Unlawful Considerations When Firing
Although difficult, disciplining and terminating employees are necessary evils in the business world. When a separation is voluntary – that is, the employee resigns – there are generally few problems. However, the situation gets much stickier when an employee is terminated because of poor performance or misconduct. Besides the drama often associating with firings, the threat of a lawsuit looms large if the termination is handled improperly.
That being said, you may be surprised to learn that one of your best protections against a termination-related lawsuit begins at the hiring stage. It’s called at-will employment – a condition you can make employees aware from day one.
At-will employment simply means the employment relationship may be terminated at any time, for any reason or no reason at all – except for an illegal reason.
Numerous federal and state laws establish “illegal” reasons for terminating someone’s employment. Most involve prohibitions against discrimination or retaliation. For example, Title VII prohibits discrimination on the basis of race, color, religion, national origin or sex, the ADEA prohibits age discrimination, and the ADA protects against disability discrimination. Each of these anti-discrimination laws also makes it illegal to fire someone in retaliation for complaining about discrimination/harassment or participating in a related investigation or proceeding.
It is also illegal to fire someone in retaliation for whistle-blowing, reporting an OSHA violation, participating in union activity, requesting time off under the Family and Medical Leave Act, and other activities protected by public policy.
For a terminated employee to build a case under any of these laws, he or she must essentially prove that you based your decision on an illegal factor (e.g., age, race, sex, retaliation for engaging in protected activity, etc.) as opposed to a “legitimate business reason” (see below). This is why it is critical for managers to keep accurate records of employee performance issues.
If a lawsuit is filed challenging an employment decision, you’re in a better position if your records (i.e., the manager’s documentation) clearly establish a legitimate business reason for your actions, and there is no other evidence suggesting illegality. For example, if an employee claims that he was terminated unlawfully on the basis of his national origin, but your records establish that he was terminated for repeated violations of company rules and that others who committed similar violations were treated the same, you’re in the clear (assuming there is no other evidence of discriminatory motive, of course).
Legitimate business reasons for termination
The following are generally considered “legitimate business reasons” for terminating someone’s employment:
- Poor performance: This usually means an employee has consistently performed below expectations, in spite of clear feedback that improvement was needed.
- Work rule/policy violation: This occurs when an employee’s conduct is in violation of a company rule or policy, or the employee has acted in a manner that significantly jeopardizes the company’s reputation or business interests (e.g., fraudulent activity).
- Layoff: This usually results from lack of available work or other financial/budgetary concerns.
Bottom line: Before terminating someone, make sure you are basing your decision on a legitimate business reason, and that the surrounding facts and circumstances, as well as your documentation, support your decision.
Because of the rapidly increasing number of employment lawsuits filed each year, you want to be extremely cautious when it comes to terminating employees. Even if a manager has done everything right in terms of counseling and documenting an employee’s performance problems, there are some additional issues to consider before letting an employee go.
- Consider fairness and applicable policies.
- Review the employee’s personnel file, documentation from earlier disciplinary discussions, and key notes from your performance journal. Ask yourself: Did you give the employee notice of the problem and an opportunity to explain or provide new facts or evidence? Was the incident properly investigated? Did you follow your company policy if there is a disciplinary procedure? Did you bypass certain warning stages or internal procedures? For example, if an employee’s incident triggers only a warning based on written policy, a warning should be given first – unless unusual circumstances justify the exception.
- Be consistent with past practice.
- Make sure you are enforcing company policy fairly and consistently. Check with HR or other managers to make sure similar situations in the past have been treated the same.
- Review objectively.
- Take a step back and review the facts and circumstances as an outsider would. Remove personal biases. Question whether you would take the same action if the employee were a different person. Being objective helps ensure the termination is not made in the heat of a moment -- or based on something inappropriate like discriminatory or retaliatory action. Rather, the decision should be based on a valid business reason such as poor performance.
- Consider timing and appearance.
- Terminations may be seen as discriminatory even if you and your managers didn’t intend it. For example, if a group layoff only affects a certain age group, it may appear that you considered age when choosing which employees to terminate. Discrimination claims are often based on statistical evidence alone. The timing of a termination can also create problems. For example, terminating an employee only days after he or she makes a harassment complaint most certainly would appear to be illegal retaliation – and it would be difficult to convince a judge or jury otherwise.
Before terminating someone, always consider the timing and whether it paints a picture of illegality. For example, ask yourself: Has the employee recently filed a workers’ compensation claim? Did he or she recently take FMLA leave? Has he or she recently complained of harassment/discrimination? Did he or she recently “blow the whistle” on the company? If the timing looks suspicious, it is more important than ever to have good documentation supporting your decision. Make sure your documentation and the surrounding facts prove the termination is based only on legitimate business factors and is not influenced by the employee’s legally protected status.
