By Mike DuBose
It was the year 2005 and our company was experiencing success like I had never dreamed of having. We were not perfect, but it seemed that just about everything we touched turned to gold. Then, without warning, it happened! Our success rate for securing projects, which had reached 90 percent over 20 years, plummeted to 38 percent for one of our programs. We were all stunned! Our work was impeccable. How could that happen? We had fallen into the trap of thinking we were invincible, and the good Lord had showed us a new path of humility.
After the shock wore off, the realization came that we were in trouble if spending continued as we had planned. Our budget was exceeding $3 million and when we ran the numbers to balance the budget with the new revenue projections, the realization set in that we had to cut nearly $200,000 a year. Yes, my dream of having a corporate jet vanished overnight! More importantly, it meant that the budget cuts would impact others’ lives.
Identifying and reacting swiftly but logically to a budget crisis is critical. You cannot sit by and watch your company bleed to death when warning shots are going off all over the place. We had to stop the music, face the “brutal facts of reality,” [1] and do something about the problem. One division, which required a lot of financial and staff time support, was losing significant amounts of money. We ripped the budget apart looking for things to cut, but the bottom line remained that personnel was our most significant expense.
We agonized for 30 days, trying every formula we could think of to correct the budget, but to no avail. We finally determined that we had to eliminate four staff positions and other expenses equating to $200,000. I considered all four of these employees friends and really cared for them. They were good people and were very competent. But in the end, I had to put that president’s hat on, be the leader of the company, and make the budget cuts to help the company survive and protect the employees who remained behind. Making tough decisions that keep the company alive is a critical part of the life of a manager or business owner. In Good to Great, Jim Collins writes, “Level 5 leaders are fanatically driven, infected with an incurable need to produce results. They will sell the mills or fire their brother, if that’s what it takes to make the company great.” [2]
To approach the budget problem in a systematic way, we developed a PowerPoint presentation and provided detailed information about our budget problems to the entire staff. We felt that factual, honest communications were very important in leading up to the terminations. We developed detailed notes to be used for the termination procedures and ran those by our human resource experts at Administaff. The senior management team decided to allow the impacted employees to remain on staff with benefits until they found a new place to work.
Even though we knew that we were doing the right thing for the company, the days preceding the companywide meeting and the terminations were gut-wrenching. To make matters more traumatic, days before the terminations, one of the impacted staff excitedly announced that she was pregnant with her first child. I felt like the worst human being in the world, but our plan was based on facts and we could not turn back from doing what was right for the company. How would you like to be known in the company as the leader who terminated a nice, competent, and pregnant woman that everyone liked?
When the terminations were made, I think we all were very emotional, but we followed the plan we had made. Afterward, other employees within the company were also concerned for the employees who had been laid off and some even offered to give up some of their salaries to keep them.
I worked very hard trying to find the laid-off employees jobs with other agencies. I wrote letters to everyone I knew that might help, made calls to employers, and attended work fairs to promote the employees. Even though most of them found jobs with even higher salaries and there were no legal ramifications for our actions, the memory of that dreadful experience has never left me. As the leader, I accepted responsibility for the financial security of our company and apologized to our staff in a companywide meeting.
Leaders have to be caring but tough in a financial crisis. Too many leaders sit back and watch the bleeding only to see the company go out of business! I think I would fire my own mother if it meant that the company could survive. However, terminating employees is simply a nightmare. Whether you are terminating for cause or for financial reasons, there is no such thing as a pleasant termination.
For this chapter, JoAnn Moss, President of Human Resource Dynamics, [3] and I explored types of employee terminations ranging from downsizing to terminations for egregious disciplinary problems. Regardless of the cause, we concluded that thereisnothingmore unpleasant, stressful, and daunting than having to terminate an employee. When we ask other business owners and managers what they consider the most unpleasant part of running a business, the answer is almost unanimous: “firing people.” You can use different words or phrase like reduction in force (or RIF), downsizing, firing, termination, attrition, elimination, or others. The bottom line is that someone in your organization will be asked to leave and you (as leader) will have the awful job of telling them the bad news.
