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HR Handled Right

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You’ve been a food and beverage sales rep at the same company for the past six years. You haven’t made your quota for the past three, but neither has half your sales team. You were out for six months a year and a half ago due to a serious inner ear disorder that completely threw off your balance. Your health is good now although, when you’re tired, you tend to lean slightly to your left.

You and your boss have never gotten along; he thinks you’re arrogant and you think he’s stupid. Three months ago, you were so incensed about what you believed was an ignorant remark he made during a sales call that you went over his head. Big mistake; your boss and his play golf together and the two of them had quite a talk about your “insubordination.” Since then, you think your boss has been gunning for you. He’s made several sarcastic remarks about your selling techniques and, last week, when he noticed your balance was slightly off, he joked to the sales group that he wasn’t sure if you were tired or “had one too many cocktails at lunch.”

Today, when you got to your office, SURPRISE! You were met by a human resource professional who tells you that you have been terminated for “performance reasons.” Wrongful discharge? Disability discrimination? This employee certainly thought so, and, in real life, filed a lawsuit claiming both. In this article, we’ll take a look at the legal issues in wrongful discharge, the psychological impact of being fired, and how to stay safe on the firing line.

Getting It All Wrong

In many states, unless an employee is hired for a specific amount of time, the employee is an “at-will” employee, and can be fired for any reason or no reason at all – but not for a bad reason, like discrimination. He also cannot be fired in a way that causes personal injury or without good cause if he is under a contract. In essence, then, wrongful discharge cases restrict an employer’s right to terminate an at-will employee.

A number of courts recognize a wrongful discharge claim for termination in violation of a well-established public policy, including discriminatory discharge and retaliatory discharge. Discriminatory discharge claims are on the rise; in fact, they almost exclusively account for the 40% rise in wrongful discharge claims since 1992. Other examples of public policy retaliatory discharge lawsuits involve employees claiming they were terminated for “whistle-blowing,” filing workers’ comp claims, cooperating in a governmental investigation involving the employer or fulfilling a legal duty such as serving on a jury or testifying under subpoena as a witness. The most common form of wrongful termination lawsuits alleges that an employer breached a contract, whether formal or informal, not to terminate employment except for “good cause.” If an employer expressly or implicitly agrees, orally or in writing, to hire an employee for a specific period, to discharge only for just cause, or to abide by progressive disciplinary procedures, that agreement may be determined by a court to constitute an enforceable employment contract. Courts have permitted individual employees to sue for breach of contract simply on the basis of informal promises made orally by managers or other individuals in positions of authority. Even when no promises were made, some courts have determined that there was an implied contract because of:

  • language in employee handbooks that state employees will be provided an initial probationary period
  • language in disciplinary policies that states employees will be discharged only for particular offenses
  • language in progressive disciplinary policies that states employees will receive chances to improve their performance
  • language in handbooks or records that states fairness or special consideration will be given to employees because of longevity or seniority
  • an employee’s work history that reflects merit raises
  • good performance evaluations, praise and promotions
  • the employer’s practice of discharging employees only for good cause

Finally, wrongful termination claims may arise when the employee alleges that the discharge was carried out in an intentionally degrading or humiliating manner, the employer falsely accuses the employee of misconduct (or makes false or damaging statements to coworkers), and other various injurious behavior. Thus, an employee who wishes to sue for wrongful termination must show either,

1) that his employment contract, either expressly or implicitly, included a promise that he would not be fired without cause (contract cases); or,

2) that his employer fired him for a reason that violates a fundamental policy expressed in either state statutes or constitution (public policy cases), including laws against unlawful discrimination (discrimination cases), or

3) that the employer committed a tort, like defamation, invasion of privacy, or intentional infliction of emotional distress (independent tort cases).

Clues to avoiding wrongful termination start with a look at what causes it. The common themes in the above are treating employees fairly, consistently, humanely, and honestly.

Rejection That’s Hard to Take

Think back over romantic breakups that have been especially hard to get over. Odds are, the breakup met at least one of these criteria:

1) the rejection came as a complete surprise

2) the person had been threatening to end the relationship for months (with no follow-through) and finally did

3) you got mixed signals from this person and then were abruptly dumped

4) the person made disparaging remarks about your character, etc.

The same is true for involuntary terminations. No employee should be surprised by a termination because s/he should have received verbal and written warnings with a clearly documented performance improvement plan, including a deadline. No employee with a pattern of good performance appraisals should suddenly be fired (unless it is for a serious conduct offense). And, termination meetings should focus on the specific reasons for termination and should never veer off into name-calling or disparaging character remarks.

A firing or a resignation on poor terms can have adverse psychological effects on the individual concerned (embarrassment, shame and anger) and the remaining staff (rumors, resentment and fear). The former can be reduced by politeness and consideration, treatment consistent with that given to other fired employees, and, if possible, generous severance arrangements. Legal claims can be reduced by the same, especially if accompanied by fair and consistent performance management policies and procedures.

Parting Ways on Good Terms

Avoiding wrongful discharge claims starts in the hiring process. Supervisors and managers must know how to offer a job without implying an employment contract.

Employment handbooks and job applications must contain an “at-will” statement. Then, it’s a matter of managing performance by:

1. Providing specific written notice of all problems with job performance, and give the employee a fixed period of time to correct the problems.

2. Keeping careful records of each employees’ job performance.

3. Keeping specific, detailed, files on employee performance and reviews. For instance, don’t note: “Frequently leaves early,” or “Work has numerous errors.” Record the dates the employee left early (and how early) or describe examples of error-filled work.

4. Include in the file written summaries of any warnings given to employees about their performance problems. Use a documented system of progressive discipline, escalating from oral warnings to written warnings to suspension to termination.

5. Mete out discipline evenly. Don’t overlook problems in one employee for which you discipline another.

6. Have an employment policy book setting out examples of offenses that will lead to termination.

7. Never make the decision to fire somebody out on impulse. If an employee’s behavior pushes a manager to the boiling point, give the employee the rest of the day off and ask the manager to go back in his/her office and cool off. If the employee’s behavior is seriously inappropriate, put him or her on immediate leave pending an investigation.

8. Run terminations past a lawyer so s/he can examine the worker’s history and membership in any potentially protected group as well as the company’s past practices and adequacy of documentation.

Lessons From the Firing Line

Why do you think our food and beverage sales rep was fired? Poor performance? Disability discrimination? Neither, in my opinion. I think our sales rep was fired because of the longstanding personality clash he had with his supervisor, with the triggering event being his decision to go above his supervisor’s head. However, the way the manager handled his employee – making inappropriate remarks, firing the employee abruptly and with no verbal or written warnings, not disciplining other employees for failure to meet their quota — virtually begged for a wrongful termination claim.

The bad news is that wrongful termination awards have risen dramatically over the past ten years. The good news is that many of the steps that help companies avoid wrongful termination also help companies hire and retain the best workers. And that’s a win-win for everyone.

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