HOW TO FIRE AN EMPLOYEE THE LEGAL WAY

6 Termination Guidelines

These days, it’s much harder to get rid of a problem employee. Workers are more aware of their rights under the law—and they’re more likely to seek the advice of an attorney if they think they’ve been wronged by their employer. The result: A lot of workers are getting even by suing their employers for wrongful discharge or discrimination.

The lesson: Fire away, but do it the right way. Use this special report, How to Fire an Employee the Legal Way, as your guide on proper procedures to exercise your right to fire at will, lay the groundwork with progressive discipline, avoid wrongful termination lawsuits, and conduct termination meetings and exit interviews.

Termination Guidelines #1

Employers’ rights

Under the law in most states, if there’s no employment contract, workers are employed on an “at-will” basis. That means employers have the right to fire employees at any time for any reason or no reason at all, and, conversely, employees have the right to leave the organization at any time.

If an employee is under contract, though, the terms of the contract apply. A written contract may specify the reasons you can terminate the employee, while an oral contract usually implies that termination can occur only for cause. That means the employer can terminate the worker only for poor performance, dereliction of duty, an act of dishonesty or insubordination, or because the company needs to eliminate the employee’s position.

At-will limitations

Over the years, the employer’s right to fire at will has been limited, as courts have recognized exceptions to the at-will doctrine. Here are three major exceptions:

Exception 1: Discrimination.

Under federal law it’s illegal to terminate workers because of their age, race, religion, sex, national origin or a disability that does not influence their job performance. Some states add other limitations—for example, in many states, you can’t fire someone over sexual preference.

Exception 2: Public policy.

You cannot legally terminate an employee for reasons that violate public policy. That means you can’t fire one of your engineers for informing the EPA that your company has been dumping toxic waste in the river. By the same token, if a court orders you to garnish the wages of a worker who’s behind on child support, you can’t fire him merely to save yourself the hassle of additional paperwork.

Exception 3: “Just cause” promise.

If you tell your workers that they will be fired for cause only—or otherwise establish guidelines that spell out how and when terminations will be handled—you may be creating an implied employment contract.

The problem: If you don’t follow your disciplinary rules to the letter, you could find
yourself on the losing end of a lawsuit.

In short, employment at-will still exists, but it has been so deeply eroded with exceptions
that you’d be wise to follow a simple rule: Don’t fire a worker without a good reason that
you can articulate clearly and document convincingly.

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Termination Guidelines #2

The right way to fire: Lay the groundwork

It’s a lot easier to discipline a worker if you’ve made your expectations clear from the beginning. Each employee should have a job description that lists the tasks you expect accomplished daily or weekly. Make it clear, however, that these tasks are subject to change depending on the organization’s needs.

If you have rules specifying how certain tasks should be performed, post them in the work area. That helps workers do their jobs correctly and helps you point out when a rule is broken. Some employers state clearly in their handbooks that employees are subject to firing without cause. Some companies ask employees to acknowledge this by signing a form. There’s a trade-off here: Signing such a statement won’t endear your workers to you and the company. A policy of firing only for just cause is more likely to build loyalty, but it might subject you to judicial review.

When you’re unhappy with a worker’s performance, the first step is to point out the
problem and suggest ways to correct it. Be objective, direct and specific. Ideally, the
employee will acknowledge the problem and do what it takes to straighten up.

