Avoid a Wrongful Termination Lawsuit: Legally Terminate EmployeesSeptember 22, 2011
Feeling the heat of the economic climate? If your business has resorted to layoffs or may soon scale back operations, you may be at an increased risk for wrongful termination lawsuits. Hundreds of employment lawsuits are filed each week, and with employees winning two-thirds of all cases, small businesses are on the losing side. The average compensatory award in federal court employment cases is nearly a half-million dollars, not including punitive damages or attorney fees. Even settling a lawsuit can cost over $300,000. Can your business afford such a pricey payout?
To protect your business and get a good start toward a legal termination, first identify the grounds for employee dismissal, and ensure those grounds are well documented in writing. (Never forget this cardinal rule to document everything in writing, including performance reviews and performance issues!) There are three common grounds for releasing an employee, each with its own procedures that should be followed leading up to termination. Those grounds are redundancy, misconduct, and poor performance.
In redundancy, an employee’s position is no longer required due to a diminished role or a surplus of labor, perhaps caused by an organization restructuring. Although it may be tempting to use restructuring as an excuse to terminate a problem employee, don’t! It may look like a calculated effort to force the termination. Always be sure the redundancy is genuine and justifiable with documentation, such as cost-cutting exercises or falling sales.
Employee misconduct is typically a straightforward issue. In all cases of known or suspected misconduct, the offending employee should be given a chance to explain the misconduct. There might be a misunderstanding or a valid reason for the perceived misbehavior. Cases of clear and severe misconduct, such as security footage showing an employee committing theft, or an employee who admits to punching a coworker, provide more solid grounds for termination. Less clear or severe cases may not warrant dismissal, and may instead require appropriate disciplinary action.
Poor performance is the most common reason for termination, and by its subjective nature, can also be the most difficult to support. Numerous steps should be taken before an employee is let go for underperforming. First, the employee should be notified that the job performance is not meeting expectations. This should be a detailed notification, quantified if possible, such as citing the employee’s dwindling sales figures, missed deadlines, falling performance ratings, and so on. Merely stating, “You’re not performing well enough” does not give the employee a concrete starting point and can get your business in trouble. Second, the employee should be given the time and means to improve. Try implementing a performance improvement plan that gives the employee performance indicators and objectives over the next few months. After these steps, if an underperforming employee continues to flounder, termination is a viable option.
Even if every step leading to a termination is followed and documented, the most cautious employers may find themselves involved in an employment labor law dispute. If that happens to you and your business, trust the professionals at Hornberger & Brewer to guide you through this trying time. Our employment attorneys specialize in wrongful termination lawsuits and can help your business come out on top. We’ll put our business litigation experience and thorough understanding of California state and federal employment law to work for you.
Looking for sound legal support from a skilled professional? Contact us today to discuss your case.
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