Owning a small business can be an exciting and profitable venture, but it can be fraught with obstacles and issues that require careful handling and good management. Employees are often the lifeblood of your business, and you probably have to make special efforts to keep the best ones. Bad employees can affect workplace morale and your bottom line. So when it is time to say goodbye to a bad employee, make sure you are prepared.
In practice, the termination process should begin long before the actual last day of work. The idea is to create a situation where the employee is not surprised about being discharged. When the termination comes from out of left field, the former employee will often be surprised or feel sandbagged. When that occurs, the former employee leaves the office angry and sometimes ready for revenge. He or she will wonder what went wrong, and ask, “What did I do to deserve this?”
When there is no sense of fairness, the former employee might think there is something questionable or underhanded going on. Now you have an individual who is seeking advice from attorney friends and calling the local civil rights agency for help. And instead of accepting your valid reasons for the termination decision, he thinks the decision reached is discriminatory based on the fact that he is a member of a protected class.
Thus, how you conduct the termination process can often affect whether the discharged employee will file a charge of discrimination with the Equal Employment Opportunity Commission (the federal civil rights agency charged with handling charges of discrimination in the workplace) or a state or local civil rights agency. And your preparation and documentation prior to the actual termination will determine whether you have a good defense against the claims of discrimination.
Before Judgment DayConsistently keeping track of and accurately documenting employee performance is often difficult and time-consuming. In most cases, there is no need to conduct performance evaluations more than once a year, but annual performance reviews-and documentation of poor performance or negative issues or write-ups as they occur-are important for many reasons.
In the broad scheme of things, it is a good thing that your employees know where they stand. Regular evaluations advise employees of their strengths and weaknesses, and put them on notice of where they need to make improvements. Not only will this make your business more efficient, it will open the lines of communication between management and payroll. When expectations are set and clearly defined, everyone knows what the rules of the game are and how to follow them.
Regular documentation of employee performance also allows you as the business owner to defend your employment decisions if they are questioned later on. For example, if you have a female employee who struggles with her job duties, if her reviews reflect those problems, then you will be able to defend your decision when she later claims that she was fired because she is a woman, in violation of Title VII. However, if she is treated differently in the review process than her male co-workers, or if she is subject to a different standard or tighter scrutiny, then you have a problem. Accordingly, it is important that managers be honest and even-handed when filling out employee performance appraisals.
On the flip side, if you have a manager who is too nice and afraid to give negative ratings to employees, then the manager needs a negative review of his own. If you give an employee good ratings, but then discharge the employee for poor performance, it will be difficult to defend against a claim of discrimination. For example, if you only have one black employee, but he is terrible at his job so you fire him, eyebrows will be raised when you explain the valid reasons for the termination but the documentation shows good work. Honesty is the best policy with employee performance reviews.
Beyond regular reviews, documenting work problems contemporaneously is integral to supporting your decisions. If an employee is discovered to have sexually harassed a female co-worker, any discipline should be documented. Even if you have a progressive discipline policy that provides first for a verbal warning, the manager should document the verbal warning and place it in the employee’s personnel file. The notation should be detailed enough if you describe the offense, any investigation, the content of the oral warning and other conversations and all relevant dates. The notes do not have to be so detailed that you quit making them because they become too time-consuming, but they should be descriptive enough for an outside person to understand what occurred and the reasons for your actions.
If you employ managers or supervisors in your business, it is necessary that they be aware of the importance of documentation to support all employment decisions. If you have a supervisor who is not keeping sufficient contemporaneous notes of employee disciplinary actions, then it may be time for you as the owner to take disciplinary action against the supervisor. Attorneys understand that your managers just want to get their job done and documentation can sometimes get in the way of that, but if the manager’s job description includes supervisory responsibility, then she needs to protect herself and your business by writing it down.
The Termination MeetingWhen the time is finally right to sever the relationship with an employee, there are certain general principles to abide by. First, two managers should always be present at the termination meeting, with one manager handling the termination and the other manager attending simply as a witness. Both managers should document what occurred and what was said after the meeting, but this allows the second manager to focus on what occurs at the meeting so that a written summary afterwards is more complete and accurate.