6 classic firing mistakes to avoid

How can you avoid the anger of fired employees that might later manifest itself as a lawsuit? Follow these guidelines:

  1. Keep your cool. Avoid heightening an already emotional situation. Don’t spring the news suddenly, shout names or berate the worker in front of other employees.
  2. Avoid surprises. Workers should never be completely surprised by a termination. Give your employees regular feedback on their performance, and suggest methods for improvement. At the very least, progressive discipline proves to a court that you had valid reasons for terminating a worker.
  3. Play by the rules. Follow your established discipline policy. If your handbook says you’ll provide a verbal warning, a written warning and a probationary period, then do each step. Of course, your handbook also should give you the right to terminate workers immediately who engage in serious misconduct. But before skipping progressive discipline, be sure of your facts. It’s not enough to hear rumors of wrongdoing from others. Conduct a thorough investigation, then ask the employee for his side.
  4. Watch what you say. Workers will remember whatever you say on the day you fire them—or in the preceding weeks—in the worst possible light. While you should always avoid making statements that could be construed as discriminatory, you should be especially cautious if you may have to fire a worker.
  5. Don’t be too kind. Sometimes you may feel compassion for a worker you must fire, but don’t express your feelings in the wrong way. If a worker’s performance is substandard, don’t offer compliments on his job performance. Doing so may make you feel better, but it will only infuriate the worker because it will appear that he is being fired for no reason. And that can easily spark a wrongful termination suit. Also, when hiring workers, don’t make promises you can’t keep. Some courts have taken general statements, such as “We hope you’ll be with us a long time,” as a promise of perpetual employment.
  6. Keep quiet. Don’t discuss your reasons for the termination with other employees. It’s enough to say, "Jamie will not be working with us anymore." Some employers have spoken too freely about the reasons for a departed worker’s termination, only to find themselves in court defending a defamation of character suit.

If that doesn’t work, write a few notes about what the employee is doing wrong or failing to do right, and reference the standards you’ve communicated. Include the date of specific failings. Document every warning. Keep enough of a record that you can remember what happened, but not so much that it looks like a setup.

The firing line

If you’ve been careful to set standards, discuss shortcomings and suggest improvements, you may see enough progress that you don’t have to terminate the worker. If nothing else, giving constant feedback should make the firing process easier because the worker will see it coming. That doesn’t mean, of course, that the process will be easy. Some employees will get teary, others might turn violent, and all might try to distort the events of the actual firing. To protect yourself:

  • Have someone else with you when you talk to the employee so there’s no question of what was said.
  • Write a memo afterward about the meeting and have the witness sign it.
  • Conduct an exit interview to give employees a chance to let off steam or express their concerns.

Termination Guidelines #3

Avoid wrongful termination suits: Use progressive discipline policy

While no federal or state law requires you to create and follow a progressive discipline policy, courts often come down hard on employers that promise progressive discipline but fail to deliver it. In fact, many employee lawsuits stem from the employee’s perception that he or she didn’t receive a “fair” deal.

That’s why the most reliable way to protect your organization from wrongful termination charges is to establish a progressive discipline system and make sure your supervisors enforce it.

An increasing number of lawsuits have been filed in which terminated employees complain that employers have violated their own progressive discipline policies by firing the employee before working through all the rungs on the progressive-discipline ladder.

That’s why your policy should include language allowing you to skip progressive discipline and fire employees right away for particularly egregious behavior.

While it’s usually your right to terminate at-will employees at any time for misconduct or lax performance, a progressive discipline policy lets you make clear that problems exist and need improvement.

How it works: Your policy simply increases the severity of a penalty each time an employee breaks a rule. Typically, a policy progresses from oral warnings to written warnings, suspensions and then termination. That way, employees won’t be surprised when they reach the end and are fired. By taking the surprise out of the firing, you lessen your exposure to a wrongful termination lawsuit.

Five-step model policy

Here are the five standard pieces of progressive discipline:

  1. Oral warning/reprimand. As soon as a supervisor perceives performance or behavior problems, he or she should issue oral reprimands. Ask the worker if any long-term problems or skill deficiencies need correcting.Make sure the supervisor keeps detailed (and dated) notes on the reason for the warning and the response. This step is vital. Don’t assume that managers will remember specifics about disciplinary actions—or even remain employed by your organization—when a complaint makes its way to court.
  2. Written warning/reprimand. If the problem persists (or more problems emerge), the supervisor should meet with the worker and provide a written warning that details the problem and the steps needed to improve. If possible, ask another person (a management-level employee or HR rep) to sit in on the meeting.
    The written warning should summarize the issues discussed, set a timeline for action and describe in detail the corrective steps agreed upon. Explain the standards that will be used to judge the employee.
    Also explain the consequences of continued poor performance, including termination. Require the employee to sign this form, acknowledging that he or she has received it. Place the document in the employee’s personnel file.
  3. Final written warning. If the performance doesn’t improve, deliver a final written warning, possibly including a “last chance agreement.” Show the worker copies of previous warnings, illustrating specific areas in which he or she must improve. Specify the time period and, again, obtain the employee’s signature on the warning.
  4. Termination review. If problems continue, the supervisor should notify HR. In general, supervisors shouldn’t hold solo firing authority. However, to preserve supervisors’ exempt status under the Fair Labor Standards Act, they should have significant say in hiring and firing decisions. Some organizations suspend employees while they investigate and decide whether to terminate. Before acting, make sure that your disciplinary measures are consistent with those you’ve taken in other similar situations. If you don’t, a court could say illegal age, sex or race discrimination was the true reason for your actions. Document your action and reasoning.
  5. Termination. If you make the decision to fire, meet with the employee and deliver a termination letter that states the reasons for dismissal.

Is your discipline fair?

The perception that management is “against” workers, once earned, is hard to shake. That’s why it’s vital to ensure that you treat employees fairly during disciplinary investigations. Before handing down discipline, ask these five questions:

  1. Does the punishment fit the crime (or is the employee being singled out)?
  2. Is the discipline consistent? Have different supervisors used different discipline for similar conduct?
  3. Has the discipline been administered after a proper investigation of the facts? Be a neutral fact-finder until you gather all the facts.
  4. Is the discipline being taken quickly? A simple investigation that takes weeks could be seen as though your organization is trying to find problems. Inform the employee of the steps you’re going through, as well as when you’ll respond.
  5. Is the discipline confidential? Warn everyone involved that speaking about disciplinary investigations or actions is strictly on a need-to-know basis.

Self-audit: wrongful termination

Before firing anyone, ask yourself the following questions to gauge whether you could defend yourself in a wrongful discharge suit. If you answer “Yes” to any, your risk of sparking a lawsuit greatly increases.

Does your company have a history of discharging employees for any of these reasons?

  1. Filing a workers’ comp claim?
  2. Speaking out on issues with which your organization disagrees?
  3. Refusing to engage in activities they felt violated state or federal statutes?
  4. Reporting suspected health hazards to a state agency?
  5. Missing time because of jury duty?
  6. Blowing the whistle on a superior or a co-worker who violated a law or company policy?
  7. Filing a wage-hour complaint?
  8. Filing charges with or giving testimony to a state or federal agency for workplace violations?
  9. Having wages garnished?
  10. Opposing a discriminatory employment practice or filing a charge?
  11. Testifying or helping in an employment-related investigation?
  12. Refusing a polygraph test?

There are other factors that don’t substantiate claims of constructive discharge, such as:

  • a one-time inappropriate comment from a supervisor
  • expecting employees to live up to what’s demanded on the job
  • not being very friendly or communicative
  • handing out a less-than-expected pay raise or even a demotion or transfer, as long as the supervisor can prove that such a negative report is valid.

3. Do employers have to tread carefully when disciplining an employee who has filed a complaint for fear of a constructive discharge claim?

You don’t have to feel handcuffed in your dealings with an employee who has filed a complaint. But you do have to be careful with any disciplinary action taken, particularly after the charge has been filed. Here are six points to keep in mind before you discipline an employee who could strike back with a claim of constructive discharge.

