Enterprise -- Legal Affairs: Management
WHAT TO DO BEFORE YOU SAY `YOU'RE OUTTA HERE'
A few crucial procedures can help lower the legal risks in firing an employee
Sooner or later, it's bound to happen. An employee's incompetence becomes so disruptive to your business that you can't afford to let the situation continue. Finally, in a fit of desperation, you drop the ax. Firing someone is never easy, particularly in small workplaces where employees are more like extended family. But the bottom line question is whether you're wearing the necessary legal armor.
Even though nearly all states in theory recognize the concept of "at will" employment--the right to fire a worker for any or no reason--the reality is, there are statutes and court decisions that limit employers' freedom. Federal (and some state) laws protect workers against discrimination based on age, sex, race, and disability. Employers need to know how to protect themselves when forced to make the dreaded decision. Fired workers may claim they were sexually harassed or were terminated in retaliation for complaining about workplace safety or illegal business practices. And the courts continue to plow new ground. The California Supreme Court, for example, is reviewing a lower court decision that a worker's lengthy, satisfactory employment could create an "implied contract" that barred dismissal without cause.
How often do fired workers sue? A survey this year of more than 600 human resources professionals conducted by the Society for Human Resource Management found that 53% of the responding companies, including businesses of all sizes, had been taken to court by an ex-worker in the past five years. Overall, the survey found, a third of the suits alleged wrongful termination and about half involved a discrimination charge.
Small assets are no protection, either. Theodora R. Lee, a partner with the law firm of Littler Mendelson in Oakland, Calif., recently defended a four-employee insurance agency sued for sexual harassment by a worker who the firm alleged was fired for performance and behavior problems. "We prevailed," she says, "but not without the owner incurring a lot of legal fees."
Still, employers shouldn't feel intimidated. The key is to carefully follow procedures that can make your decisions defensible as fair and reasonable.
Before doing anything that might lay the groundwork for firing, examine your dissatisfaction. "A firing decision has to be tied to performance expectations," stresses Rhoma D. Young, an employment consultant in Oakland. "It's not a question of how well you like a person." Acting from emotion, she warns, opens the door to accusations of hidden, possibly illegal, motives. If you've identified a performance problem, tell the worker right away and give him or her a chance to improve. "You can't be covered enough in terms of documentation and a paper trail," says Judy Galbraith, founder of the 23-employee Free Spirit Press in Minneapolis. She credits her suit-free status after 15 years in business to clear warnings. If communication skills are the issue, "I'll show on a particular memo what's incorrect or vague," she says.
Workers who are caught stealing or who endanger others may need to be fired on the spot. But too often, managers wait until a crisis erupts--then fire in a fit of rage or exasperation. Human resources consultant Allison Hopkins of Core Elements Inc. in Saratoga, Calif., says she was recently consulted about a worker's on-the-job drinking. "They wanted to fire her, but nobody had talked to her about it. I said, `you have to sit down with her and let her know it's a problem."' Alcoholism is covered by the Americans with Disabilities Act (ADA), which can limit the employer's options.
Keep records of your talks, detailing the problem, the plans for improvement, and any deadlines you set. Ask the worker to read and sign a copy. "I can't tell you the number of instances where an employer is firmly convinced that an individual's performance has been substandard for months, yet nothing exists in the personnel file," says employment lawyer Ulrico S. Rosales in the Palo Alto (Calif.) office of McCutchen, Doyle, Brown & Enersen.
How long should you give someone to improve? Most experts say a month or so. For behavioral problems, such as unexcused tardiness, the misconduct should stop immediately. For deeper difficulties, such as substance abuse, longer may be necessary and humane.
Make sure you apply standards equitably to everyone, but take special care with workers in a "protected class"--women, minorities, employees over age 40, and the disabled. Washington employment lawyer Maurice Baskin, recalls a client who wanted to fire an African-American for justifiable reasons. He warned it was risky because the company could not prove it had dismissed all other workers for the same offenses.
A tricky situation can arise if the worker claims poor performance stems from an ADA-covered condition such as epilepsy or even drug addiction. Lynne C. Hermle, a partner with the San Francisco law firm Orrick, Herrington & Sutcliffe, says to solicit suggestions from the worker to improve things. The law only requires you to make "reasonable accommodations." Clearly, that's a subjective term, but you aren't required to spend a huge amount of money (relative to the scope of your resources) or make a major alteration to the working environment. The ADA only applies to companies with at least 15 employees, but some states, including California, have laws that apply to smaller firms.
After you have followed all the crucial steps and decided to proceed with the firing, don't delay. Otherwise, the worker may claim you condoned the disputed conduct and that the firing wasn't "for cause." This not only could provide grounds for a lawsuit but also might qualify the employee for unemployment benefits, which can cause your unemployment insurance rates to rise.
When you break the bad news, keep it simple. Rehashing the person's shortcomings may provoke debate and you could say something that, in court, could be construed as inconsistent with earlier warnings. Supply all the necessary information about continuing benefits, such as COBRA health insurance, and any severance package you choose to provide. And finally, treat the worker with respect. "You're already taking the guy's job, don't take his dignity," says human resources consultant, Randy Houck of Industrial Relations Assistance Inc. in Tyler, Tex.
NO E-MAIL. It may be best to have someone other than the worker's immediate supervisor do the firing, since bad feelings may have developed between the two. But by all means, have someone tell the worker in person. Consultant Hopkins has seen some companies fire people by E-mail or with a voice-mail message. It's not just shoddy management; it could give the alienated worker added emotional incentive to sue. So could being escorted out of the office by a security guard.
What should other workers know about the firing? Don't lie to them, but don't go into gory detail. Bad-mouthing a fired worker could trigger a defamation suit. In general, when ousting someone, keep a perspective on who's really important--those who remain.By Susan Beck in San FranciscoReturn to top