Firing an employee may be a sticky subject, but by creating a plan of action and following procedure, you'll avoid lawsuits associated with terminating an employee illegally.
Firing an employee may be a necessary act but it has the potential to be a legal minefield. Terminations can lead to legal claims based on a variety of potential allegations, including discrimination, retaliation, wrongful discharge, wage and hour liability, defamation, and so on. Mishandle firing an employee, or terminate someone in the heat of an argument without paving the groundwork, and your business and its employees could be paying for it for years to come.
And, yet, firing an underperforming or troubled employee may be the best move for your business. It may improve morale among better performers. It may rid the business of a cancer.
'Firing an employee is both the worst day of your life and the best day,' says Jerry Osteryoung, director of outreach at the Jim Moran Institute at Florida State University's College of Business. 'That's because when you let someone go it affects their family and their livelihood, and it's tough. But it's also the best day of your life because, normally, if you have to fire someone, that person has been a pain in the butt for a while, and it's time for them to go.'
In business, however, it's important to make sure that you prepare well before firing an employee and that you follow the law and your own company procedures. The following pages outline steps to lay the groundwork for firing an employee, holding a termination meeting, and following up after termination.
Dig Deeper: How to Fire an Employee
How to Fire an Employee: Prepare to Fire an Employee
The groundwork for an effective termination of employment should be laid long before the termination decision. 'The biggest mistake people make is they don't prepare for it. They don't work with the employee ahead of time to help the employee succeed so that firing is a last resort. People tend to put up with behavior until they say, 'I'm through,'' says Nancy M. Cooper, chair of the labor and employment group of Garvey Schubert Barer, a law firm based in Portland, Oregon.
A firing should never be a surprise. If you have worked with an employee to identify problems, goals, and performance metrics, that employee is going to know whether they measure up or not. 'Once you go through everything and see that the employee is still not meeting expectations, nobody is going to be shocked,' Cooper says.
The first step is to make sure you have documented your efforts with the following:
- The company's employment application
- An employee handbook describing unacceptable employee behaviors
- Policies describing the company's right to discipline and terminate employees
- Job descriptions or other documentations that specify performance expectations
- Performance appraisals
- Records of disciplinary counseling and formal disciplinary action
- Written documentation of the findings of any internal investigation related to the termination
Since these documents will be legally discoverable in the event a former employee sues the company, it is critical they be clearly written, accurate, and do not contain 'inflammatory' statements about the individual.
It may be best to consult with a human resources attorney before taking steps to fire an employee to make sure you are covering the bases. 'The number one thing you have to make sure of is that you don't violate any laws,' Osteryoung says. 'There are a lot of plaintiff's lawyers who love to sue businesses because they failed or did not follow the correct procedures in firing an employee.'
Dig Deeper: How to Write a Termination Notice
How to Fire an Employee: Think Through, and Review, the Decision to Terminate
An employee should never be fired on the spur of the moment, and especially not in the heat of anger, Cooper says. 'You want to take some time to reflect,' she adds. A decision to terminate employment should be reached only after careful review of all relevant facts and documents.
An important, but often neglected, step in the termination process is obtaining a thorough and independent review of the decision. Sometimes that involves calling in another set of eyes and ears – maybe the direct supervisor, a member of the human resources department, or in-house or outside legal counsel. 'If it's an incident, talk to people and make sure the employee you're focusing on is really the one to blame,' Cooper says.
The purpose of the independent review is to make sure that:
- The firing is justified by the facts
- The firing is legal under all applicable laws
- The decision to fire follows company policies and procedures, such as those in the employee handbook
- The decision to terminate is consistent with the company's handling of similar situations in the past, regardless of race, gender, age, etc. of the employee being discharged.
'You want an audit trail. You want to document everything,' Osteryoung says. 'You can't just say, ‘I've tried to talk to you 16 times already.' There are a litany of things you need to do.'
Dig Deeper: Furloughs vs. Layoffs
How to Fire an Employee: Hold a Termination Meeting
Even under the best circumstances, an employee discharge can be a difficult and stressful situation for the employee and the managers involved. 'More often than not the problem is that entrepreneurs wait too long to fire an employee,' Osteryoung says. 'If you have a problem employee, they don't get better. They can affect the morale of your whole workforce because others are thinking, ‘Why aren't you doing something about this problem employee?' It's like a cancer. The sooner you surgically remove it, the better.'
