How to Fire Someone Without Getting Sued

Introduction

​It’s a new beginning for endings, or at least the ones that happen when it’s time to part ways with employees who aren’t working out. While termination remains among the most difficult tasks business leaders have to perform, the thinking behind how to fire someone is evolving. Instead of avoiding risk altogether or using a one-size-fits-all approach, employers are cultivating a more nuanced understanding of how risk can vary depending on the situation.

At the end of the day (and the job), an abundance of caution translates into less drama, which is the best outcome for everyone when a termination is needed. 

Because of the ever-present threat of litigation, says Suzanne Dodge, vice president at insurance brokerage and risk management firm DeWitt Stern, a Risk Strategies Company, in Sacramento, Calif., in Sacramento, Calif., HR professionals and line managers have been trained to document more and to communicate better. “Rarely am I in a room with someone who says, ‘I didn’t know there was a problem.’ ”

The renewed focus on ensuring that communication is clear, professional and well-documented may be related to the ubiquity of social media and the resulting ease with which employees can air grievances online through employer rating sites such as Glassdoor. It is also a likely outgrowth of the move by many employers away from static annual performance appraisals and toward more-fluid feedback models, which require regular and meticulous upkeep. 

The rise of the so-called gig economy plays a role as well. “People are on and off the payroll or on and off a lease arrangement a lot faster than they would have been before,” says Trish O’Brien, director of human resources at Caliper, a talent management company in Princeton, N.J. “We’re making sure that everything and every decision we make is backed up.”

Some experts even recommend including information about a company’s termination policy in its onboarding materials, although doing so can carry legal risks if the company’s policy changes during the employee’s tenure. 

Given the tricky nature of today’s legal landscape, HR professionals would do well to develop a strong partnership with an employment attorney—and to remind themselves that there is no such thing as a risk-free termination. “If you have a race or a gender, you’re protected [under Title VII],” says Jonathan A. Segal, a partner at Duane Morris LLP in Philadelphia. “[Employers] must evaluate and document in any instance.” 

Risky Business

Fear of getting sued is driving more employers to offer separation agreements, in which employees agree not to hold businesses legally accountable for issues raised during termination in exchange for a payout if they are asked to leave.

Some companies have found this approach, which was previously reserved for position eliminations, to be an expedient way to “buy peace,” Segal says. That’s because, given the time-consuming nature and the cost of the litigation that can arise from a termination, even the employer’s wins often come with a large price tag. For example, if an employee who happens to be over age 60 cannot meet acceptable standards of performance, a separation agreement could prevent a costly legal battle over an age discrimination claim.

But while this approach may reduce some risks, it can create others. As more companies come to rely on these agreements, the U.S. Equal Employment Opportunity Commission (EEOC) is increasingly challenging their use. The agency is questioning the legality of clauses that limit employees’ right to criticize employers, for example, or that bar workers from being re-employed at the same company at some point in the future.

Indeed, in 2014, the EEOC filed a lawsuit in Illinois federal court against CVS Pharmacy alleging that the chain store’s separation agreements unlawfully prohibited employees from communicating with the agency or filing discrimination claims. Although the suit was dismissed, it could signal a new era of government scrutiny. Segal advises consulting with an attorney to figure out whether and how to put separation agreements in place.

Be consistent in how each employee is treated (and how each situation is documented) when compared to others in similar positions.

Regardless of whether such documents are part of the picture, many companies are asking HR to play a bigger role in assessing risk.

One of Dodge’s clients was managing a termination and came to realize late in the process that the worker fell into a protected category. “I was told, ‘Another employee told me that this employee told her she was pregnant,’ ” Dodge recalls. Suddenly the risk level rose.

The new information didn’t mean that the termination couldn’t move forward. It just meant understanding the heightened risk and ensuring that the documentation was appropriate. “In that same situation, had the documentation and communication supporting it not been adequate, we would likely have held off on the termination,” Dodge says. “Even though we received the new information from a third party, a future claim could have developed.”

Experts recommend that documentation be kept short and dispassionate and be based on observed behaviors rather than character judgments. The more elaborate the input a manager provides on an employee’s performance improvement plan, for example, the more risk opportunities managers may create, experts say.

Having sat through her share of depositions, Dodge has seen how poor documentation can sabotage what should have been an airtight termination. The managers may be giving what they think is a fair assessment, she says, “but they’re not wording it in a way that’s going to stand up in court.” It’s critical that managers choose their words carefully, avoiding the use of charged terms such as “annoying” or “disrespectful” when describing someone and focusing instead on missed deadlines or unmet expectations.

For Cause

Letting an employee go for cause—say, a theft or an act of insubordination—may seem like a no-brainer, but the same rules apply even in extreme cases. Of course, an HR professional can ask an employee to leave immediately if there is a safety concern. However, “you still have to document what happened and be thoughtful,” Segal says. Here, too, describe behaviors instead of making judgments. “Don’t say they were ‘dangerous,’” Segal advises. “Say they ‘had a knife in their hand.’ ” 

You may want to evaluate risk by considering, among other factors, the employee’s protected status as it relates to his or her particular position. “For example, while men and women are both covered by Title VII, a man would have a harder time proving gender bias if let go by a male manager in a department where all but one employee is female,” Segal says. By the same token, a woman terminated from a sales team that comprises seven women does not represent the same risk that would exist if she was one of only two women. “Protected status is very much contextual,” Segal says.

In all instances, conduct a workplace investigation to make sure you have all the facts straight, Caliper’s O’Brien counsels. That may include questioning witnesses to ensure that the case for termination is solid.

