The most seasoned executive often turns into a white-knuckled novice when the time comes for a difficult termination. Ending an employment relationship is never easy, but some termination meetings seem certain to be particularly contentious.
With verdicts in favor of employee-plaintiffs on the rise, it's worth pausing to reflect on the fundamental dynamics of a termination meeting in order to avoid a misstep. Each one is different, and the likelihood of challenge is ultimately governed by factors as variable and uncontrollable as the temperaments of the people involved and the dismissed employee's prospects for reemployment. But attorneys who handle employment controversies know that certain themes recur in difficult cases, and there are various ways to minimize the risk of a successful challenge. Abiding by the suggestions below will not eliminate all legal claims, but it should greatly diminish the prospect of successful litigation.
Avoid Surprises
Before you decide to end an employment relationship, you should first make sure that you can answer 'yes' to these questions: Is the documentary record complete?1 Have company policies been followed?2 And most important, has the employee been made aware that the end is near?
The statutory and common-law claims that an employee may assert are the combustible material of legal disputes, but the spark that ignites them is the employee's sense of injustice at having been caught off guard and treated unfairly. The most important suggestion an employment lawyer can offer is: try to put yourself in the place of the employee and anticipate his or her likely reactions. Will the employee be startled and react with anger? If so, the necessary ground may not have been laid. It is no wonder that experienced HR Directors often say the cardinal rule of sound personnel management is, "no surprises."
Except in cases of egregious misconduct, consider the alternative of issuing a clear final warning and establishing a probationary period instead of proceeding with the termination-you may get the result you want, with little delay and far less controversy. If the rules of probation are set properly - that is, (1) termination can occur at any time during the period, and (2) performance must remain satisfactory even after probation ends - then the burden of waiting to shore up your ultimate position should be modest and well-justified. 3
Being certain that the employee isn't taken by surprise is important given that most employment claims are decided by juries. Jurors will generally try to follow a judge's instructions on technical legal issues, but they will also consider the fundamental fairness of the employer's action. If the employee wasn't made aware of your expectations and your sense that they were not being met, and if you did not give the employee an opportunity to turn the situation around, there's a greater chance the jury will stretch to find a reason to hold you liable.
Examine the Rationale
Think carefully about the rationale for your decision. Recognize that human nature will lead the employee to ask for an explanation. If you try to get through the termination meeting with an ill-prepared or sugar-coated response, you risk fueling the employee's sense of injustice. You might even use terminology that could come back to haunt you in a discrimination complaint. It is when managers start extemporizing that explanations such as "over-qualified" or "don't fit in" are proffered-statements that may carry undesirable baggagein the context of a discrimination claim.4 You should also remember that the concept of at-will employment doesn't get you very far. This doctrine, which is bedrock law in Washington, D.C., and 49 states, is based on the presumption that an individual hired without a specific term of employment may be dismissed at the will of the employer at any time for any reason. (The exception is Montana, where legislation requires that an employer must have cause to discharge an employee.5 ) On top of that presumption, however, are both a well-developed body of decisional law and a host of employment statutes specifying reasons why an at-will employee cannot be terminated in different circumstances. You should be prepared to articulate the legitimate, performance-based reasons for any termination before you convene the final meeting.
Handle Misconduct Carefully
Some of the trickiest termination meetings involve confrontations over alleged misconduct. Employers who suspect that serious policy violations or illegal acts have occurred are often in a hurry to dismiss the alleged perpetrator and perhaps set an example for other workers as well. But while firing an employee on the spot may produce a fleeting sense of satisfaction that company principles have been affirmed, it is almost never a good idea.6
If misconduct is involved, lead with questions. There are at least three good reasons why you should start by asking for more information.
First, the employee may have an explanation that raises questions about his or her culpability. An honest mistake, a mistaken identity, or some other fact may be involved that changes the picture dramatically. If the employee is going to offer an excuse that sounds plausible, regardless of whether it's honest or contrived, you should take it into account before you announce your final decision, even if you ultimately decide it isn't worthy of further investigation.
Second, if you ask questions before you pronounce judgment, the employee may volunteer information that would not be forthcoming after termination. The employee may say that a supervisor condoned the misconduct, or that other workers are engaged in the same activity, or that he or she will resign, relieving you of the burden of making a decision based on ambiguous facts.
Third, if the meeting begins with questioning, your final decision can take into account the employee's demeanor, candor, and cooperation. An employer often is uncertain of the facts even after investigating and may be hesitant to terminate based solely on suspected misconduct. The decision may be far easier to justify when the employee's inconsistent or evasive answers are taken into account.7
These three tactical considerations can also be viewed as another aspect of the procedural fairness evaluation that a jury might make: was the individual allowed to hear and respond to your charges of misconduct? If the answer is no, then your decision will be at risk regardless of any technical legal grounds you may assert.