Regardless of the reason for an employee’s termination, it is an emotional, traumatic experience for the employee, other staff, and the employer. The employee is likely to go through emotions similar to those experienced after a death of a loved one. These emotions may manifest themselves in a number of ways, some of which could be dangerous for the employer and other employees in the company. It is important to realize that in making the decision to terminate, you are not only making a decision that (hopefully) is best for the company, you are also making a decision that will drastically affect the lives of people (not only the employee, but his or her family and other company employees as well). It is not a decision to be taken lightly nor is it a decision to be entered into without proper and very careful preparation.
However, as unpleasant as it is, if you manage or lead a business, you know that terminations are a necessary part of running a business. Employees are terminated for a number of reasons. In the scenario I mentioned earlier, they were laid off based on financial needs which were not the fault of the employees involved. Wrongful termination charges can stem from any kind of adverse employment action, and you should apply a philosophy of fair treatment and common sense, regardless of the reason for termination. Because of the errors business owners and managers often make in dealing with performance or disciplinary problems, terminations “for cause” place the company in a particularly vulnerable position. For this reason, we will mostly discuss those types of terminations.
No matter how sound your recruitment and hiring process are, there are going to be times when an employee’s performance is inadequate, the employee is a disciplinary problem, the employee doesn’t share the company’s vision and goals, or the employee doesn’t fit into the company’s culture. Therefore, that person becomes a liability to the company.
Experts seem to agree that just a few of the wrong employees can bring down a whole company. In Good to Great, Jim Collins saysthat great companies get “the wrong people off the bus.” [4] They do this because, “Letting the wrong people hang around is unfair to all the right people…Worse, it can drive away the best people.” [5] Unfortunately, some employers are so afraid of being sued that they delay or avoid terminating high-risk employees. This is costly not only in terms of productivity, but also in terms of reduced morale and potential danger to customers and other company employees. Jack Welch pointed out that many workplace problems lie with underperformers. “By not carrying their weight, they make the pie smaller for everyone. That can cause resentment,” [6] he writes in Winning. In Monday Morning Leadership, Cotrell states that we should “dehire the people who are not carrying their share of the load.” [7]
The bottom line is that sooner than later, you will be faced with the need to terminate an employee. In the United States, employees do not have to be fired for cause; however, there are federal and state laws intended to ensure that employees are treated fairly. It is critical that managers and leaders understand the laws that protect employees from illegal discrimination and that they approach any termination as if their company will have to defend it in court.
The following are three danger zones that employers need to consider when contemplating the termination of any employee:
Members of Protected Classes: Federal law prohibits employment discrimination on the basis of race, color, religion, national origin, gender, pregnancy, [8] age, [9] disability, citizenship, [10] and military service. [11] Any employee who falls into one of these categories is considered to be a member of a protected class. Additionally, depending on the state in which your business is located, you may also be subject to laws protecting employees in other categories, such as those who are in a same-sex relationship.
It is easy to understand the very real fear of being sued by a terminated employee, especially if he or she is a member of a protected class. According to the U.S. Equal Employment Opportunity Commission, the EEOC received 82,792charges of discrimination in 2007 [12] alone!
As the leader of a company, what does that statistic say to you and your managers? You have a good chance that you could face a time-consuming and potentially expensive complaint or even a lawsuit. The number of employment lawsuits that actually make it to trial is comparatively smaller, but even if the case is settled out of court, dismissed, or the jury finds in the employer’s favor, your company will expend a lot of time, money, and manpower investigating and responding to the claim. Your company may also be responsible for the attorney’s fees for the aggrieved employee.
All too often, employers are so afraid of being sued that members of protected classes are not held to the same standards of behavior or accountability as other employees. We have seen organizations in which management was virtually held hostage by an unproductive employee who was a member of a protected class. This kind of “look-the-other-way management” creates an internal culture of fear, distrust, resentment, and disrespect that will permeate the entire organization. Competent staff will begin asking questions about incompetent workers like, “Why does leadership allow that person to get away with their inappropriate behavior and incompetence? Why don’t they do something about this? Why don’t our leaders lead and make the tough decisions? Why am I held to higher standards than that person?”