  1. You must be able to show that the behavior of the employee you want to discipline violates written company policy.
  2. You have to prove that the employee was aware of the policy and the possible consequences for violating it.
  3. Your recommended discipline must be consistent with actions you have taken in the past against other employees who have not filed any charges against the company. Make sure both extremes are avoided—special treatment or retaliation.
  4. You should never try to build a case against employees who have filed a complaint. Putting them under special scrutiny or constructing a file filled with reprimands and/or unsatisfactory performance appraisals will make matters worse.
  5. Remember that even if an employee’s original complaint against the company is dismissed, the person is still protected. Retaliation under such circumstances can turn an innocent employer into a guilty one if the employee can prove retaliation.
  6. Take a close look at all undesirable jobs. Make sure supervisors don’t use them as a weapon to punish complaining employees.
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Termination Guidelines #4

Beware of constructive discharge

Constructive discharge occurs when employees claim their working conditions were so intolerable that they were forced to quit. Employers must stay within federal employment laws so they don’t contribute to factors that trigger constructive discharge claims, and don’t heighten the risk of employee lawsuits.

1. What do the courts look at when it comes to claims of constructive discharge? What types of actions can lead to such a claim?

Here’s how one state supreme court defined constructive discharge: “An employee who is forced to resign due to actions and conditions so intolerable or aggravated at the time of his resignation that a reasonable person in the employee’s position would have resigned, and whose employer had actual or constructive knowledge of the intolerable actions and conditions and of their impact on the employee and could have remedied the situation, but did not, is constructively discharged.”

What falls into the intolerable or aggravated category? Think: actions intended to humiliate (e.g., demoting a vice president to janitor overnight); actions intended to harass (e.g., requiring a black employee to work extra hours for the same pay as white co-workers and punch a clock while others do not); actions intended to destroy the employee’s career or guarantee job loss (e.g., sudden, unexplained drops in performance ratings, skipped promotions, forced demotions, pay cuts).

2. What other types of factors contribute to a constructive discharge claim?

Factors that may contribute to a constructive discharge claim—either singly or in combination—include whether an employee suffered:

  • a demotion
  • reduction in salary
  • reduction in job responsibilities
  • reassignment to menial or degrading work
  • reassignment to work under a younger supervisor
  • involuntary transfer to a less desirable position
  • badgering, harassment or humiliation by the employer
  • offers of early retirement or encouragement to retire
  • offers of continued employment on terms less favorable than the employee’s former status
  • a threat of violence or actual physical assault
  • a threat of termination

Termination Guidelines #5

Termination meeting: Choose ‘firing words’ carefully

The time has arrived … You’ve evaluated all the reasons why an employee should be terminated. You’ve run the decision through an employment law audit and made sure you have appropriate records and documentation supporting the decision. Now it’s time to tell the employee that he or she is about to become a former employee.

How you break the news to the employee is key: Follow basic rules of legal and business etiquette to allow the employee to leave with dignity—and not return with a lawsuit.

If the employee’s manager, rather than HR, is designated the bearer of bad news, at least have an HR rep present at the meeting to answer questions the employee may have and to help reduce the risk of legal exposure by keeping both sides focused on the matter at hand. Also, it helps to have a witness, in case the employee challenges the termination later.

Briefly deliver the news by summarizing the well-documented, job-related reasons for the termination. That way, while the employee may not like it, he or she will have little to dispute. Allow the person to offer his or her side of the story—and even vent a little emotion—without interruption.

Also, avoid using any harsh words during termination meetings that would serve only to inflame the issue. Stick to the facts; don’t make generalizing statements.

