Would you rather get your teeth drilled or fire that problem employee? It is easily the most painful part of the employment process. The case law of employment claims is ripe with horrible stories of terminations gone wrong. The purpose of this article is to set out guidelines which can help to make the tooth drilling process a little easier, both for you and the terminated individual.
1. Take as much time to fire as you did to hire. This tip is assuming, of course, that you take your time in hiring. Hopefully, that is the case, but that is also the subject of another article. However, the employer who decides to fire someone at 3 p.m. on Friday is making a terrible mistake. Never fire in a hurry, especially when you are angry. Take your time and plan both the firing decision and the means to do it.
Now, there may be the emergency situation where an employee has committed some egregious act, and the thinking is that we must act, NOW! For example, you discover that your controller is stealing, or that your best salesperson has set up a competing business and is syphoning off your best customers. Shouldn’t the firing be done pronto?
Not always. Often it is best to immediately place the person on paid or unpaid leave, as might seem best, and then conduct an investigation. For example, that salesperson may be out of town with an expensive laptop and other valuable equipment. Firing that person over the phone might be the wrong thing to do because you may never see that equipment again. Moreover, an investigation may show that the salesperson is not stealing customers. So, it is usually always best to stop, reflect and think before acting.
Talk about the termination with other executives and with human resources. Do we have a pattern at this workplace? Have we just fired five employees over 60 years of age in the past year and not others employees have been fired? Did this employee recently complain that she is owed overtime pay and will we be liable for retaliation? Did we recently forgive far worse conduct by another employee as compared to the conduct we are using to justify this termination? Does our employment handbook give the employee more rights? These are all issues that should be thoughtfully considered. There is no rush. Make sure you have found the right answer.
2. Document performance to support the decision. Hopefully you have good documentation procedures in place already and have given the employee evaluations and warnings that the performance is subpar or that there is some other business reason for the termination. Often, I am asked to confer with clients regarding a termination only to find out that the employee file has no evaluations and no written warnings. That is not good as you may find yourself in front of the EEOC or a federal court with an empty employment file. A cardinal rule of terminations is NO SURPRISES. An employee should have a pretty good idea that they are on the hot seat because they have received prior, written criticisms. If you have done a good job documenting performance, the termination meeting should go much better.
3. Always tell the truth. Pretext is a legal term of art to describe employers who lie. If the proffered reason for the termination is untrue, or a pretext, then the Court will often assume that a discriminatory, or illegal, reason, is the true cause for the firing. If the termination is not for cause but because of a downsizing, then do not make up other reasons, tell the employee you have to downsize. Sometimes employers do not like to do that because they fear that word on the street will be that the employer is having financial problems. However, you will find yourself with an angry and litigious former employee is you exaggerate the reasons for the termination. Similarly, if the reason given is that there is a downsizing, when in fact the person was a terrible employee and you have documented that well, don’t misrepresent the firing as a layoff. The employee who believes they are being laid off will be seeking to be reemployed when you are looking to rehire. Thus, your problem employee will become a recurring issue.
4. Fire the employee for what they admit to have done, not what is speculated to have happened. In almost every for cause termination situation there are facts that the employee admits which are sufficient to justify the action. Use those as the reason for the termination, not what is suspected. For example, the bank teller who admits that she failed to count the money before placing it in the bag will be fired for that and not for theft of the money which she adamantly denies. It can be surprising what employees admit to have done. When investigating a possible termination, ask neutral questions which might lead to candid admissions, which may then lead to a bullet-proof reason to fire.
5. Use a team to deliver the news. The team should consist of a person with authority to make the decision and one who can handle the details of the exit. It is often advisable to have a male-female team to handle the matter.
Think about who should be the decision maker and who should sign the termination letter. If the 68 year old company president is the appropriate person to fire the 72 year old vice president, make sure that is the person who is the decision maker, and not the 28 year vice president. Be aware of the common actor doctrine. If a person was hired by a particular executive, who knew of that person’s protected status, it is assumed that the same executive would not fire that person due to the discriminatory trait. So, if the female office manager hired the female secretary for the male company president, and then that secretary did a terrible job, make sure the office manager remains the decision maker on the termination. It will be assumed that she is not sexist. Similar concepts can be used with all terminations. Keep the hiring executive in the loop.
You need a witness in the room. Without a witness, the fired employee might create any type of story as to what happened during the termination meeting.
6. Consider using a termination letter. Laws in some states require a written reason be given for any termination. Moreover, the exit interview can be eased substantially by the use of a termination letter. The letter can set out a general reason for the action, and handle the details of the termination with an increased degree of professionalism.
Consider what the fired employee is going to do – go see a lawyer. That lawyer is going to ask for any documents provided the employee at the termination. Pictured the fired person digging through his paperwork to produce the 3 page letter which accurately sets out the bona fide reasons for the termination. The lawyer’s interest in the case will lower and the requested retainer will increase. Perhaps the employment attorney will just not take the case at all.