The safest way to avoid being sued by such an employee is to fire the person as soon as you are certain they are not going to work out. It is harder for the employee to make a case for discriminatory treatment if they are terminated early in their time with the company, especially if the termination takes place during an introductory period. Remember my motto, “Hire slow and tough; fire fast with care?”
You should have a provisionary period of three to six months where you can accurately assess new employees’ skills and work. While some employees can fool you during the interview, work problems will surface after they accept the job. It is important that you test their skills with varying types of work to see early on how they perform in different situations. Ideally, you want to document specific examples of their strengths and weaknesses during the provisional period. Then, at the end of the 90 to 180 days, conduct a formal assessment with the new employee to let them know how they are performing. During this time, you will have to make a decision to keep the employee, extend their provisionary period, or terminate.
When managers realize an employee is having problems during the provisionary period, they have to ask themselves:
- Can the employee’s inappropriate behaviors or performance be corrected or improved?
- Will coaching, mentoring, or training correct the problem?
- Will the employee be receptive to criticism and be open to improving his or her behavior?
If the answer is yes, you should extend the provisionary period, document any concerns, and give the employee the support, coaching, and training to help him or her improve his or her performance. If the answer is no or if you are unsure, then you have made a hiring mistake and should correct the problem quickly. The longer you wait, the more difficult it will be to help the person find another job. Many leaders feel guilty, ashamed, or refuse to accept the fact that they made a mistake. However, most managers and leaders will make a hiring mistake at some point in their careers (I once hired a Ph.D. who had a phobia of telephones!).You must resolve the issue, learn from the mistake, and move on.
It is imperative, however, that you treat all employees fairly, consistently, and equally, regardless of whether they are members of a protected class, new employees, or people who have worked for you for years.
Employees engaged in protected activities: The federal laws mentioned earlier not only protect employees from employment discrimination, they also protect employees from retaliation for exercising their rights under those laws. The following other federal laws also have anti-retaliation provisions:
- Family Medical Leave Act
- Employee Polygraph Protection Act
- National Labor Relations Act
- Fair Labor Standards Act
- Occupational Safety and Health Act
- Employee Retirement Income Security Act
- Immigration Reform and Control Act
- Uniformed Services Employment and Reemployment Rights Act
- Sarbanes-Oxley Act
For example, it is illegal for an employer to take any kind of adverse employment action against an employee for taking leave under the Family and Medical Leave Act or for reporting health or safety violations under the Occupational Safety and Health Act. A relatively new piece of legislation, the Sarbanes-Oxley Act of 2002, created new civil and criminal liability for retaliation against whistleblowers and federal informants. It is also illegal to take any kind of adverse employment action against any employee for taking part in an investigation or for testifying under any of the above laws. We have seen companies found guilty of retaliating against an employee even though the courts found them not guilty of the original charge.
The really tricky issue regarding retaliation is that it is easy for company managers and supervisors to take actions against employees that look like retaliation. Even though the actions are often not intended as such, attorneys line up to take these kinds of cases. According to EEOC statistics, over 26,663charges of retaliation were received in 2007, based on all statutes enforced by the EEOC.[13] More than $290 million in monetary benefits were recovered for charging parties. This amount does not include benefits obtained through litigation.
When firing an employee who has taken part in a protected activity, it is important that you not only ensure that the action is for valid, work-related reasons, but that you also avoid the appearance of retaliation. It is wise to avoid taking adverse employment actions close to the time the employee engaged in any protected activity. Some experts recommend waiting at least six months before taking any kind of adverse employment actions against an employee who has engaged in protected activity or become a member of a protected class (by, for example, filing a disability claim or a claim of sexual harassment).
In the event that an employee files a retaliation claim, it is critical that employers have documented any problems they have had with the employee immediately after the incident(s) occurred, not after a retaliation complaint is filed. Again, treat any adverse employment action as if you will have to defend it in court. Chances are good that you may have to.
Contractual Agreements: Before you make the decision to fire an employee, make sure that the employee/employer relationship is not bound by a contract. Even if you do not have a written contract, you may have inadvertently established an implied contract in several ways. Some courts have found that an initial offer letter could be interpreted as a contract. If an initial offer contains language that indicates the employee is offered a job for a certain length of time or that the employee can only be discharged for cause, you may be bound by an implied contract.
