Discharge Employees With Care In a mythical time and place, you could hire and fire employees as you pleased, without interference from regulators, lawyers or others. Whether that time and place ever really existed, it definitely isn’t here and now. In this time and place, you have to minimize the legal risks of discharging employees. A poorly planned and poorly executed discharge – even when you have good reasons for letting one or more employees go – can result in lawsuits or regulatory penalties or both. Here are some general guidelines for discharging a poorly performing or misbehaving worker and for discharging two or more workers to downsize your work force. Be Prepared Before you actually discharge an employee for inadequate job performance, consider whether you can support your decision in court, in case the worker sues you for discrimination or retaliatory discharge. Here’s what to do long before the worker’s final day at your company. For starters, consistently follow your written policy in every case, if you have one, either as part of an employee handbook, employment contract or simply an internal human-resources document. Consistency is key to prevent the appearance of discrimination. Also, whenever possible, issue written warnings to under-performing employees, provide counseling or remedial training, and give them a chance to improve before you make a final decision to discharge. At best, you may rehabilitate the employee; at worst, you create a record of fairness and opportunity – powerful evidence to disprove claims of wrongful discharge. Last, before deciding to discharge an employee, be sure his or her personnel file supports your decision rather than contradicts it. A file full of commendations will contradict a decision to discharge for poor performance. Inform, Explain and Pay Up Now that you’ve decided to let a worker go, what can you do to minimize the risk of a wrongful-discharge suit? First, when you meet with the employee to inform him or her of your decision, make sure you have one or two reliable witnesses present who can corroborate your description of the meeting – preferably a supervisor or a human-resources official. To spare the discharged employee humiliation, don’t include co-workers or underlings. But employees may ask to have a witness of their choice present during disciplinary proceedings. Next, explain briefly the discharge reasons. If the employee presents an argument, make clear that your position is not negotiable. Describe and explain the final wages and benefits that you will provide the employee (and pay promptly). If the employee has questions, make your human-resources office available for a more comprehensive explanation. Take notes during the meeting or summarize the conversation immediately afterwards in writing. Especially, record 1) the way in which you stated the discharge reasons, and 2) any admissions by the employee of poor performance. Ask the witnesses to sign your summary. Take Special Steps for Layoffs When you decide to lay off two or more employees to cut expenses, follow a different set of guidelines. Before you make the final decision to downsize, take these four steps: 1. Document all legitimate business reasons for reducing your work force. Those reasons may include lowering expenses, consolidating departments or facilities, streamlining operations, eliminating a division or product line, closing a plant or branch office, or installing new labor-saving technology. Then ensure that your decisions – and actions – are consistent with those reasons. 2. Establish concrete criteria for selecting employees to lay off. The safest criterion is seniority (last hired, first fired) to minimize accusations of unfairness or discrimination. When seniority is not a feasible strategy, try to base employee retention on objective performance criteria – top performers stay. Other criteria may include rank, position and status. For example, temporary and part-time employees may be the first to go. Unfortunately, you can’t always establish objective criteria, so consult your attorney when making subjective decisions. 3. Analyze how your selection criteria will affect protected classes of employees – to prevent discrimination lawsuits. Determine who exactly will be laid off, and make sure that group doesn’t include a disproportionate number of protected-class members such as racial or religious minorities, workers older than 40 or disabled workers. If it does, you’ll probably have to revise your criteria. 4. Communicate clearly with laid-off workers and try to ease their transition. When you announce the layoffs as you would for individual discharges describe and explain final wages and benefits, severance package options, and release forms. (When you discharge two or more employees who are 40, or older, you must give them 45 days to review the release and seven days in which to revoke a signed release.) In addition, to avoid creating resentment over the layoffs, consider offering extra benefits such as outplacement services or resume-writing workshops or both. Remember: Disputes Happen Sometimes an employer must reduce its work force to survive. Unfortunately, when jobs are hard to find, discharged employees are more inclined to file complaints or lawsuits. You can reduce the risk of liability by acting in accordance with your stated policies, documenting discharge reasons and the discharge process, and abiding by the applicable laws. (See “Statutes, Rules and Restrictions” below.) If you would like us to review your policies for discharging employees, please call. Sidebar: Statutes, Rules and Restrictions Keep in mind these important federal rules that may apply to you, depending on the size of your firm: o The Civil Rights Act bars employers from making employment decisions based primarily on race, religion, sex, pregnancy or national origin. o The Americans With Disabilities Act bars employment discrimination in firms with 15 or more employees based on disability, for workers who can perform essential job functions with or without reasonable accommodation. o The Workers’ Adjustment Retraining Notification Act requires some employers to give 60 days’ notice before closing a plant or otherwise laying off a large number of workers. o Federal statutes make it illegal to retaliate against whistle-blowers (employees who report illegal conduct). And be sure to check your state’s laws and rules for discharging employees. Contact | Legal Disclaimer