Every employee hired is expected to be a team player and integrate into the employer's culture to cultivate success.

However, nearly all employers find out at some point that new hires do not always work out as planned.  Unfortunately, disciplinary action must be taken at times, and termination of employment becomes necessary far more often than many expect.  Even worse, regardless of whether termination is justified or meritless, terminations can lead to lengthy, expensive legal battles.  For business owners, proper planning can prevent them from expending six figures in legal fees (or losing their business altogether due to an exorbitant jury verdict). 

Don't Walk in Blind

Before inadvertently inviting costly litigation, employers should prepare for termination decisions and alleviate risks to the extent possible.  This process starts with understanding the legal limitations of discharging employees. 

First, the employer should review its relationship with the employee.  Although at-will employment is the default rule in the United States (with the exception of Montana and Puerto Rico), employment contracts can provide a guaranteed term of employment.  If an employer and employee agree to a term other than at-will employment and do not provide for termination without cause, then the employment relationship is terminable only for cause, which should be defined within the agreement.  Additionally, contrary to popular belief, at-will employment does not allow employers to terminate employees for any reason.  Instead, employers may terminate an employee's at-will employment for any reason or no reason, with or without notice or cause, provided that it is not for an unlawful reason. 

Next, the employer must understand the applicable laws that may create a basis for wrongful termination claims.  Examples include Title VII, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Family and Medical Leave Act, the National Labor Relations Act, and many more federal, state, and local laws.  Employers also must recognize public policy exceptions to at-will employment, which prohibit termination from employment in specific situations.  In summary, all of these laws prohibit discrimination, retaliation, or harassment against employees based on protected classes or protected actions. 

While employment laws place limits on terminating employees, they do not prevent terminations based on legitimate grounds.  However, if challenged, the onus generally falls on the employer to prove that an employee was terminated for legitimate, lawful reasons (and not rely upon the fact that an employee was employed at-will). 

But Did You Document It?

Assuming termination is not for an unlawful reason, employers should look to their policies to support the decision to terminate an employee.  Employers' policies should be crafted to match their practical standards and expectations.  Moreover (and this step is important), employers must follow their policies and hold employees accountable for failing to abide by the policies.  Often times, proper documentation and implementation of policies serve as the first line of defense in wrongful discharge claims.  Documented violations of company policies will help undercut an employee's burden to prove a wrongful discharge claim. 

On the other hand, an employer's failure to effectively document an employee's issues prior to terminating employment may indicate to the applicable agency (such as the Equal Employment Opportunity Commission) or a jury that the employee was actually terminated for an unlawful reason.  Documenting the motives for termination in real-time through performance evaluations, written warnings, and meeting notes is completely in the employer's control, so failure to prepare such documentation reduces an employer's chance of meeting its burden to offer a facially nondiscriminatory reason for termination.  On the whole, it is essential that employers train their management-level employees to give timely, honest, and constructive criticism in an objective manner and maintain a sufficient written record to bolster defenses in potential litigation. 

The End

Once the appropriate documentation has been reviewed and the decision is made to terminate an employee, employers should deliver the message promptly and appropriately in a private meeting.  Any disciplinary records or other documentation relevant to the termination should be assessed in advance to communicate clearly, concisely, and in accordance with the written record.  The termination meeting, similar to other discipline, should be documented, and a human resources representative or another member of management should be present as a witness.  When delivering the message, employers should be prepared for a negative response and avoid arguments related to the decision.  Rather than debating facts, employers should lean on the documented issues and move the meeting toward a conclusion. 

If applicable, the employee should be reminded of any ongoing obligations that survive the end of the employment relationship, such as restrictive covenants or confidentiality agreements.  When concluding, the employer should discuss the employee's final pay, any continuing benefits, and whether a separation and release agreement will be provided as consideration for any severance payment.  Finally, employers should be aware of any notices required by state and local law to ensure that those final obligations are met.  Although not required, it is generally recommended that employers send a follow-up termination letter encompassing the termination meeting and providing any required notice in writing. 

Conclusion

Every termination is different, and any disciplinary action taken by an employer has some risk of being misconstrued.  However, employers who put the time and effort into documenting issues in advance stand a much better chance of having a former employee's claims dismissed at minimal cost.  Conversely, those who fail to do the work on the front end generally pay for it (figuratively and literally) on the back end. 

Ultimately, there is no singular script for terminating an employee.  There is no avoiding the fact that disciplining an employee is a difficult situation.  Nevertheless, thoughtful employers prepare for these situations and hopefully avoid additional legal disputes arising out of these situations down the road. 

This is a part of our May series: "Working Through Difficult Times."  For more insights, click here.