The termination letter should state the reason(s) for the termination. If you do not want to include the reasons, simply state that it is “for sound business reasons.” The letter should discuss money owed and to be paid (see below). The letter should discuss the company’s property and the proper return of that property. The letter should discuss how the employee can retain their property, whether that be by a meeting after hours or immediately, which is often pretty difficult. The latter should warn the employee if there are is a non-compete or trade secret agreement or concern.
7. Handle the money well. Know how much the employee is owed for wages, vacation, commissions, etc. By handing the fired employee an envelope with a check in the appropriate amount at the termination, you will substantially reduce the chances for lawsuit by a disgruntled employee.
It amazes me how many times I hear of employers who attend a termination meeting without any clue how much accrued, earned but unpaid PTO the employee is entitled to receive, or whether the employee will be paid til the end of the week. Think of those issues in advance. Have empathy for the fired person who must go home and inform a spouse and loved ones that he has just been fired, “and those idiots don’t even know how much they owe me!” That fired employee is soon going to looking for an attorney, which is exactly what you do NOT want to happen. Be professional and take care of the money. Include the check in the envelope with the termination letter if you can.
8. Terminate in a neutral site such as a board room or conference room. Besides being more fair to the discharged employee, the neutral site is more flexible than the executive’s office. The terminated employee may want to go over every detail of removing each nick-nack from the office or go over other details that the executive doesn’t need to remain to discuss. By using the neutral site, these situations can be avoided.
9. Shut up. Termination interviews can be ruined by poorly stated oral presentations. You have labored over this letter which the employee is trying to read, so let them do so. The best terminations are when the employee reads the letter, shakes your hand and walks out the door, nothing more to be said. Don’t ruin it by talking too much. Also, don’t engage in debate. The decision has been made and there is no reason to continue a discussion on the point. Ask the employee to sit down, hand them the letter, and let them read it.
Many employees will want to argue the issue. Sometimes the decision maker becomes defensive and wants to prove a point. Don’t ever let that happen. Your point has been made, the employee has been fired. That person is never going to agree with your decision and so do not try to argue the point at the termination meeting. These arguments will only lead to misconstrued quotes that show up in later employment discrimination lawsuits.
10. Consider a severance package. Many employees are looking for a package consisting of severance and other benefits. If you are willing to pay more than two severance, you should have an employment attorney draft a complete severance and release agreement which complies with the Older Workers Benefit Protection Act. In the long run, you may save a lot of time and money by providing a severance package.
Often, terminations are close calls. Perhaps the employee has had discrimination claims or other problems which might lead to a lawsuit for retaliation. A severance package starts the conversation about a mediated result between the parties, a compromise. If you offer a package, do not offer the most amount you would ever pay. For example, if an employer tells me that the most they would ever pay to this long time employee is 6 months’ severance, then offer 4 months in the package. That gives you some room to increase your offer after the employee, or her lawyer, sends you a demand for more money.
To comply with the Older Workers protection Act the release provided by an employer must advise the employee to see an attorney. The release must provide additional consideration which does not include anything that the employee is otherwise entitled to receive. The release cannot apply to anything that might happen in the future. The employee must be given 21 days to consider the release and 7 days to revoke it. For a group termination, meaning two or employees, the employees must be given 45 days to consider the release and 7 days to revoke it, as well as a separate document with the job titles and job classifications for those chosen for termination and those who are not. Some employers find those restrictions onerous and decide, as a matter of policy, to never provide a severance package. Those employers believe that suggesting to an employee to see an attorney is not a good idea. They also believe it is best to fire the employee and deal with those who seek severance after the termination.
11. Remind the employee of any obligations to the company. In most states, covenants not to compete are enforceable even against employees who have been fired. Also, many employees know confidential trade secrets belonging to the company and they may not realize the liability they face for misappropriating those. It is good practice to remind employees of their obligations in the terminations letter. Pull out those agreements and attach them to termination letter. Ultimately, a non-compete is an economic document, and you may be able to work out a deal with a former employee. For example, if you know the former employee is going to take a big part of your customer base when the covenant period is over, maybe you can make a deal to receive a portion of those commissions for a longer period of time.
12. Post-termination considerations. Do not follow all of these suggestions and then screw up the entire matter after the fact. Be aware that post-termination defamation and discrimination claims can be very expensive. Keep the circumstances of the termination confidential and instruct all others to do the same. Think about how you are going to announce the termination. Make sure that counsel is consulted regarding these announcements. Err on the side of keeping the reasons confidential. Don’t feel the need to give your side to everyone in the office, which could lead to a defamation suit. Don’t screw up a pristine termination by then going on a vendetta against the former employee and defaming them in the community.
Robinson v. Shell Oil is a fine example of an employer screwing up a termination after the fact. Mr. Robinson was fired, signed a release, and his employer thought he was long gone. Unfortunately, Mr. Robinson believed that his former employer was defaming him to prospective employees and the US Supreme Court ruled that he could pursue a race discrimination claim, even as a former employee.
Most employers have a policy of only giving the title and dates of employment to future employers. That is the best policy as employers often find themselves on a slippery slope when they agree to give some former employees a positive recommendation but not others.
Firing an employee is, without question, the hardest part of management. However, by following these guidelines you might find what you thought would be a difficult termination, turns out to be as harmless as a visit to the dentist — with no cavities.