- Get approval by HR or upper management.
- It helps reduce risk if upper management agrees with the decision, its timing, and other details surrounding the termination (e.g., whether the employee will be given notice, severance pay, etc.). A manager may also need to check with upper management to make sure the termination does not violate or contradict any contractual provisions (including collective bargaining agreements or executive contracts) or any other promises made to the employee (verbally or in writing) about his or her length of employment or job security. If the employee has a contract, make sure you are complying with the contract’s termination provisions.
Handling Termination Meetings
It’s easy to understand why managers get nervous about handling termination meetings. The legalities can seem overwhelming. However, managers have the right to fire underperforming or policy-violating workers as long as:
- They have documented the problem and can show that the action is justified
- They communicated their expectations and gave the employee opportunities to improve (for performance issues)
- They have treated other employees the same in similar situations
Though terminations are never pleasant, knowing you are “in the right” should make them easier to handle.
Before the meeting
- Make sure your documentation is in order before you meet with the employee. Pull together performance appraisals, written warnings, notes and all pertinent correspondence about the issue.
- Plan what to say, to avoid saying something you may later regret. Be prepared to handle the employee’s emotional response. Walk through potential scenarios in your mind and imagine how you would deal with them. It is possible, for instance, for an employee to cry, yell, or beg for his or her job back.
- Determine when the employee will receive his or her last paycheck. State law may require you to provide the last paycheck immediately upon termination.
- Be prepared to answer any questions the employee might have about the termination. Typical questions include: “Will I be paid for accumulated sick leave or vacation time not taken? Will I get a severance package? Can this decision be appealed? Can I get a reference letter? Am I eligible for unemployment insurance? What about my health benefits?”
- Prepare a termination notice in advance. The document should include the last day of employment and the reason for the employee’s termination. Some companies use forms with reason codes such as “performance” or “layoff.” Company policy will dictate what additional information to include. It is important to document the specifics (on the termination notice, a separate document to be filed in the employee’s personnel file, or in your performance journal) with the same amount of detail as required for any other disciplinary write-up.
- List all company belongings to be returned, including things such as keys and ID badges. Prepare to change security passwords, computer access codes and locks, if necessary.
- When planning the termination meeting, consider the day of week and time of day. Most experts agree that the best time to fire someone is at the end of the day when other employees aren’t likely to be around or the beginning of the day before the employee goes to his or her workstation. An employee is likely to become embarrassed or humiliated by the exposure to coworkers. Select a day and time when this can be reduced.
During the meeting
- Have a witness present for the termination meeting. It’s best to include a member of HR or upper management. Make sure this person knows his or her role, and has been briefed on how to respond to any comments. For example, establish in advance whether the person is there strictly to take notes and witness the event, or whether he or she will assist and answer questions.
- Perform the termination in your office or another neutral setting. Do not do it in the employee’s own office. Choose a private location where you won’t be interrupted or seen by others.
- Be clear and straightforward. Tell the employee when the termination will become effective and the reasons for the termination. Tell the truth, regardless of how uncomfortable it is. For example, do not attempt to spare an employee’s feelings by saying that his or her job is being eliminated if, in fact, the reason for the termination is poor performance.
- Keep the meeting as brief as possible. Do not allow the employee to pull you into detailed discussions of performance issues, and who’s to blame. Don’t give the employee the impression he or she can change your mind.
- Show appropriate sympathy, but do not praise performance in certain areas to make the employee feel better. It will just confuse matters.
- Remove emotion. Never argue with an employee to justify a termination decision. If you’ve taken appropriate action in reaching your decision (e.g., discussing the consequences of failing to meet performance criteria), the termination decision should not be a surprise to the employee. Be courteous, confident and firm. If you suspect that the employee is about to become violent and harm you, others, or company property, call security or the police immediately.
- Have the employee sign a copy of the termination notice and other related paperwork. If the employee refuses to sign, have a witness sign, indicating that the employee was presented with the paperwork but refused to sign.
- Tell the employee how long he or she has to gather personal belongings and leave the premises. If possible, try to arrange for a quick and graceful exit. Monitor the departure or offer to send the employee his or her personal belongings if necessary. In most cases, it’s a good idea to have a witness observe the packing to ensure the employee doesn’t take company property.
- Treat the departing employee with dignity and respect. How you treat the person often determines whether he or she will seek legal advice and file a lawsuit. A former employee also can be your best or worst marketing person in terms of promoting your company (as a business and/or employer). Handle terminations professionally and try to leave departing employees with a good impression of the company as a whole.