Another common and dangerous practice is supervisors, managers, and human resource professionals verbally indicating to an employee that their job is secure. This kind of language can give rise to oral contract or promissory estoppel (a false statement treated as a promise by a court when the listener had relied on what was told to him/her to his/her disadvantage) [14] claims.
There are pros and cons to having an employee handbook. Many business owners fear that a handbook could create an implied contract. Most human resource experts agree that the dangers of not having a handbook far outweigh the dangers of having one, ifthe handbook is properly written. To avoid your handbook being construed as a contract, the handbook must be carefully written and reviewed by professionals. It should not include any language indicating that the disciplinary procedures included in the handbook are mandatory. Your handbook should also include a disclaimer indicating that the employment relationship is at-will, with the disclaimer formatted in such a way that a reasonable person would notice it. You also have to consider employee unions and their policies as well.
Make sure that you have a signed statement in each employee’s file indicating they have received the handbook and understand it, that you can change the handbook at any time for any reason without notice, and that they recognize that their employment is at-will. Employee handbooks should be prepared by professionals in the human resources field to ensure compliance with state and federal requirements and fair, consistent treatment of all employees.
What’s the next move?
Let’s assume you have cleared all the hurdles listed thus far in this chapter and want to move forward with terminating an employee for cause. Before you make the final decision, take a few extra precautions.
If it is a performance issue, Jim Collins cautions that the person may be in the “wrong seat” and may perform better in an alternative job in the company. [15] Some individuals are unsuitable for some jobs but thrive in others. We have witnessed this firsthand with several of our employees who have been switched to different jobs in our other companies. If switching the person to a different job doesn’t work, it may be time to consider termination.
Make sure that you have documentation of honest evaluations and counseling sessions with the employee. If you are terminating for performance issues, you may have to prove in court that you are doing it for legitimate work-related reasons, not because the employee falls into a protected category. The worst thing you can do is terminate an employee for poor performance when the employee had not been evaluated on and told in writing about his or her performance issues and therefore had no reason to think he or she was not doing a good job.
If you have a progressive corrective action policy, make sure that you have followed that policy. Whether you have a policy on employee discipline or not, it is imperative that you apply the same treatment to all employees in similar situations. If you are firing this employee for doing something for which you disciplined another employee differently in the past, you are asking for trouble. Be consistent in the manner in which you discipline.
Don’t act before doing a proper investigation. Make sure that you have thoroughly examined the allegations against the employee before you take any action. Never count on one-sided stories—look for facts. One of the most significant improvements I have made as a leader is to cease coming to conclusions too fast. I try to assess all the facts and see both sides of a situation. Never fire anyone on the spot during an emotional confrontation.
If you fire an employee for disciplinary reasons of which he or she isn’t guilty, you risk being sued by the employee for wrongful discharge. You should have standard investigative procedures in place and follow them consistently. An outside consultant can bring objectivity and the appearance of fairness to internal investigations. Regardless of who does the actual terminating, document, document, document! When in doubt, document some more! Business experts agree that thorough documentation of disciplinary measures is a great way to decrease your likelihood of being sued. In The Small Business Bible, Steven D. Strauss states, “You may also be tempted to fire someone immediately when things go wrong. It is far better, and helps you avoid litigation, if you document problems first.” [16]
Be Prepared: Let’s say that you have taken all of these precautions and the decision has been made that terminating this employee is in the best interest of your organization. Don’t delay the inevitable, but make sure you are thoroughly prepared for your meeting with the employee. Remember that this is not going to be easy on either of you, so taking the proper steps to prepare is crucial to making it as painless as possible for you and the employee (thus reducing the likelihood of legal action). Approach any termination by visualizing yourself on the witness stand with the terminated employee’s attorney grilling you. Take my word for it—attorneys can be ruthless and are very skilled in making you look like the guilty party! We also recommend that you:
Try to anticipate the reaction of the employee. If there is a possibility that the employee may react violently, contract with an off-duty police officer to be nearby for protection or send the employee a written letter of termination. Otherwise, schedule a meeting with the employee.
