Employment Law

7 Rules to Secure a Successful (Litigation-Free) Termination

Greg Garbacz PhotoBy Greg A, Garbacz, Esq.

Document, Document, Document

The key to a successful termination occurs before the termination meeting occurs and before a termination decision is made. Document the grounds for the termination, whether they are performance related or financial related. If terminating for performance reasons, there should be a minimum of 3-4 documents showing that the employee was made aware of the performance problems and opportunity to correct them.

Performance documentation cannot be a secret. Documentation should show that the employee received a copy or the issue was discussed. I’m not a fan of forcing an employee to sign and acknowledge receipt. A simple notation on the disciplinary memo showing it was given to the employee will suffice. Use of a PIP (Performance Improvement Plan) documenting a final, specific plan for improvement with a reasonable opportunity for correction (at least thirty days) is very helpful in defending a termination. Few juries will find against an employer if they find the employer was truthful, fair and gave the employee a chance to improve before terminating.

Never Misrepresent Facts

I have personally handled dozens of terminations. I have counseled employers on hundreds of terminations. In my experienced opinion, the most important characteristic of a successful termination is that everything stated during the final meeting was a 100% accurate.

Why? If the employee challenges the termination, it will end up in court before a jury or a judge. If you have misrepresented facts during the termination meeting, you are starting at a serious disadvantage. Your credibility is already compromised.

Employment lawsuits are first and foremost about credibility. In state court in California, a jury will consist of twelve jurors. Statistically, 75% of those (9) will have an “employee” perspective or bias. You must obtain the verdict of 9 jurors to win a case and, if you obtain the vote of 4 jurors, you don’t lose. (It’s a mistrial.) If you compromise your credibility before the lawsuit starts by citing false reasons for the termination, you start the lawsuit with a (frequently) fatal, disadvantage.

So don’t tell an employee that it’s a “layoff” if the termination is for performance reasons. Don’t mischaracterize the performance reasons that form the basis for the termination decision.

State the Reason For The Termination Decision

There is a debate as to whether to state the grounds for termination. Some lawyers counsel not to state the grounds. When this occurs, the employer almost always falls back on the at will presumption: “We don’t need a reason to terminate” (and we’re not telling you why!) In my experience, this is a big mistake.

It goes right back to Rule #1; an employer must be true and accurate. If you don’t state the grounds, it sounds like you don’t know or, worse, you are covering up the true reason. This will get you off to a bad start in any subsequent employment lawsuit.

Juries expect employers to be reasonable, fair and transparent in their communication with employees. To win an employment lawsuit, which is quite possible, an employer needs to show that they are more reasonable and more credible than the employee. If you are concealing the true reasons for a termination, you will not pass this test.

Be Concise & Don’t Debate

When explaining the reason for termination in the final meeting, be concise and don’t debate the reasons. Being accurate about the reasons does not mean being verbose. A simple statement will do. “We have made the decision to end our relationship based upon our belief that your performance is not meeting our expectations with regard to your work product.”

Combative employees may want to engage in a debate; don’t take the bait. If an employee wants to argue, disengage, control and end the discussion of that topic. Have some canned phases prepared to help you do this. “I appreciate that you may see things differently, but it is our difficult job to make decisions in the best interest of the company and we have made our decision.” Make plain that the decision is not open to debate or being re-visited.

Have A Witness Present

Always have a witness present for the termination meeting. While everyone always says they know this, I can’t tell you how many times I receive a lawsuit involving a termination of an employee and only one person was present for the final meeting. If there is only one company witness present, an abusive or lying employee can have a field day. Their “version” of the termination meeting will be far different from yours, or reality. If you have a witness present, taking notes, the potential for abuse significantly decreases. If the employee still wants to try to misrepresent what happened, this will significantly erode their meeting if there is an additional witness (or two) to contradict them and tell what really happened.

Be Kind & Professional

This should go without saying but always be professional and, to the extent possible, kind. Try to make the determination not about who the employee is, but rather just about their performance or “fit” for a job. Where possible, emphasize to the employee that the termination decision is not a reflection of who they are, or whether they are liked. Earnestly discuss that separation decisions are not easy decisions or “fun” for the employer or the employee and that the company wishes the employee the best in their next position. Reassure the employee that the employer will do nothing to interfere with future employment opportunities and will only give a neutral reference if contacted.

If the employee gets angry or threatens, don’t get drawn into their emotions. Stay cool, professional and neutral. Have some catch phases in your back pocket that you can fall back on. “I’m sorry that you feel that way.” “I understand that you are upset and can understand why.” A kind termination is the most effective means to defeat future claims of intentional discrimination or punitive damages, which are frequent risks in employment cases.

Pay All Final Wages Upon Termination

In California, final wages are due at the time of termination, not the next day or following pay period. Failure to pay all wages at the time of termination exposes the employer to a lawsuit or labor board claim, as well as the draconian “waiting time penalty” that requires payment of up to thirty days of the employee’s daily wage for any failure to pay final wages. Final wages must include payment of all accrued vacation pay, all earned commissions and bonuses, and any overtime earned prior to the separation date.

Use Severance If Appropriate With A General Release

In some circumstances, severance is not appropriate. If you terminate an employee for threatening coworkers with violence or stealing, severance is not appropriate. In fact, it undermines the veracity of the termination because, if a later judge or jury hears that you offered severance, they may not believe that the person really committed the misconduct.

However, in other circumstances, severance, conditioned upon execution of a general release, may make smart business sense. Paying an employee a few weeks of severance pay to ease their transition to a new job is money well spent if it avoids an expensive termination or employment claim. At a minimum, employment claims, if settled, will be settled in the few thousand dollar range. If a lawsuit follows, an employer will likely invest a minimum of $10-25,000 responding and/or resolving the lawsuit. It could turn out to be far more expensive if a trial is required. Why not negotiate a positive severance agreement to avoid an expensive claim or lawsuit, and the resulting increase in insurance premiums that will follow a lawsuit?