Inside Legal Secrets on how to Fire an Employee Without Causing Legal Backlash
A client called me recently in a state of great agitation. He had to fire one of his employees. The employee just wasn’t working out-he was often late for work, left early, failed to perform the tasks that were requested of him, and did not get along with his coworkers.
My client wanted to fire the employee on the spot and didn’t want to hear anything about why he couldn’t or shouldn’t do that.
After calming my client down, I explained the importance of acting carefully and thoughtfully. An abrupt termination of the employment relationship could create more problems for him than he had already. Among other things, the employee could be humiliated and angered and might lash back with accusations, claims and demands far beyond what was justified or what he would assert if he were not enraged.
I advised my client to go through the situation with me in some detail and to explain the background of the problem and the steps that he had taken to deal with it.
When we did that, it became apparent that there were significant performance problems with the employee, but that they had not been discussed with him. Under these circumstances, an abrupt termination could have had serious negative consequences for the employer.
Working together, we created a plan of action which included firm and frank discussion with the employee about the performance problems and creation of a timetable for improvement with an explicit warning that, if there was not improvement, the employment relationship would be terminated.
The employee listened when my client discussed these matters with him, but no improvement was forthcoming. After that took place-and after the employer had created a written record with regard to the lack of improvement-I again worked with the employer to create a plan.
This time the plan concerned the means of terminating the employment relationship without causing undue backlash. The plan had as its centerpiece a document entitled “Separation Agreement and General Release.” The document was prepared by me, in consultation with my client, and was designed to minimize the chances that the terminated employee would be able to pursue any claims against the company.
To my client’s relief and satisfaction, the employee accepted a modest severance payment and signed the release. He went on his way and was not heard from again. That outcome certainly was preferable to becoming embroiled in extended disputes, legal and otherwise, with the former employee.
This article will review and summarize the steps that can be taken to help you achieve such a successful outcome the next time you need to fire an employee.
A company’s employees are often its greatest asset, but they also can be a liability. If you determine that a particular employee is not contributing and needs to be fired, you must be very careful to avoid creating a destructive situation. In the process of firing, too many employers end up adding fuel to the fire and causing themselves a host of problems.
A disgruntled former employee may file charges of discrimination, commence lawsuits and claims, disparage you and your business, seek to compete unfairly with your business, try to steal and use your confidential information and trade secrets, seek to recruit and lure away your customers and employees, and cause harm to your business in many other ways.
You want to do everything you can to avoid problems of this sort.
The key is to avoid adding fuel to the fire. Adding fuel to the fire will merely result in greater anger on the part of the terminated employee and a greater likelihood of litigation, disparagement, sabotage and other problems.
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KEEP CALM AND CONTROLLED
The first thing to keep in mind is to control your interactions with the employee who is being terminated.
There is no upside to becoming hostile or nasty with the employee. Instead, you should approach the employee in a sympathetic way, expressing regret that things are not working out, and avoiding making accusations or severe comments about the employee’s job performance, no matter how accurate such comments might be.
The termination should take place in private and in a way that is not humiliating to the individual so as to avoid inflaming the individual against you.
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Second, it is preferable to avoid abrupt terminations. Of course, if the employee is stealing from the company or engaging in other serious misconduct, it may be necessary to terminate the employment on the spot without further discussion. In most cases, however, you should consider the possibility of giving the employee a warning that his or her employment will be terminated if conduct or job performance does not improve.
In some cases, a formal, written performance improvement plan may be warranted. A performance improvement plan provides a means of clarifying the issues and reducing the employee’s ability to claim later on that he was never criticized and that there was no legitimate basis for the termination.
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CREATE A PAPER TRAIL
A third crucial step is to create documentation of all performance and conduct issues. You should prepare a memorandum to the file every time there is a problem so that you will have a paper trail to support your decision to terminate the person’s employment.
If the performance or conduct problems are serious enough, it may be appropriate to issue a written warning or other disciplinary document to the employee to drive home your point and, most importantly, to create a clear written record for future use, if needed.
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GET A RELEASE
Fourth, just as it is important to treat the employee respectfully and carefully no matter how upset you are, it also is necessary to consider making a severance payment to the employee even though you may be totally fed up with him or her. The purpose of making the severance payment is to motivate the employee to sign a general release.
A general release is a document whereby an individual agrees not to sue or assert claims in the future. Such a document is an essential element of your termination process. Releases ordinarily are upheld by the courts as long as they are not obtained under duress and as long as they are supported by valid consideration-i.e., a payment to the employee to which the employee was not already entitled.
This means that you will have to consider providing the employee with a payment above and beyond what he or she has actually earned during the course of employment. This may be distasteful, but it is an essential element of a termination if you are going to limit your exposure to future litigation.
You will need to have counsel prepare a release form for you to use. The form must be tailored to the law of your particular state, the characteristics of the employee who is being terminated (such as his or her age) and other factors to ensure that the release is valid and adequately protects your rights and interests.
In some cases, you will want the release document to contain special additional provisions above and beyond the release itself, such as a prohibition on disparagement of your company by the terminated employee or a requirement that the terminated employee will not compete with your business. Again, it is vital to consult with counsel about such provisions. Only an experienced lawyer can assure that your document will in fact provide you with the protections you are seeking.
In conclusion, it is important to (a) treat the employee carefully and with sensitivity, (b) act in a thoughtful and judicious manner, (c) create a paper trail concerning the employment problems and your efforts to remedy them, and (d) have the terminated employee execute a form of general release which will protect you and your company going forward. If these steps are followed, you should be able to fire employees, when necessary, without causing legal backlash for yourself.
Paul T. Shoemaker