Before you even think of uttering those words, you’d better be sure they’ll stand up in court.
In most jurisdictions, an employer and employee are free to terminate their relationship at any time, for any reason. Sometimes called “at will,” this arrangement sounds simple. But the ramifications are far from it.
Most of us are aware that employees cannot be terminated based on their race, gender, age or disability. However, there are a number of other exceptions to the “at will” rule based on state and federal statutes. For instance, lesser-known laws provide protection for employees who are absent due to jury duty, military service or attendance as a witness in a criminal trial. Some states have limits on the use of criminal history in hiring and firing decisions. Others have protections based on employees’ sexual preferences and sometimes municipal law conflicts with state law. Suffice it to say that even an “at will” employer better have a well-documented cause before terminating anyone.
The key to avoiding litigation is good planning, knowledge and investigation.
Here are 10 steps you should take, so you don't end up in the court room.
1. Distribute an employee handbook.
This document establishes disciplinary policies, communicates them to everyone equally and can offer you protection if an employee later takes you to court. Give a hard copy to new hires on their first day and have them acknowledge receipt in writing. Although there are “boilerplate” handbooks online, always consult a lawyer to ensure the handbook is specific to your business and complies with local laws.
2. Document violations.
When it comes to poor performance or violations of company policy, a conversation is not enough. Any issues should be in writing and acknowledged by the employee. Although you can do this by email, I recommend a written memorandum signed by the employee and placed in their personnel file. Undocumented issues leading up to termination are a recipe for expensive litigation or a costly settlement.
3. Enforce disciplinary policy.
Whatever the consequences are for violating company policy, it is up to you as the employer to enforce it consistently. When you make exceptions, even with the best of intentions, you risk claims of disparate treatment due to race, gender, age or disability.
4. Investigate before termination.
The moment you feel you want to fire someone is the moment a thorough investigation should begin into the basis of termination. This should include documented interviews with supervisors and co-workers as well as a review of any related computer files and emails. All evidence should be preserved to avoid any claims of spoliation (interfering with evidence).
5. Know the law.
Certain laws may have special significance to the person you are terminating. For instance, discrimination related to age, race and gender as well as disability. If you have any concerns, consult counsel to review any special circumstances as well as the process that led up to termination.
6. Put the employee on notice.
As an at-will employer, you’re not obligated to give an employee notice of termination, but warning of problems and giving the employee a chance to improve can soften the blow. A worker who is aware of the issues is less likely to file a claim. A common theme from plaintiffs: “They never told me I was doing anything wrong.”
7. Handle termination with dignity.
If an employee doesn’t improve after being put on notice, it’s time to end the relationship with dignity and in a professional manner. Firings should occur in a private area with at least one witness, but away from other employees.
8. Be brief and accurate.
Unnecessary information can create more questions than answers for the employee. It can also lead to more questions in court. A script with bullet points prepared prior to the meeting is always a good idea.
9. Avoid sugarcoating.
Be clear about the reason for termination. If the employee is misled and the true reason is disclosed after a claim is made, the employee will claim it’s merely a pretext or false. Once proven, this may shift the burden back to the employer to prove a non-discriminatory reason for the termination. Your credibility will be questioned.
10. Fulfill the requirements
Be sure to communicate all legal requirements including, but not limited to, COBRA benefits, last paycheck, unemployment options and transportability of other insurance. This should be confirmed in writing.
Where possible, I recommend severance policies that require the employee to sign a release to receive payment. These releases are generally enforceable and dissuade an employee from filing a claim. The severance cost is modest compared to a lawsuit.
And think twice before you deny unemployment benefits. In most states, absent an employee quitting, stealing or truly egregious misconduct, an employee who is terminated (even for incompetence) will be eligible for unemployment compensation. When an employer resists, it almost always leads to the ex-employee contacting an attorney. It’s not worth the cost of fighting a claim for discrimination or other protected activity.
Gawthrop Greenwood Associate John Larkin also contributed to this article.