Explain, Don't Argue
Employers commonly believe that a proper termination meeting should be brief. They've come to understand that it's a mistake to debate the details of every judgment that led to the decision to terminate. But while this precept is generally true, there's a countervailing consideration to bear in mind: any justification you don't at least mention in your meeting may be unpersuasive in later litigation.8
If you offer no reason, you'll surely appear arbitrary. And if you mention some reasons but decline to state others, you should not expect the reasons that are left unspoken to appear credible to a jury.
Choose a Result: Resignation or Termination
Consider whether you are terminating the employee or asking for a resignation. Some employers routinely ask for a resignation, while others insist on calling the decision a termination. Neither approach is right in all instances; each has advantages and disadvantages, and you should think them through carefully in each case.
Minimizing the employee's anger is always a valid goal. If your review of the situation and your assessment of the employee's temperament lead you to think that offering a resignation may help keep relations on a higher plane, that may well be the right approach.
But don't be deluded by other apparent advantages of the resignation option. Courts and employees alike are quick to recognize a compelled resignation, and the fact that an employee agreed to tender a resignation under pressure is in no sense an assurance that legal charges will not be filed.9
If you do choose to offer resignation as an option, be clear about how unemployment compensation will be handled. The employee may be suspicious of your motives, fearing that a resignation will lead to disqualification for unemployment benefits. In fact, as long as you don't oppose the employee's application for unemployment benefits or assert that the decision to resign was truly voluntary, benefits should be available.10 Be certain the employee understands that you will take this benign approach.
A final thought about unemployment: If you must terminate an employee for misconduct and the employee is likely to file a legal challenge, be aware that in some jurisdictions successfully opposing unemployment benefits can be of substantial assistance in a subsequent lawsuit. Under the doctrine of collateral estoppel, facts that are established during an administrative hearing for unemployment benefits may be treated as res judicata in the context of a subsequent court action. Suppose, for example, you fire an employee for serious misconduct, and an administrative law judge considering the former employee's unemployment claim determines that the misconduct took place as alleged. If the former employee later files a lawsuit claiming defamation, the court may simply adopt the administrative law judge's finding that there was misconduct and rule in your favor. Thus, before you make the decision not to contest unemployment because you don't want to antagonize the former employee needlessly, consider whether you want to forgo this potential advantage.11
Avoid Promises
Don't make promises you may not want to keep. Employers often want to be conciliatory in termination meetings; they may want to defuse the situation and volunteer in general terms to provide any assistance they can. They may offer the affected employee the right to stay on the job for a month or two while conducting a job search, or they may agree to provide a favorable reference. But these proposals may be quickly discarded when the employee makes disparaging statements or files a lawsuit.
The anti-retaliation protections of equal employment opportunity law extend to former as well as current employees.12 As a result, if you offer office privileges and a positive reference and then rescind your offer because the employee becomes disruptive or threatens to file a complaint with the Equal Employment Opportunity Commission, you may be found to have engaged in unlawful reprisal.
To avid this problem, you should be prudent in making offers of assistance, and, where possible, condition any offers you may make on the employee's willingness to behave in a constructive manner.
Even if all of the above suggestions are followed, discharging an employee is never going to be easy. Expectations on both sides of the table have been dashed, a significant investment has been lost, and personal sentiments may be very strong. But if an employer reaches an honest conclusion that a relationship is not working and is able to communicate the reasons for that decision in honest and respectful terms, both employer and employee may emerge feeling that a positive step has been taken. And that is the key to avoiding legal liability in today's challenging climate.
Footnotes
* Paul F. Mickey, Jr. is a member of the Employment Law Practice at the law firm of Shaw Pittman LLP, in Washington, D.C., and served as Managing Partner of that firm from 1995 to 2003. Mr. Mickey has handled several landmark employment cases, and served as counsel for the employer in Harris vs. Forklift Systems, Inc., the Supreme Court's 1993 ruling on environmental sexual harassment.
1. Halfond v. Legal Aid Soc'y, 70 F. Supp. 2d 155, 162 (E.D. N.Y. 1998)(finding for the employee in part because "[the employer] failed to live up to that very minimal obligation" of adequately recording its nondiscriminatory bases for firing—"an obligation imposed both by law and by practical business necessity"). Bear in mind that a solid documentary record is of particular importance where the employee has previously voiced concern about allegedly illegal conduct, creating the possibility of a retaliation claim. The trier of fact may infer reprisal on a simple post hoc, propter hoc basis—the employee complained and then was terminated—and the employer will find contemporaneous written records of legitimate performance concerns to be invaluable in defeating that inference.
