How to Terminate an Employee: Document, Document, Document

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By Allen Andrascik, Esq

“Document, document, document” is the mantra that most, if not all, employment lawyers will tell their clients, big or small, who are faced with a problem employee who may ultimately need to be discharged for not measuring up to expectations. It is never an easy task to confront having to let an employee go, especially when your business or organization has invested time and energy into training the employee to become an integral part of your operation.

Obviously, if the employee has an employment contract or is a member of a collective bargaining agreement, then the contract itself or the labor agreement should spell out the circumstances under which an employee can be separated from employment. Absent those circumstances, there is never a foolproof way to avoid a claim — however, there are certain things that can be done to try to insulate your company from liability associated with a discharge. Below, I will discuss some of those practical precautions to take to better position you to defend such a claim.

Most states are classified as employment at will. This means that an employee can be discharged with or without cause, and similarly, the employee can move on at his or her own will as well. Regardless of this fact, as an employer, you will have to frequently justify your actions in taking the step of letting someone go. Even though employment-at-will law gives you the absolute right to do so with or without cause, federal and state civil rights statutes prohibit discrimination in the discharge process.

These federal and state civil rights statutes are organized to first require that a complaining employee file a charge of discrimination involving a discharge with the administrative agencies tasked with investigating those claims. On the federal side, this is the Equal Employment Opportunity Commission. In determining whether there was a legitimate bona fide nondiscriminatory business reason why you discharged the employee, those agencies will look first and foremost to your documents. This is the standard you must meet to justify a discharge. An absence of documentation regarding your decisions will make the defense of any claim a problem. But what can you do before that point?

1. DO YOUR HOMEWORK BEFORE HIRING ANY EMPLOYEE

The time you invest in the hiring process is critical to determining whether an employee will come to be the asset you hope they will. Thoroughly vetting each potential employee’s past employment history is an important part of identifying a problem employee prior to hiring. This requires an extensive background check of former employment and a discussion with the references that accompany the résumé or application. Use of a release or authorization by the employment candidate and a hold harmless clause can be utilized to encourage previous employers to speak more freely about prior employees. However, in order to protect themselves, employers will frequently limit the information given out to merely the dates of employment, even if such a release is utilized.

Additionally, your employment application should have a provision that requires the employee to verify that the information on the application and résumé is true and accurate, and that any misrepresentation related thereto can result in discharge. If you don’t have such a provision, then that is something you should address. This affirmation of honesty and accuracy is a tool that may be useful in the event you come to discover a misstatement or misrepresentation either during the hiring process or afterward.

2. CONSIDER IMPLEMENTING A PROBATIONARY PERIOD OF EMPLOYMENT

A probationary period of employment can be a useful tool. It, however, offers no particular legal protection. In fact, most employers believe that they have carte blanche to fire someone during their probationary period. While the probationary period does not afford any specific legal protection, it does create the expectation in the employee that greater scrutiny will be paid to their performance. This gives you the opportunity to evaluate the employee’s skill level to see if it measures up to the employee’s résumé history. Most importantly, it requires you, as the employer, to look closely at performance. This affords the perfect opportunity to teach and to evaluate the employee and move to corrective action, if necessary. This period forces you to pay attention to work skills and gives you the opportunity to correct known deficiencies.

3. FREQUENTLY EVALUATE THE EMPLOYEE

Following a probationary period of employment, employers thereafter often limit employee performance evaluations to an annual review to determine if an increase in salary is warranted. In many instances, these evaluations have evolved into a daunting task that no one wants to take seriously nor accurately complete, because problems may have been forgotten or not accurately chronicled throughout the year. This is a mistake.

For smaller employers, it is always difficult to find the time to engage in best practices human resources handling because, this often takes significant time and takes you away from your business of providing your service and making a profit. However, this administrative personnel time is critical to defending any ultimate discharge that may occur. You must document the deficiencies in performance, when they happen, and within the week they happen, otherwise they will be lost to you and of no use in a later defense should a claim arise. As well, it is important to take a constructive approach to disciplining the employee. It should always be used as a learning experience from which the employee can grow. Similarly, mid-year reviews should be considered and will force you to address any shortcomings at a time when the review is not tied to whether the employee is to get a raise.