Most states have at-will employment, which means that either the employer or the employee may terminate the employment relationship at any time with or without cause. Prior to the termination meeting, you should decide whether you will be providing a reason-and what the reason or reasons will be-to the employee for his or her termination. Under the law of at-will employment, you are not required to give a reason. The manager can simply state that it is not working out. If the employee has received negative feedback on performance issues in the past, the reason probably won’t be a mystery.
If you decide to point to specific issues as the reason for the termination decision, the manager should explain them briefly and clearly without inviting a response from the employee. The employee should probably be allowed to respond, but there is no need to affirmatively invite a response. Either way, you should allow the employee to save face. The termination meeting is not the time to point fingers or to engage the employee in disagreements over what happened and what did not happen. Don’t make it personal, and don’t take it personally.
Stay focused on the terminated employee and his or her actions or performance issues. Don’t make comparisons with other employees. Terminated employees will often want to compare themselves to co-workers in order to defray blame or as a defense mechanism. Don’t get sucked into that type of discussion, as it will only create more angst and result in more questions than answers. Respond to such inquiries by explaining that the decision is about the individual’s performance only.
In order to lessen the effect, you might point out a few of the employee’s strengths that he or she might be able to bring to a future employer. But do not praise the employee for talents that the employee failed to exemplify during the employment relationship. It is very important to be truthful, and it is not necessary to give the discharged employee an inflated sense of self. But it can be beneficial to all involved to bring something positive to what is otherwise a negative experience. Wishing the terminated employee good luck in future endeavors is always appropriate.
Ensure that, prior to the termination meeting, all necessary administrative papers are ready to go. The employee’s last paycheck should be provided during the meeting. Any written forms such as exit interviews, health insurance forms or equipment return policies should be prepared beforehand so that they can be completed quickly during the meeting. After the meeting, the managers should write up summaries of the meeting and place them in the former employee’s personnel file. Sometimes it is a good idea to notify the rest of the employees of the termination in order to avoid the gossip problem. If an announcement is made, make it simple and straightforward, and then move on.
After the meeting, the terminated employee will likely have to clean out his or her workstation and gather personal belongings. If possible, try to schedule the meeting before other employees arrive for work, during lunch or at the end of the day. This way, when the discharged employee is leaving, other employees are not around, hopefully making the event less public and less embarrassing. This also prevents the fired employee from making a spectacle of the situation, if that is a concern you have.
If a more private exit is not possible or inadvisable for certain reasons, try to keep the meeting and the former employee’s exit from the workplace as quiet as possible. This allows the employee to keep his or her dignity, rather than having to perform a walk of shame past inquiring minds and stares. The more you can do to lessen the trauma of a stressful event like a job termination, the better off all parties will be in the end. And while a terminated employee probably will not be happy about being fired, this will lessen the chance that he or she will file a charge of discrimination against your company.
Be Wary and Aware of RetaliationOne of the more popular claims being made by disgruntled former employees is retaliation under Title VII of the Civil Rights Act of 1964. As an employer with 15 or more employees, it is illegal for you to retaliate against an employee or former employee who files a charge of discrimination or otherwise opposes discrimination. Employers with less than 15 employees are often covered by state or local civil rights statutes. Retaliation occurs when an employer takes a materially adverse action against an individual who engaged in a protected activity, such as complaining about discrimination or supporting a co-worker’s complaint.
A materially adverse action is an action taken by an employer to prevent or punish an individual for opposing a discriminatory practice. Examples include refusal to hire, denial of a job promotion, demotion and, of course, termination of employment. Note that materially adverse actions as prohibited by law are not limited to those that are related to employment or occur at the workplace. An employee who makes a complaint of discrimination or otherwise opposes employment discrimination must still abide by workplace rules and procedures like every other employee, but in practice the claimant will have garnered some job protection for him or herself.
According to the EEOC, more than 75,000 charges of discrimination were filed in fiscal year 2006. The number of overall discrimination charges filed annually has remained fairly stagnate over the last decade, while the number of retaliation charges has steadily increased. In 1997, retaliation charges accounted for 22.6% of all charges filed with the EEOC. By 2006, that share had risen to 29.8%. In other words, almost a third of all charges of discrimination filed with the EEOC now contain allegations of retaliation by employers.
