Legal Blog

Top 10 Mistakes Employers Make When Terminating Employees

The best lawyer is the one who helps his client avoid litigation, or at least helps immunize his client from an adverse decision if litigation or arbitration cannot be avoided.  With that thought in mind, here’s my list of top ten mistakes to be avoided when terminating employees:

10. Fudging the Facts to Avoid Hurting Your Employee’s Feelings

Don’t do it. If things are not working out, tell your employee that things are not working out.  Don’t say you’re eliminating someone’s position or you don’t have enough work for him unless you’re eliminating his position or don’t have enough work for him.  “White lies” like this can come back to haunt you.  In litigation, they’re called pretexts.  Be diplomatic but truthful.

9. Not Creating a Record

Often a longtime employee will have a long history of pay raises, promotions and/or positive evaluations before her performance tails off. Even a long period of employment without raises, promotions and positive evaluations will be looked at as approval of a person’s performance if there is no negative material in the employee’s file.  If the person is a member of a protected class, you should reconsider the termination without a clear written record of a drop-off of performance (or other solid grounds for termination), even if the employee is an at-will employee.

8. Disrespecting your Employee

Many litigations are driven by hurt feelings, or suspicions of discriminatory animus arising from hurt feelings.  Terminations should always be in person and should always be thoughtful and serious.  Don’t fall for the temptation to lighten the mood by making jokes.  They will likely be taken wrong, even if the employee is a joke-teller himself.  Your employee is likely to be upset and concerned about his future. Be prepared to answer questions about issues that are likely to come up, including COBRA benefits, unused vacation, personal and/or sick days, and providing a reference.

7. Acting in the Heat of the Moment

Terminating an employee is a serious matter.  It is almost always a mistake to do it in a moment of intense anger or stress.  No matter how serious the employee’s conduct may have been, you will likely be compounding your problems by terminating the employee on the spot without a plan in place for all the post-termination arrangements, including messaging the termination to other employees, as well as clients or customers.  The better course of action is almost always to suspend an employee, even on the spot if appropriate, conduct an investigation, and make a reasoned determination whether to terminate and how.

6. Not Conducting an Adequate Investigation

If a person is being terminated because of a particular incident or series of incidents, it is essential that a thorough investigation be conducted before any adverse employment decision is made. Don’t forget that people sometimes lie to advance their own careers or cover up their own misbehavior, and different people often have different perspectives on the same facts.

5. Not Developing a Comprehensive Post-Termination Plan

Depending on your organizational needs and the nature of the employee’s position, there are circumstances in which you will want to terminate employment effective immediately, and circumstances in which you will provide advance notice.  In the latter event, be sensitive to the fact that your employee often has nothing to lose by misbehavior.  In either event, there must be a comprehensive plan that addresses all confidentiality, safety and other issues, including office keys/access cards, return of equipment, return or cancellation of credit cards, and termination of access to email and company records.  You must balance a desire to show trust and good faith toward a terminated employee against access to sensitive, confidential and/or valuable company information, and the risk of workplace disruption.

4. Leaking Plans

If you’ve made a decision to terminate an employee, don’t wait for the right time.  There’s never a right time.  And don’t share your decision with anyone beyond the people who need to know and can be trusted.  If the employee has advance word of the termination, there are many things he can do to be disruptive, including leaving at the wrong time for the company, taking important company information, and upsetting company relationships.

3. “Cleaning Up” an Employee File

What you might call “cleaning up” an employee file a judge would probably call destroying evidence.  The same goes for the erasure of emails.  Do not get rid of relevant records or emails just because they are inconsistent with your narrative about the termination, or you otherwise don’t like them.  Those records and emails can often be recovered anyway, and the consequence of destroying evidence is often more serious than the information in the records.

2. Not Reviewing the Relevant Documents

It is essential to carefully review any employment agreement, offer letter, employee handbook and/or other document discussing the terms of a person’s employment before initiating any termination.  Often an employer believes that an employee’s employment is at-will, but the documents suggest otherwise.  An employee handbook may provide for warnings or other action before a termination can be effected.  Speak with your company’s or organization’s lawyer first if there is even the slightest question about the meaning of any relevant documents or your compliance with them.

1. Being Penny Wise and Pound Foolish

The larger the company or organization, and the longer the period of employment, the higher the expectation will be that the company or organization provide severance pay to the terminated employee, even if it is not required by contract with the employee.  Consideration should often be given to providing severance pay to a terminated employee in exchange for a full and unconditional release of claims, especially if the employee is a member of a protected class.  Even if no severance pay is deemed appropriate, a pre-termination consultation with counsel is usually a good idea.

ABOUT BRENDAN MARX

bmarx@offitkurman.com | 347-589-8505

Mr. Marx represents high-net worth individuals, business and organizations in a wide range of fields, including manufacturing, retail sales, financial services, entertainment, legal services and other industries. He also represents numerous cooperative corporations and condominium associations, charities, and other non-profit organizations.

 

 

 

 

 

 

 

ABOUT OFFIT KURMAN

Offit Kurman is one of the fastest-growing, full-service law firms in the mid-Atlantic region. With over 185 attorneys offering a comprehensive range of services in virtually every legal category, the firm is well positioned to meet the needs of dynamic businesses and the people who own and operate them. Our twelve offices serve individual and corporate clients along the I95 corridor in the Virginia, Washington, DC, Maryland, Delaware, Pennsylvania, New Jersey, and New York City regions. At Offit Kurman, we are our clients’ most trusted legal advisors, professionals who help maximize and protect business value and personal wealth. In every interaction, we consistently maintain our clients’ confidence by remaining focused on furthering their objectives and achieving their goals in an efficient manner. Trust, knowledge, confidence—in a partner, that’s perfect.

Find out why Offit Kurman is The Better Way to protect your business, your assets and your family by connecting via our BlogFacebookTwitterInstagramYouTube, and LinkedIn pages. You can also sign up to receive LawMatters, Offit Kurman’s monthly newsletter covering a diverse selection of legal and corporate thought leadership content.

MARYLAND | PENNSYLVANIA | VIRGINIA | NEW JERSEY | NEW YORK | DELAWARE | WASHINGTON, DC