When I first became a lawyer back in 1988, the Labor Department chairperson emphasized that we practice fairness law and that it should never be a surprise to an employee when a discharge happens, because there will have been a clear history of counseling and teaching about both the positives and negatives of the employee’s performance. This is an important principle. As long as you are fair, do not surprise the employee, and effectively communicate shortcomings in a positive fashion to allow the employee to fix the issues, then your actions will not seem arbitrary, conspicuous, or unfair in the event a discharge is inevitable. Frequent evaluations and counseling afford you this opportunity.

4. DOCUMENT YOUR DISCIPLINE

Often, employers will discharge an employee because of problems in performance, but do not document the extent of that prior discipline with the employee. If there are verbal warnings, you should spend the time creating a document that confirms the issue with the employee and review it with them. The writing should have the employee acknowledge the events, even though they may disagree with the disciplinary action. Both documented verbal warnings and written warnings should make it to the employee file. Written warnings should similarly require an interactive process with the employee in order to correct or improve performance. Documentation is the most critical part of defending against any discharge claim. Its importance cannot be stressed enough.

5. ADMINISTER YOUR DISCIPLINE EQUALLY TO SIMILAR IMPROPER BEHAVIOR

Often employers will treat individuals differently for similar infractions. You should avoid this situation, if possible. While there may be particular circumstances that make the administration of discipline warrant a lesser or different punishment, care should be taken to chronicle why the discipline was administered differently. This will be a significant area of inquiry by the administrative agencies if a charge is filed. Documents substantiating differences in discipline are an important part of defending a claim.

6. BE PROGRESSIVE IN THE ADMINISTRATION OF DISCIPLINE

Maintaining a progressive system of punishment is important in allowing the employee to reform conduct and to give the employee the opportunity to correct their performance deficiencies. In cases where there are serious infractions, of course, progressive discipline may not be an option. In those circumstances, a progression of discipline may not be warranted, given the gravity of the offense. Absent that circumstance, the administration of progressive discipline will be an effective tool to demonstrate that you gave the employee the opportunity to address shortcomings and that you had no other choice but to discharge them from employment if no resulting change in performance occurs.

7. ALWAYS CONSULT YOUR LEGAL COUNSEL BEFORE DISCHARGE

Frequently, employers will come to me after the fact of discharge and ask me to “defend” their actions because they have now received a charge of discrimination to which they are required to respond. Often, this compromises the position of the employer, and it is always wiser to talk to your legal counsel to get direction as to how to go about discharging the employee or whether the discharge will be defensible and the problems you may face in doing so.

8. MAINTAIN INSURANCE COVERAGE, IF AVAILABLE

Lastly, as I always suggest to the small employers I represent, you should review your insurance coverage with your general commercial liability carrier and agent to see if “Employee Practices Coverage” or “Fair Employment Practices Coverage” is available under your general commercial liability coverage policy or is available as a rider to your policy, as any defense to an administrative charge of discrimination can be costly. This policy will provide you with a lawyer, who will be paid by the insurance company, and a fund, in the event the discharge results in liability. While none of these suggested steps may avoid a claim, hopefully, these simple tips will assist you to defend any challenge when discharging an employee. 

Disclaimer: This article is not intended to create an attorney-client relationship.


Allen Andrascik, Esq, is a solo practitioner in Beaver Falls, Pennsylvania, and represents small- to mid-size employers in all aspects of labor and employment law. He is a 1985 graduate of Georgetown University’s School of Foreign Service and a 1988 graduate of the Georgetown University Law Center. He is the current president of the Beaver County Bar Association and a long-time member of the Pennsylvania Bar Association’s House of Delegates.

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