Be prepared to answer any questions the employee may have. The employee being terminated deserves an honest reason for the termination and specifics to back it up. Don’t beat around the bush or try to sugarcoat the reason. The employee will also be concerned about things like insurance and benefits. You need to be prepared to answer these questions. Most of the time, terminated employees are so stunned and emotional after you inform them of your decision that they may want to have another follow-up meeting with you.
Ensure that all company property is returned. Make sure that you have a checklist of company assets that you will need to collect from the employee, like keys and name badges. You will want to cancel passwords and change locks and security codes immediately. Lock down your computer system so the terminated employee is unable to wreak havoc on the system or steal valuable customer lists. I will never forget a friend telling me that a terminated staff member wiped one of the key computers clean and left a nasty note to her supervisor (along with a computer virus) on her way out! Another business owner said that one of their employees wrote a nasty letter to hundreds of customers after the termination. Don’t think it can’t happen to you.
Consult a benefits attorney. If your company has a policy offering severance to fired employees, you must follow it. The Employee Retirement Income Security Act (ERISA) [17] generally governs severance plans or policies, so it is important to consult a benefits attorney to determine if your severance policy falls under ERISA guidelines. Even if you don’t have a formal severance plan, you may still want to consider offering a severance package to the terminated employee. This could include such benefits as severance pay or continuing to pay the employee’s health insurance for a few months. It also becomes an incentive for the impacted employee to sign a waiver relinquishing the right to future complaints, lawsuits, and claims.
Formulate a severance agreement. Although many things can be included in a severance agreement, some items are standard, such as a release of potential claims against you, a description of the wages, overtime, and vacation time owed the employee, and a confidentiality agreement. Additionally, if the employee is over 40, you must consider the Older Workers Benefit Protection Act (OWBPA), which is part of the Americans with Disabilities Act. The OWBPA details the circumstances under which you can require an employee who is 40 or over to release any claims he or she might have against you. You should consult legal counsel before you offer a severance agreement to any discharged employee. We once had to downsize and offered an employee a nice severance package in return for signing a severance agreement. We also allowed this person to claim unemployment and even tried to help the person find a new job. When the ex-employee spent all the money, however, a complaint was filed with the EEOC. We wasted more than 100 hours defending our actions but won the case. The reasons we won were that we had: clearly documented our case, laid off the employee in the right way, had a signed waiver, contested the complaint, and consistently maintained that we were correct. It really all goes back to something that a lawyer who was suing me once said: “Desperate people do desperate things!”
The Termination Conference: Getting to the point where you have actually decided to fire someone can be a long, laborious process, so you want to make every effort to conduct the termination meeting in a way that allows the employee to maintain his or her dignity and does not expose your company to increased liability. Although there are always exceptions and extenuating circumstances, here are some guidelines for conducting the termination conference:
When? There is no right or wrong time to conduct the termination of an employee. Strauss recommends terminating employees in the morning during the middle of the week. [18] Traditionally, employers have chosen Friday, but a case can also be made for Friday being the worst day. Terminating an employee on a Friday will give him or her the weekend to stew over the situation, nurse his or her anger, and be ready to call an attorney on Monday morning. It would also be wise to be aware of other special occasions—think twice about firing an employee on his or her birthday or shortly before a major holiday. We also recommend that a person who has been advised that they are being terminated should not return to work. Most employees’ performance will dramatically decline once the notice has been given and they will be a source of depression and sadness that can spread to your other employees. I have made the mistake of allowing laid-off employees to continue working for me while they sought other work and this was a mistake! If circumstances allow, have the employee clean out his or her desk after hours (accompanied by two witnesses).
Where? It is important that the conference be conducted in a private place, preferably away from the employee’s work station. Avoid setting up a situation where other employees may stumble into the meeting or see the person coming out of your office crying, angry, or depressed.
Who? Never conduct the termination conference alone. At least two company managers (preferably a male and female) should be present when you tell the employee he or she is fired. If you sense that the employee could become confrontational, it may be wise to have a security officer nearby. If you have no security officers at your company, your local law enforcement agency can usually provide an off-duty law enforcement officer at an hourly rate. We generally station this person out of sight but nearby.
