CHICAGO — It’s a dreadful responsibility, but almost every business owner and manager will eventually come face-to-face with the disagreeable task of terminating one or more employees.
As difficult as the task may be, fiscal reality sometimes makes employee layoffs unavoidable. When your payroll costs climb to unacceptable levels, or when an individual employee’s performance is unacceptable, it’s best to take appropriate action.
With the increasing risk of costly legal complications when discharging an employee, even for purely business reasons, it’s important that you keep yourself aware of the legal pitfalls surrounding that task.
Every year, thousands of employers, from the largest to the smallest, are being hauled into court by former employees claiming that they were fired illegally. Many of those employees are winning substantial judgments against their former bosses.
“It costs nothing for an employee to file a charge with the EEOC [Equal Employment Opportunity Commission] or state fair employment practices agency,” cautions attorney James P. McElligott Jr., McGuireWoods LLP, Richmond, Va. “State and federal agencies can investigate employers for retaliation charges based on OSHA [Occupational Safety & Health Administration], Wage and Hour, environmental, FMLA [Family and Medical Leave Act], or other violations. In addition to the expense of legal fees, employers often must spend hours trying to reconstruct and justify their actions. Moral: Do it right the first time.”
What you need to be especially sensitive to is the risk of lawsuits based on some form of discrimination.
“Every employee has a race, a gender, a religion,” says attorney Beth Schroeder, Silver & Freedman, Los Angeles. “So, every employee, even new and probationary ones, falls into at least one so-called ‘protected’ class.”
AVOIDING THE NIGHTMARE
Here are some suggestions that will help you to avoid the nightmare of a wrongful termination lawsuit:
KEEP LINES OF COMMUNICATION OPEN
Many wrongful termination lawsuits have their roots in a misunderstanding on the part of the employee. Often, that misunderstanding involves the reason for the termination.
“Many employers are under the impression that the less communicated to an employee about the termination, the better. My 18 years of experience in both counseling employers and defending lawsuits suggests otherwise,” says Schroeder.
“The more an employee understands about where he or she stands and the reason for the employer’s actions, the less angry, frustrated and suspicious the employee is likely to become. It is that anger, frustration and suspicion that drives terminated employees to attorneys.”
Layoffs due solely to poor business conditions aren’t likely to be the cause of legal problems. However, it’s critically important that the employee be made aware that the separation was not due to his or her job performance.
PUT IT IN WRITING
Labor experts agree that careful documentation is an essential part of every employee termination, especially a termination for cause. Incidents or behavior leading up to termination for a reason should be recorded at the time of the incident, or as soon thereafter as possible. The documents should be respectful of the employee, but detailed, listing events or issues in a logical or chronological order.
“At the very least, you should put the reason for the termination in writing,” says Schroeder. “The employee is likely to be emotional and upset and may not hear what you said in the termination interview. If the terminated employee goes to a lawyer, the lawyer will hear the story in the employee’s words, and will decide whether to take the case based on the employee’s description. In that case, the attorney may not hear your side of the story until after a lawsuit has been filed.”
BE CAREFUL OF ‘CONSTRUCTIVE’ DISCHARGES
The courts sometimes rule that an employee was indirectly fired, known legally as a “constructive” discharge. This can happen if the employer creates a hostile or abusive work environment, places unreasonable demands on the employee, or issues a “quit or be fired” ultimatum.
If a constructive discharge is ruled, the employer’s responsibilities will be the same as for a direct firing.
CONDUCT REGULAR EMPLOYEE EVALUATIONS
Under the law, your employees are entitled to be kept informed of how well they are meeting your expectations. Your failure to meet this requirement may not be of any consequence unless and until a terminated employee files a lawsuit that claims you made no attempt to inform him or her of your dissatisfaction.
Your evaluations do not have to be elaborate or follow any specific format, but it’s always best if you put them in writing, even if it’s only a short paragraph or two.
McElligott advises, “Your employees are entitled to know whether or not their performance meets your expectations. In this regard, it helps to make a written record, for future reference if the need arises.
“Always be consistent in evaluating and disciplining your employees, and be sure to review previous evaluations and disciplinary actions if any has taken place.”
Many human resources professionals recommend that you allow employees to review their written evaluations. Then, ask them to initial the document. If the employee declines, your record should indicate that.
DEAL PROMPTLY WITH PERFORMANCE PROBLEMS
Because the task can be so unpleasant, many business owners find reasons to delay firing a problem employee: “Perhaps the employee will improve. Perhaps I’m being too hasty. Perhaps living with the problem is the lesser of two evils.”
If you’ve done a good job of following the guidelines mentioned here, if you’re confident that a termination is justified, delaying the action is probably not in your best interest.
“Not firing a problem worker is often the worst thing you can do,” says James Walsh in his book, Rightful Termination (Merritt Publishing, 1994). “It keeps the problem worker around to create more trouble, making a bad situation worse. That’s not fair to you or to your other employees.”
McElligott goes further: “Don’t procrastinate or wait for the next evaluation. Do it now!”
Employee layoffs, even those that are the direct result of poor business conditions, hold the potential for both legal and morale problems. Following these ground rules will help to lessen the chances for costly complications.
Miss Part 1? You can read it HERE.
Have a question or comment? E-mail our editor Bruce Beggs at [email protected].