2. Showalter v. Univ. of Pittsburgh Med. Ctr., 190 F.3d 231, 237-38 (reversing summary judgment for the employer and finding that there was evidence to show that the employer failed to follow its own policies when it terminated plaintiff); Skalka v. Fernald Environmental Restoration Mgmt Corp., 178 F.3d 414, 421 (6th Cir. 1999)(affirming a ruling in favor of the employee after finding that the evidence showed that the employer's "objective system of layoffs" was a "sham"); Cook v. Arrowsmith Shelburne, Inc., 69 F.3d 1235, 1239-40 (2d Cir. 1995)(there was evidence that Cook's layoff violated [her employer's] policy regarding reductions in force).
3. Donato v. Plainview-Old Bethpage Central School Dist., 96 F.3d 623, 629 (2nd Cir. 1996) (New York law provided no basis for plaintiff to believe that she had a legitimate claim of entitlement to continued employment during the three-year probationary period); McGraw v. City of Huntington Beach, 882 F.2d 384, 391-92 (9th Cir. 1989)(due to poor drafting, the relevant document gave the employee a reasonable expectation of continued employment following the completion of her probationary period, and thus the employer was required to reinstate her).
4. Taggart v. Time, Inc., 924 F.2d 43, 47-48 (2d Cir. 1991) (overqualification "has a connotation that defies common sense: How can a person overqualified by experience and training be turned down for a position given to a younger person deemed better qualified?"); Donaldson Mine Co. v. Human Rights Comm., 420 S.E.2d 902, 909 (W.Va. 1992)(the employee successfully demonstrated that the employer's comment "you don't fit in" caused him severe hurt, humiliation and embarrassment). Note that in a federal EEO action, the factfinder's disbelief of the stated reason for termination, together with thelements of a prima facie case, may be adequate to justify a finding of illegal discrimination. Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133 (2000).
5. Mont. Code Ann. § 39-2-901-906 (2002), the "Wrongful Discharge from Employment Act," creates a cause of action for termination of employees other than for "Good Cause," which it defines as "reasonable job-related grounds for dismissal based on a failure to satisfactorily perform job duties, disruption of the employer's operation, or other legitimate business reason." Id. at §39-2-903(5).
6. Bultemeyer v. Fort Wayne Comm, Schools, 100 F.3d 1281, 1286-87 (7th Cir. 1996)(employee could proceed to trial on his ADA claims because employer "tried to take hasty advantage of what it saw an as opportunity to rid itself of a problem" when it summarily discharged him). Where there appear to be sound practical reasons for removing the employee from the workplace immediately, the option of administrative leave is almost always preferable to summary termination.
7. Marsaglia v. Beinhauer & Son, Co., 987 F. Supp. 425 (W.D. Pa. 1997)(finding for the employer because of inconsistency between the employee's contemporaneous explanation for not coming to work-a skin rash-and his subsequent claim that he suffered from depression and thus was protected under the ADA).
8. Medlock v. Ortho Biotech, Inc., 164 F.3d 545, 555 (10th Cir. 1999)(finding for the employee in part because the employer's non-discriminatory reason for the termination was not voiced until after the employee was discharged). Note that under the after-acquired evidence doctrine, a legitimate rationale not discovered until after the fact may be a basis for limiting damages, but is not a basis for avoiding a finding of discrimination. McKennon v. Nashville Banner Publ. Co., 513 U.S. 352, 362 (1995).
9. The federal courts of appeals are divided as to what standard should be used to identify "constructive discharge." Eight circuits employ a purely objective test, where the inquiry is whether a "reasonable person" would have felt compelled to resign under the circumstances, and do not require the employee to show the employer specifically intended to force her to quit. The remaining circuits require the employee to prove as well that the employer deliberately made working conditions intolerable in order to induce a resignation.
10. See 26 A.L.R.4th 395 (2003).
11. Gear v. City of Des Moines, 514 F. Supp. 1218 (C.D.Iowa 1981)(applying collateral estoppel to a decision made in the state's unemployment appeals process because both parties were provided a fair opportunity to litigate the material issues and to appeal the administrative decision to a judicial tribunal). Many states have enacted statutes denying collateral estoppel effect to unemployment determinations, see, e.g., Ohio Rev. Code Ann. § 4141.281(d) (2003); even in those jurisdictions, however, the employer must take administrative proceedings seriously, because an adverse ruling will surely increase an employee's determination to pursue judicial litigation, and will tend to raise the settlement value of the claim.
12. Robinson v. Shell Oil Co., 519 U.S. 337 (1997).