How? Actually telling the employee that he or she is fired is the hard part. However, resist softening the blow to the point of sounding hesitant about the decision. Tell the employee that they are being laid off or terminated in definite, final terms and give honest reasons for the termination. Even though this is not personal as far as the company is concerned, never lose sight of the fact that it is personal for the employee. Therefore, every effort should be made to break the news as gently and caringly as possible. Offer any support that you can reasonably provide and minimize the embarrassment of the employee to whatever extent is possible. Don’t argue with the employee or become hostile. Stick to the facts and do not deviate from them. Avoid speculation and telling the employee what others have said about him or her. Don’t let the employee use emotions to change your mind or convince you to negotiate on major points. Set a goal for the employee to leave with the least amount of hostile emotion directed toward you and the company as possible and for them to retain the most dignity possible.
If you are offering a severance package, it is a given that you will allow the employee to resign. If you are not offering a severance package, it is still a good idea to allow the employee to resign. Allowing the employee to resign will make him or her less likely to sue you and will also decrease the chances of him or her filing for unemployment compensation. Be aware that the employee choosing to resign minimizes but doesn’t totally eliminate the risk of your company being sued. The courts view a forced or “constructive” discharge the same as an outright firing.[19]
Go over any severance agreement, but give the employee several days to review it. Make it effective seven business days after they sign it. Again, remember to consult an attorney before you ask an employee who is over 40 to sign any release of claims against you. If your state requires immediate payment of final wages and overtime, have the check ready to give to the employee at this meeting. This may be your only opportunity to get company-issued property from the employee, so do it now if possible.
Give the employee an opportunity to ask questions, but don’t let the meeting drag out. Stick with the facts and your predetermined presentation. If they ask questions that you may not have a solid answer to, follow up with the answer in writing.
Remember: The fairer the employee thinks you are being, the less likely they are to sue or retaliate against you or your company.
After the employee is fired: The hard part is over now, but there are a few important issues to keep in mind.
If your company offers health insurance and you have 20 or more employees, you have to offer the terminated employee an opportunity to continue coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA).[20] COBRA requirements can be complicated and have specific notification requirements for employees and their dependents. Consult a professional if you have concerns about COBRA requirements.
Make sure that you follow the laws of your state concerning payment of final paychecks. Depending on your state, this could range from immediately to the next regular pay date. Check with a professional who is familiar with employment law to learn the specifics of your state’s law. Make sure you get that check sent out on time, or else you could find yourself having to pay steep penalties!
Generally, employees are not entitled to unemployment benefits if they are fired for misconduct, but if the employee files a claim, carefully consider whether or not you want to contest it. It may be better to let them collect the benefits if it protects your other employees, reduce angers, and minimizes the risk of being sued.
Don’t malign the employee to potential employers or former fellow employees. Employers are often also hurt over terminations or want to justify their actions, so it becomes very easy to leak the details of the termination to other employees. The best policy: the less that other employees know, the better—keep your mouth shut. If another employer calls about a reference on the employee, be careful what you say! If you badmouth the former employee, you could be sued. Make sure that others in your organization are aware of the liabilities associated with this kind of retaliation as well. An exception is if the employee would be a safety risk to future employers. If you recommend an employee who you know will not perform well for their next employer or could be a liability risk (for example, a sexual harasser), there is the chance that that agency will sue your company for false information. Most companies only verify that the employee worked at the company during certain dates and their salary range. Be very careful about how you word letters of recommendation because they too can come back to bite you!
Don’t talk to others about the termination. Predetermine what you will say to them and stick to it. Your words after the firing could become a legal problem. Remember that there are always people in your organization who will retain ties with the person being terminated. They can (and often will) communicate what you and others say to the former employee.
Assign one person to communicate with the former employee to ensure consistent relations at a single point of contact. This should usually be a human resources professional.
These seem like simple steps, but it is often such a relief to have completed the termination that employers neglect these important points. Make sure that you know the federal and state laws that may be applicable when you have to terminate an employee or consult a professional who does.
If you are sued: Sometimes, your best efforts to avoid being sued by a former employee are not enough. If you are sued, hopefully the following suggestions will help you build a solid defense for your actions:
We encourage you to review any employment litigation insurance your company may have and familiarize yourself with the provisions of your policy. We recommend that you procure a comprehensive umbrella business policy and maintain at least $1 million in liability insurance, both personally and for your business. You could end up being sued as an individual and you want to protect both your business and personal assets.
