Q: I need to let one of my people go. He's been with us for 5 months, but it is simply not working out. I'm a small business owner, and this is the first time I've had to fire somebody. Are there any steps I need to take to avoid getting sued or anything like that? The business is in Los Angeles, CA if that matters.
A: As long as there is no contract or agreement stipulating any length of employment, an employer can terminate an employee. It is illegal for a termination to be based on reasons that constitute discrimination such as race, age, marital status, etc. An employee should not be terminated for filing a complaint of illegal behavior, or if he/she has a disability that can be reasonably accommodated.
No matter what, an employee can still sue an employer because he/she believes his/her rights have been violated. Therefore, many believe that the best way to handle a termination is to be empathetic but direct. A termination should never be an opportunity to scold an individual or belittle them. This will only lead to resentment and hostility which increases the likelihood of a lawsuit. A termination is the moment in which the employer explains to the employee that the working relationship is not working out and that the relationship is being severed. Options for a smooth transition for the employee can be offered (if the situation warrants it) such as severance and outsourcing services.
Another key factor in reducing the risk of lawsuits is to provide clear communication to the employee about their performance before termination is considered. When an employee is not performing their duties to the expectations of a supervisor, the need for change should be communicated immediately, in a courteous but clear manner. Written documentation supporting the conversation is crucial 1) to ensure the employee fully understands the expectation and potential consequence, and 2) to show down the line in the event of a lawsuit that the concerns were performance based, and not related to any illegal intention. A written counseling should outline 1) factual details of the problem (e.g. dates, incidents, etc.), 2) the impact on the Company, 3) the Company’s expectation, 4) the timeframe, 5) the consequence if requirements are not met, and 6) the offering of training and support by the Company to help improve the performance.
If the Company has an employee handbook with counseling and termination guidelines spelled out, this should be followed across the board to avoid inequitable treatment.
A separation agreement if signed by all parties will also decrease the risk of a lawsuit. An attorney can help develop a standard format for your organization. Generally, the agreement outlines amongst other things, confidentiality requirements, and the agreement for all parties to walk away amicably, in exchange for provisions such as severance, a neutral reference and/or unemployment not being contested. A severance package like this is typically a small price to pay in comparison to the cost of legal defense and potential damages in instances where the court determines wrongdoing has occurred. Many companies require employees sign an arbitration agreement at the point of hire, which stipulates that all claims will be decided in an arbitration hearing instead of a court of law. Such an agreement can prove to be quicker and more cost effective for all parties, should a dispute occur.
But again, the biggest deterrent to any type of lawsuit is to be kind and respectful to employees. Staffing Success