Discharging Employees: Truth and Openness Reduces Risk

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The U.S. is in the midst of its worst business downturn in 70 years. Many businesses have faced necessary reductions in workforce. However, even in times of prosperity, all business managers face situations where they need to let people go. Whether terminating an employee for performance problems or misconduct, the ability to effectively terminate people is a skill all managers should have.

Absent an employment agreement, employees work “at will” and therefore can be discharged at any time, for any reason. While the law does not require an employer to provide a reason for letting someone go, common sense surely does. So does Risk Management 101. Missteps managers make in the termination process can lead to serious consequences and financial risk for the company. Employers have a lot at stake in handling terminations appropriately.

Many employees fall into one or more protected classes as defined by Title VII. These classes include age, disability, national origin, race/color, religion and sex. If not given an honest and legitimate reason for termination, many employees will assume the reason is their protected class status and will file a claim against the company. Not in a protected class? Employees may claim “reverse discrimination.” There is no winning when it comes to not providing a reason for termination.

Before the point of termination, a good manager should have laid the proper groundwork. Well documented performance problems show that an employee was made aware of issues and given ample time to improve. Documentation is crucial and will help ensure the termination does not turn into one person’s word against another’s and a date in court.

Communication is “king”

Employees need to know what is expected of them when they are hired. They also need to be advised if they are not meeting expectations. Terminating an employee rarely happens on the spot, but rather builds over time. Direct and clear performance communications not only help employees understand what is expected of them, they can also help shield employers from potential litigation.

When the decision to terminate is made, schedule a face to face meeting with the employee. Managers should be firm. This is not a debate and there should be no back and forth discussion. It is important, however, to treat the employee with respect throughout the entire process. An employee who feels respected is less likely to want to turn a termination into a legal dispute.

Fight the urge to “duck the issue” when terminating an employee

While some people thrive on confrontation (especially in my profession), most of us do not. We hope that all of our meetings are pleasant experiences. Why bring up something negative? Besides, doesn’t providing reasons for termination put my company at risk? Exactly the opposite is true: not providing a reason for termination leaves an employer at risk.

Again, when not given a reason for termination, many employees will assume the actual reason is some form of discrimination and may seek counsel.

Managers are people too

While we know the right way to handle our people and issues that arise, from time to time we may drop the ball. In many cases, misconduct issues have festered far too long or bad performance was not properly documented.

This does not mean litigation is inevitable, but it does mean that your margin for error is effectively zero. It is critical to get on top of all the issues as quickly as possible and of course you need to make a plan. Since financial risk for your company is now elevated, you may be well served by consulting outside counsel.

Marty LaPointe is happy to answer your employment questions. He can be reached at 312/840-7012 or mlapointe@burkelaw.com.

330 North Wabash Avenue, Suite 2100
Chicago, Illinois 60611-3607
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