6 basic procedures to follow

Although termination meetings are unpleasant, these practices and procedures can help make the situation as painless—and legally safe—as possible:

  1. Conduct the termination meeting in a neutral location. If a conference room or other neutral location is not available, conduct the meeting in the employee’s office. The employee will be less likely to become defensive in his or her own territory.
  2. Keep the termination meeting brief. On average, a termination meeting should last 10 to 15 minutes. Typically, the less said, the better. For the most part, it should be a one-way conversation; don’t let it turn into a debate. But that’s not to say you shouldn’t let the employee speak at all. Give the employee a chance to respond. Forcing the employee to bottle up feelings will just make the person more disgruntled.
  3. Tell the employee the real reason for the dismissal. Trying to sugarcoat a serious problem can backfire later in court. Make sure the reason you state is fully supported by the employee’s record. If you have done the job of progressive discipline properly, the employee should know most of the facts already.
  4. Be firm in your termination decision. Don’t give the employee the impression the decision may be reversed. If an employee tries to challenge the decision, let him or her know that the termination is final.
  5. Be prepared to answer questions. Few employees are fully prepared to be fired, and may have questions regarding the reasons behind your decision.
  6. Document. Complete a “General Separation Notice” and retain a copy in the employee’s personnel file should any questions arise post-termination.

Termination Meeting Checklist

Tell the employee the purpose of the meeting.

Emphasize that all relevant factors were reviewed and the decision is final and cannot be reversed. Advise that other options were explored, if applicable.

Tell the employee the effective date of the termination.

Review with the employee a written summary of benefits.

Verify the employee’s address and that of his/her dependents.

Explain the company’s policy on providing references to prospective employers, and have the employee sign a reference release form.

Have final paycheck ready, or state when the employee can expect to receive it.

Outline the next steps in the termination process, such as return of company property; how the employee can collect his belongings; when he must leave the premises.

Review the employee’s confidentiality obligations.

Explain any available outplacement assistance services.

After the meeting, update the employee’s personnel file before placing it into inactive status. Then, make sure the employee’s name is removed from company directories, including email, and have business mail routed to the individual who will handle the former employee’s duties.

General Separation Notice

[Note: Employees may sign this form during their exit interview or when they receive their final paycheck.]

Company:

Employee:

Dates of Employment (Start & Last):

Working Hours:

Working Days:

Rate of Pay:

Severance Pay:

Job Title:

Previous Dates of Employment:

Overtime? Yes No

Union Involved? Yes No

Voluntary Quit Discharge Lack of Work

Occurrence: Type of Discipline: Date Issued:

What were the factors leading to separation if no discipline was applied?

What other circumstances, if any, were taken into consideration?

Employee’s Comments:

Employee’s Signature:

Date:

Immediate Supervisor's Signature:

Date:

Is this individual legible for rehire?

Yes No

If No, Reason:

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Termination Guidelines #6

Conducting exit interviews

Many employers think that conducting exit interviews with employees who have been fired is a waste of time. After all, angry or bitter ex-employees would not be motivated to do something beneficial for the organization that just let them go. And if they’re harboring negative feelings toward the company, how helpful could their feedback be?

But there are several reasons you should conduct an exit interview with an employee who has been fired or otherwise terminated:

  1. To discover any unknown causes of an involuntary termination; that information could prevent the recurrence of such an action in the future.
  2. To learn of any problems the employee may have had with the organization that could be corrected.
  3. To learn of any misunderstanding or conflict between an employee and the immediate supervisor so that a similar situation can be avoided in the future.
  4. To ensure the employee understands what compensation, allowances, benefits and payments he or she is entitled to receive.
  5. To make sure company property has been returned.

Exit interviews, whether with an employee who has been fired or who has resigned, can be a valuable resource. Information learned in an exit interview can pinpoint areas of concern and provide a foundation for implementing changes.

EXIT INTERVIEW FORM (INVOLUNTARY TERMINATION)

[Use this form as a guide for asking questions, or give it to the employee to complete during an exit interview.]

Name:

Supervisor's Name:

Department:

Job Title:

What did you like most about your job?

What did you like least about your job?

How did you feel about the other employees in your department?

How did you feel about the supervision and feedback you received?

What would you have done differently if you had been the manager?

How would you rate your pay and benefits? How would you rate the training you received? How would you rate your overall working conditions? What improvements to the job, department or company do you suggest? Additional comments:

Employee's Signature:

Date:

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