Poor Cultural Fit

Companies are increasingly placing a premium on employees’ “cultural fit” within the organization. But it’s important to ensure that determination of a “bad fit” isn’t a proxy for “like me” bias, Segal says. A cultural mismatch can be a legitimate factor in a termination if you can easily describe and document the acceptable behaviors and standards of performance for the position, according to Segal. 

Also remember to be consistent in how each employee is treated (and how each situation is documented) when compared to others in similar positions—and to act fast. The longer you keep an employee who isn’t a fit, the longer the company is exposed to risk. “We often use the term ‘hire slow, fire fast,’ ” says Dianna Wilusz, SHRM-SCP, founder and CEO of organizational consultancy The Pendolino Group in Silicon Valley. “Meaning, be thoughtful in the hire and, once you know there’s not a good fit, have the thoughtfulness and also, quite honestly, the dignity to move quickly.”

To PIP or not to PIP

Performance improvement plans (PIPs) have been a long-standing tool for HR. But keep in mind that their primary purpose should be what the name indicates—to improve performance, not end employment. A PIP is a tool “to manage [an employee] back in,” Dodge says, “because when you look at that employee, you have to know whether you can manage them in or if you have to manage them out.”

“We give them several chances,” O’Brien says. “Generally, during the first conversation, we’ll sit down with them and say, ‘Tell us what’s going on. You know things aren’t going well.’ ” If it’s a personal situation or health issue, O’Brien will suggest accommodations the employer can make to assist the employee as part of an interactive dialogue. When it’s purely an issue of performance, she moves to the next step.

She asks the manager to be specific about what changes he or she wants to see from the employee, and the worker is given 30 days to improve. If changes for the better have been made after the 30 days, the individual will get another month. But even if the situation hasn’t improved, O’Brien still suggests another month. However, the conversation takes on a decidedly different tone, and the employee is put on notice that the continuation of his employment depends on whether job performance improves. The process includes more-intensive documentation, coaching and feedback. Toward the end of the final 30 days, all parties should have a clear idea of how things will end.

As performance management continues to evolve, some experts have advised moving away from PIPs in favor of a more direct approach. Dick Grote, president of Grote Consulting Corp., a performance management firm, is among those opposed to PIPs. “The best thing for an organization to do when they realize that this simply isn’t working out is to use a procedure called a ‘decision-making leave,’ ” he says.

This is effectively a paid day off during which the employee is asked to reflect on the performance feedback she has received and to ask herself if she is willing and able to meet the company’s expectations.

“When they come in the next day, they’ll tell you one of two things,” Grote continued, “either that they’ve decided that they can change and can meet all of the expectations at a fully satisfactory level or they’ve decided that this isn’t the right job.” In his experience, most will come to the latter conclusion.

Performance-Based Downsizing

In recent years, O’Brien has noticed that performance has become a more frequent criterion to use when downsizing, compared to seniority. HR professionals’ ready access to years of performance data will come in handy if they’re called upon to provide information to guide the decision of who to lay off.

A large-scale termination can be brutal, but a little sensitivity can go a long way. According to Ron Ashkenas, an emeritus partner at Schaffer Consulting in Stamford, Conn., the worst-case practice—and it’s not uncommon—is that the dismissal is announced with very short or no notice.

“It’s ‘Everybody, come with us, turn in your badge and get out of the building,’ ” he says. “The better practice obviously involves an amount of warning or notice, and there has to be personal, human interaction between the people who’ve been terminated and management.”

Terminating a Manager

When it’s the manager who is not doing his or her job, it’s a foundational problem that can adversely affect an entire enterprise, so it’s important to move quickly. HR’s bird’s-eye view of patterns, as found in the documentation of a particular department’s activities, can, over time, raise red flags and support termination.

When it comes time to actually terminate an employee, all relevant parties must agree that the decision is the right one.

Work with the C-suite to make detailed plans for both managing in and managing out the person in question. Wilusz lets the manager know what the HR team has observed and why it’s a concern. She then gives him or her the opportunity to respond.

Grote suggests an even blunter approach: Ask the manager “Do you think the problem is you?”

“That’s a big question,” Grote says. “And I would simply ask that and then shut up and listen. A couple things are going to happen: The person may not have thought about it and is open to learning more about how to be a good leader, or the person may go into denial.”

If the person takes ownership of the situation and is open to feedback, upper management can then move forward with a PIP that outlines the terms of the desired improvements and a specific time frame for meeting them. If, on the other hand, the manager disputes what he or she hears, listen to his or her perspective before deciding your next move. It’s important to be open to new information.

The Final Meeting

When it comes time to actually terminate an employee, all relevant parties on the employer’s team must agree that the decision is the right one, experts say, because a lack of consensus could create complications if an employee decides his firing was unfair. If the person to be fired is a lower-level employee, that team generally includes the individual’s manager and HR. If he or she is more senior, the team would likely include more managers or members of the C-suite.

Once the decision is made, the employee’s manager should lead the conversation. HR’s role is to manage the logistics and paperwork—not to deliver the bad news.

“Managers avoid [this confrontation] like the plague,” Ashkenas says. “It’s a lot easier for them to tell their HR people to go fire that person and let them know when it’s over. That’s not a good practice. Don’t let the manager outsource their responsibilities to HR.”

But that doesn’t mean HR can’t support the manager in the room—and before the event, by determining the date and time of the meeting and by coaching the manager on what to say.

Keep the termination meeting short. More than 15 minutes is too long, Dodge says. The conversation should get straight to the point, and HR should be ready with final paperwork and an explanation of benefits.

While the meeting is taking place, IT can be removing the individual’s access to company systems.