason for termination comes six months after misconduct has occurred; or, even for legitimate reasons, after an employee engages in some form of protected activity
Miscommunication – failing to tell the employee why he/she was discharged or calling a termination by some other name: e.g., “layoff” or “suspension,” etc.
Wrongful Termination – so blatantly unlawful that the employee knows it before seeing a plaintiff’s lawyer
The Litigious Employee – some people simply will not accept responsibility for their conduct and will sue, blaming the employer for their termination.
Documentation
A record should always be created of an important factual event. Memory may not serve you well years after the fact, or you or parties involved in a particular incident may be unavailable at a later date. As such, contemporaneous documentation may protect you and your company against frivolous lawsuits.
There are many types of events or actions that should be documented, including a new hire’s receipt of the employee handbook; requests for workplace accommodations and responsive efforts; promotions, demotions, or changes in position; when management has taken action to prevent and/or correct discrimination; and any event that may affect the terms and conditions of an employee’s job. However, do not document anything you would not want an employee or his/her lawyer to see one day—for example, a manager’s personal dislike for an employee.
Always document just the facts: who-what-when-where- and why. Additionally, get witness statements when appropriate. Maintain focus on legitimate business reasons for any disciplinary action and place warning notice(s) in the employee’s personnel file.
Risks
Even though an employer may have a legitimate business reason for termination, a discharged employee may claim (even without merit) that the termination was wrongful and/or discriminatory. Such factors which may be alleged as discriminatory are the age, race, national origin, gender, marital status, pregnancy status, sexual orientation, genetic background, and disability of a terminated employee.
Further, the employee may allege the termination was wrongful or retaliatory based upon the employee filing a workers’ compensation claim, safety complaint, and/or sexual harassment charge. As such, employers must be aware of the risks of the termination and document legitimate business reasons to avoid lawsuits.
The Termination Process
There are many ways to handle a termination, but first, be certain everyone involved agrees on the reason(s). The person delivering the termination message should be prepared, and if necessary, rehearse. The discharge meeting should be held in person, unless there is concern about a violent reaction by the employee. If an employment contract necessitates a cash buyout or severance package, details of the separation and release agreement should be determined by management ahead of time, along with what will be communicated to other employees/managers regarding the departure. Finally, if there is any remote possibility of an angry/violent reaction, be sure to discretely notify security in advance.
The best way to deliver a termination message is to be decisive, honest, and BRIEF. There should be no indication the termination decision is reversible or negotiable and the employee should be given time to ask questions or respond to the decision. It is also important to have a witness present.
Any company property such as keys, cell phone, laptop, identification cards, and credit cards should be collected from the employee and arrangements made for the employee to gather his/her personal belongings. Be sensitive to the employee’s emotions, and lastly, be prepared to discuss the employee’s benefits and final paycheck.
Final Thoughts
While the termination process may be complicated, there are ways to make it less difficult for both the employer and employee subject to separation. Employers should follow an established protocol with clearly set disciplinary procedures, while always maintaining proper documentation. In doing so, employers reduce the risks associated with employee termination and can limit liability.
In conclusion, this article is intended to provide general information to employers about the termination process; however, it is NOT legal advice. Employers should consult with an experienced employment law attorney for specific factual situations.