Investigate. No amount of “after the fact” investigations can undo potential danger to you company, but if an employee sues you, check into his or her background. There may be things in their work history that may reduce the amount of jury awards to the employee or may prevent the court from ordering you to give the employee their job back.[21]
Make sure that you comply with federal and state laws that govern employment record retention. Don’t destroy any records that may be relevant to the employee’s allegations. This includes electronic evidence.
Again, don’t retaliate against the former employee.
Most importantly, use experts. You don’t want an attorney who specializes in real estate defending you and your company for a human resources-related complaint in court.
At some point in their careers, most managers and leaders will face the daunting task of firing an employee. There is no one-size-fits-all instruction manual for this situation—the scenarios are as numerous and as unique as the employees themselves. What you can do is be aware of some common risks and strategies for minimizing those risks.Preparation begins long before the actual termination. If you have proper processes in place that ensure fair treatment of all employees, you will minimize the need for firing an employee in the first place and reduce the risk of legal liability.
Having all the processes and procedures in place for treating all employees fairly can be worthless if your supervisors don’t have the proper skills and training to fairly manage their employees. Take steps to make sure that your managers are trained in most of the areas of liability. After all, they are your first line of defense against legal liability. And above all, if you have any concerns about current or future problems with your employees, consult a lawyer or human resources expert about what to do next.
Terminating employees is stressful, even for leaders who are willing to face the brutal facts and disengage employees who do not perform to the company’s expectations or do not match the company’s culture. Terminations can negatively impact the company, staff, customers, and the impacted employee. Balancing all these sectors simultaneously during a termination is often tough, but in the end, terminations done in a timely, fair, proper, caring way will help both company and the affected employee move into the future.
[1] Jim Collins, Good to Great (New York: HarperCollins, 2001) 69.
[2]Collins 30.
[3]JoAnn, who contributed greatly to this article, can be contacted through her company’s website, www.humanresourcedynamics.com.
[4] Collins 41.
[5] Collins 56.
[6]Jack Welch, Winning (New York: HarperCollins, 2005) 45.
[7] Cotrell, Monday Morning Leadership (Dallas: Cornerstone Leadership Institute, 2002) 35.
[8]Title VII of the Civil Rights Act of 1964, 42 U.S.C. §2000e-2. Only applies to employers with 15 or more employees. National origin discrimination is also prohibited by the Immigration Reform and Control Act (IRCA), 8 U.S.C. §132a, 132b. This law applies to employers with at least 4 employees.
[9]Age Discrimination in Employment Act (ADE), 29 U.S.C. § 621 et seq. Applies to employers that have at least 20 employees.
[10]Immigration Reform and Control Act (IRCA), 8 U.S.C. § 1324a & b. Applies to all employers.
[11]Uniformed Services Employment and Reemployment Act (USERA), 38 U.S.C. §4301 et seq.; Applies to all employers.
[12]U.S. Equal Employment Opportunity Commission Charge Statistics FY 2007.
[13]U.S. Equal Employment Opportunity Commission Retaliation Statistics FY 2007. August 28, 2008.
[14]Law.com Dictionary. August 29, 2008.
[15] Collins 58.
[16]Steven D. Strauss, The Small Business Bible (Hoboken, NJ: John Wiley & Sons, 2005) 257.
[17]Employee Retirement Income Security Act (ERISA), 29 U.S.C. § Covers most interstate employers.
[18] Strauss 258.
[19]Julie Athey, How to Fire Employees Without Getting Burned (Lee Smith Publishers: 2005) 31.
[20]Consolidated Omnibus Budget Reconciliation Act (COBRA), 29 U.S.C. § 1161 Applies to all employers who offer benefit plans.
[21]McKennon v. Nashville Banner Publishing Company. 513 U.S. 352, 1995 – The US Supreme Court held that an employee discharged in violation of the ADEA is not bared from all relief when, after her discharge, her employer discovers evidence of wrongdoing that in any event would have led to her termination on lawful and legitimate grounds had the employer known of it.
