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Spring 2000 Firing Employees: 10 Tips for Doing it Right

You hear a firm, startling knock at your door one night. You’re not expecting anyone. You open the door. A uniformed officer asks your name. “I have a summons for you,” he says, and hands you a legal notice. Your former employee is suing you for $100,000.

This is one nightmare you want to avoid. And you can.

Today, increasing numbers of ex-employees are suing their former employers. And as anyone who watches the evening news knows, crazed ex-employees have committed violence on former employers and coworkers in their workplaces. What can you do to protect your business, your assets, yourself and possibly others?

First, be aware of the legal realities. Myriad federal and state laws protecting the rights of employees have never been more complex. For example, you cannot fire someone because of age, sex, race or disability. Or if an employee is injured on the job or applies for Workers’ Compensation, firing that employee is more difficult. A “termination of employment” that violates any of these laws can result in a lawsuit. Being sued is disruptive, stressful, and costly. Even if you win the suit, you lose. It can cost you tens of thousands of dollars to hire an attorney to defend even a frivolous lawsuit.

Your best defense is to avoid problems—and potential catastrophe—when you’re faced with firing an employee. Start with the basics of good management: give employees regular guidance and give warnings when necessary, so that all of your employees do good work and become valuable employees. But if you must fire someone, following these 10 practical tips will help you do it right:

1. Evaluate performance periodically.
Workers need to know where they stand so they can try to improve if they need to. (If you keep the complaint to yourself, nothing will change, and you’ll be the one who suffers.) They also need to know the consequences of not improving. A firing should not come as a surprise. By the same token, treat good performers the same way as well. For example, if you give a bonus for quality work, give a bonus to all employees who performed well. You don’t have to be equal, but you must be fair. If one worker deserves a larger bonus, give that employee the larger bonus. Put all evaluations in writing and save a copy.

2. Keep good records.
If an employee performs poorly, document the problem and give the employee written warnings. Be specific. Every time you warn an employee about poor work performance, write it in the record. Good written records can help you establish in court that you had a good reason to fire an employee, and that you didn’t violate anti-discrimination or other laws.

3. Have a good reason for a firing.
A “good” reason has to do with continued poor performance. A “bad” reason is race, sex, age or some other form of discrimination, which will leave you open to a discrimination lawsuit. If the employee you’re firing is a member of a minority group, it’s especially important to have a well-documented “good” reason. Remember, the key is to treat all employees the same way. For example, if several employees are always late but you single out just one, you must have some reason other than lateness for firing only that employee. If not, you leave yourself open to a lawsuit. But if you warn them all and one continues to be late, then you have a valid reason for firing just that one.

4. Put each firing to the “fairness test.”
Before you fire someone, ask yourself how you would feel if you were fired under the same circumstances. If you think you would question your employer in that situation, reconsider firing the employee.

5. Keep calm.
Never raise you voice when you talk to an employee. You can explain in a calm manner an employee’s shortcomings. Then if you must fire someone, do it with empathy and dignity, to minimize the employee’s pain and anger. And do it in private: there is never a need to embarrass an employee in front of co-workers or customers.

6. Tell the employee the real reason for being fired.
Avoiding the truth, even to protect the employee’s feelings, can come back to hurt you. You will compromise your credibility if the employee sues you and the court requires you to disclose the real reason for the firing.

7. Get a signed release.
If you plan the firing, you’ll have everything in order and at hand when you talk with the employee. It’s a good idea to conduct an “exit interview” with the employee before he or she leaves, if you can. During this time you can take back keys, discuss issues such as continuation of health insurance, and have the employee’s final pay, a check for any severance pay and a release form ready. Have the fired employee sign a release of any claims against you before the employee leaves. To be valid, the release must provide a benefit to the employee, such as severance pay, payments for continuation of health insurance, or the waiver of a non-compete agreement. If you are offering severance pay, don’t hand over the check until the employee signs the release.

8. Be helpful.
For example, consider extending paid insurance coverage even if you don’t get a release in return. Being helpful and generous of spirit may reduce resentment and anger when you let the employee go, and possibly avert retaliation later.

9. Be considerate.
Try to preserve the employee’s dignity. Because firings are usually uncomfortable, fire the employee when other people aren’t around—typically before or after mall hours. The fired worker will appreciate the privacy, and has the weekend to cool off. Again, don’t fire someone when you’re angry.

10. Be cautious in discussing the firing with others.
Give details only to those who need to know the facts. Before you give information to a prospective employer, make sure everything you disclose has a solid basis, especially if you say the ex-employee was incompetent or dishonest. Otherwise, the employee may sue you for libel or slander. To protect themselves, many employers give out only the dates of employment and the job description. This is the safest method for avoiding a potential lawsuit.

In a sense, firing an employee is like ending a romance. You can choose to do it nicely—you can be civil, calm and (in this case) professional. Or you can do it with anger and shouting, but you may regret the consequences. So if you must fire someone, do it with empathy, dignity—and sound documentation. Doing it this way can benefit everyone, and go a long way toward protecting yourself and avoiding a “nightmare.”

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