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Legal Considerations When Terminating An Employee: Part I of II

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Do you have an employee whose performance isn't cutting it? If so, you will want to read this two part series on considerations and steps to take before terminating an employee.

Many employers terminate employees without following some basic procedures that take little effort on the part of the employer but can prevent major headaches later.   Following these rules prior to termination can help employers avoid problems post-employment and can provide a full defense to an employee’s claim of wrongful termination.

If you have an employment agreement with the employee, you will need to follow the provisions governing that agreement.  However, the majority of employees are employees at-will and therefore the following steps and procedures are highly recommended for employers.

First, are you following your own policies?  Make sure you follow your own policies and procedures regarding discipline and termination.  An employer that does not follow its own policies and procedures risks exposing itself to a discrimination claim.  Human resources should be very familiar with your company’s procedures and should regularly review the handbook to see if changes need to be made.  It is important to regularly update your social media policy in the handbook and provide a copy of the revised policy to all employees. You should also have each employee sign an acknowledgement of receipt of the handbook and a copy should be placed in the employee’s file.

Second, is there documentation to support the basis for termination of the employee?  Unless the employee has committed a clear violation of misconduct, employment disputes often become an issue of “he said she said” between the employer and the employee.  To avoid post-employment disputes that turn on each party’s recollections, employers should keep detailed records for each employee.  Even handwritten notes that are dated to the file each time there is a problem with an employee are sufficient to create a written record, should the employee file a claim against the employer.  An employer’s inability to produce sufficient records documenting a history of problems with an employee will often lead to the judge or jury concluding that the issues with the employee did not really exist or were not as serious as now alleged.

Third, is the decision to terminate based on performance? If so, you should have a well-documented employee file that indicates that the employee has been put on notice that his/her performance is not up to company standards and that failure to improve is grounds for termination.  Be honest with the employee about the problems with his or her performance instead of using another reason to avoid discussing the real reason for termination.  Since the United States Supreme Court decision in Reeves v. Sanderson Pluming Products, Inc. 530 U.S. 133 (2000), employers who do not disclose the real reason for termination may hurt their own case.  Disguising termination based on performance by telling the employee he or she was terminated for another reason may help an employee who is claiming discrimination’s case. The employee may claim the “fake reason” for termination was used to cover up the real reason, namely, discrimination.

Termination based on performance should only be done when you have provided notice to the employee of the problems, have attempted to counsel them and provide performance plans and have taken other logical disciplinary steps.