In addition to their increasing frequency, retaliation claims are particularly dangerous for employers because they are easier to prove than other types of discrimination. A complaint of sexual harassment, for example, often boils down to a he said/she said argument, and thus is more difficult for a claimant to prove in court. Retaliation claims, on the other hand, are usually determined by the timing of the materially adverse action and the protected activity. If a materially adverse action closely follows a complaint of discrimination, there is a strong inference that the employee suffered the adverse action because he or she complained about discrimination.
For example, my law firm recently defended an employer who received charges of discrimination from two of its former employees. One woman claimed that she had been sexually harassed, and the allegations were very ugly. Indeed, she claimed that her supervisor had sexually assaulted her. But she never complained to the managers or owners about the alleged sexual assault and sexual harassment. Instead, she simply quit.
Subsequently, a friend and co-worker of the first woman complained to her supervisor about sexual harassment. The allegations were suspect, and the employer did a good job of investigating the complaint. The employer concluded that the second woman had not been sexually harassed. During the course of the investigation, however, the alleged sexual assault on the first woman was reported to the police. The local police investigated the alleged sexual assault, and concluded that any sexual activity between the supervisor and the first woman was consensual. The employer terminated the alleged harasser for engaging in inappropriate behavior in the workplace. Shortly thereafter, within a few weeks of the second woman’s harassment complaint, the second woman was terminated for poor performance and unexcused absences.
Both women filed charges of discrimination with the EEOC. The first woman complained of sexual harassment, and the second woman complained of sexual harassment and retaliation. We settled the first woman’s charge of discrimination out of court because of the inappropriate behavior of the supervisor. The employer wanted to defend the second woman’s charge because she was a terrible employee and, as we all believed, was simply trying to ride on the coattails of the complaints made by the first woman. Indeed, the evidence suggested that the supervisor did not harass the second woman in any way, and that she actually exhibited inappropriate sexual behavior towards him.
The problem for us in defending against the second woman’s charge of discrimination – and our main concern when looking ahead to a potential trial of the case – was the retaliation claim. Even though she was a terrible employee, the employer did not do a very good job of documenting her performance shortcomings. And to top it off, the employer fired her within a couple weeks of her complaint about sexual harassment. The employer was frustrated that the second woman’s charge was also settled out of court, but the easy inference of retaliation due to the short time between the complaint and the termination would have been too difficult to overcome at trial.
Importantly, the underlying claim of discrimination or harassment is not required to have any merit for an employee to have a valid retaliation claim. Even though in our case we doubted the second woman’s allegations from the outset, she was still protected from retaliation under Title VII. Notably, former employees are also protected from retaliation, as many courts have found that a former employer advising a potential new employer that the former employee filed a prior charge of discrimination is a retaliatory action and thus illegal under Title VII.
What can an employer do to protect itself? Document, document, document. If you have an employee who is not up to par, be sure to document the employee’s performance shortcomings. If that employee beats you to the punch and complains about discrimination prior to notice of termination, you’ll likely have to keep that person on the payroll for a bit longer to be sure you can adequately defend the business against a potential retaliation claim. If you have sufficient records to document the employee’s poor job performance, then you as the employer can feel more secure in letting the employee go.
How long do you wait? There is no set time and all situations are different, but the more documentation of poor performance that you have, the shorter amount of time you should have to wait to terminate the bad employee who made a complaint. Some individuals are more likely to file a charge regardless of the time span, so you might decide it is better to get the problem employee out of the workplace sooner rather than later.
Remember, though, that it is illegal to terminate an employee because she complained about discrimination. As the employer, you don’t want discrimination to occur in your business, and perhaps the employee is poorly performing her job duties because she is being discriminated against. Therefore, all complaints should be fully investigated. Because of the legal ramifications and possible costs involved, you should seek the advice of an attorney on these issues. Your attorney can help you decide when the time is right to terminate a bad employee who happened to complain about discrimination.
An ideal termination meeting is short and to the point. Documentation of performance shortcomings and notice of those issues to the employee are important safeguards to protect your business prior to discharging the bad employee. While you cannot prevent a former employee from bringing a charge of discrimination against your company, you can follow certain procedures that recognize the delicate nuances of an employee termination and allow the former employee to leave with his or her dignity and respect intact. By doing so, you have acted in the right way, and hopefully your company won’t find itself as a defendant in a civil rights action. If you have questions about how to handle the termination of a specific employee, you should consult with an attorney.