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The Sound Practice of 'Happy Law'

Legal experts share 4 tips for heading off nuisance lawsuits by ex-employees.

(page 2 of 3)

2. No Surprises

Once new employees are onboard, conduct careful reviews in the first 30, 60, or 90 days to evaluate whether the new hire understands the job and fits your culture. Oftentimes, employment discrimination lawsuits come out of a poor cultural fit in which an employee poisons the well, Godar noted.

Kaplan indicated that employers would be wise from the onset to prepare for the possibility that employees won’t work out. That argues for a consistent process of setting clear expectations, sharing information with employees about any failures, and training to correct any deficiencies. If this is done on a consistent basis, the termination of a struggling employee will come as less of a shock, and the employee, however disappointed, is more likely to view the firing as a fair judgment.

“If a termination is a surprise to an employee, he or she will be much more upset about it,” Kaplan explained. “If they are aware of what the employer believes are the failings as it relates to their job performance, then they at least have an understanding. They may not agree with it, but they at least know you are being consistent in the application.”

Kaplan said it’s also important to hold all employees to the same standard in order to further ensure a sense of fairness. “The number one reason why employees file lawsuits is not just because they think there was some nefarious, discriminatory basis for the termination, it’s because they think that what happened wasn’t fair,” he noted. “While the EEOC and the non-discrimination laws don’t enforce ‘fairness,’ you do get stuck in that legal quagmire of having to prove that what you did was legal, even if it wasn’t fair.

“So the best thing to do is take what I call the fairness approach. Give people notice, give them warnings, and be consistent in your application of those things.” 

Another scenario that could unfold is when an employee’s job changes over time and the employer fails to provide the proper training for new requirements. One aspect of fairness is to avoid simply throwing employees to the wolves. To remove that excuse, employers should head that off at the pass with additional training, and employees should raise that concern during periodic job reviews. 

“You would hope the employee would raise that concern at the first instance, when you are discussing the poor performance with the employee,” Kaplan said. “First a warning, and then some kind of disciplinary track is the best approach to performance improvement, or moving somebody out of the workforce for not performing well. You normally don’t have someone that is not performing to your liking and you turn around and say, ‘That’s it, you’re done.’ You must say, ‘Here’s your downfall, here’s why you’re not succeeding, here’s how you need to improve, and I expect improvement by a certain time.’”

Godar said the failure to convey a sense of fairness will leave terminated employees with questions. “They will fill in the blanks with their own suggestions,” he warned. “If you leave the suggestion that it was unfair, they might think it was unfair because they are a minority, or over 40, or what have you.”

If the employer is unsure whether the firing will come as a surprise, Kaplan suggests taking one more step. Have a meaningful counseling session with discipline and say, ‘Next time, you will be terminated,’” he advised.

3. Follow a Strategic Process

If termination is required, the way it’s handled can help avoid nuisance claims. At this point, if an employer can document that all the proper steps have been taken to fashion a successful employee-management relationship, then a reasonable basis for termination has been established.

In an actual termination process, it’s always best to do it in a manner that shows decency. Again, the number one concern is fairness because an employee doesn’t want to be treated poorly when he or she is let go. “The more that you can treat an employee with decency, the less likely they are to want to extract their pound of flesh,” Kaplan noted. 

There should be a termination process that involves at least two people, and there should be a respectful exit process that does not involve cleaning out your desk in front of co-workers. Try to avoid scenes where the employee is stood over by a guard as he or she boxes up possessions in front of everybody. 

“Sometimes on a Friday, after the workday, it can be best because then the employee can be let go and they don’t have to face their co-workers during the week, or as they are leaving,” Kaplan advised. 

Both attorneys recommend that, wherever possible, employers provide some severance compensation. Obviously, if somebody is being terminated for poor performance, you don’t want to provide a glowing reference, but you can note that you have discussed performance issues all along and let the employee know he or she will be eligible for unemployment insurance and that it’s the employer’s intention not to challenge unemployment compensation.

“If the employee asks for a reference, offer to provide dates of employment, position, and if the employee agrees, compensation level. If you do it in a manner that suggests you’re being fair and open about it, that you are not lying or hedging about the reason, that’s useful,” Kaplan stated.

For a termination that does not involve performance, such as downsizing due to economic conditions, the employer should consider providing outplacement assistance. 

In addition to softening the blow, employers might consider a separation agreement. In return for modicum of severance or some other benefit, including outplacement benefits, an executed release agreement can offer severance in return for a promise not to pursue certain claims. “Once they sign that agreement, then all of those kinds of discrimination claims can be released and they would not then be able to be asserted against the employer later,” Kaplan said. “If they were, you would have that piece of paper that has been signed, and that is a quick, inexpensive defense to present.”

Under no circumstances should severance be offered without some sort of release agreement. “Nothing feels worse than having paid someone three months of pay and then after three months and one day, find out that they have filed a discrimination complaint,” Godar said. “It’s an agreement that states that because we are going to provide something to you that you otherwise would not have earned at work, you also promise not to sue us. It’s a contract that’s enforceable. They have to be carefully done, but they are enforceable.”

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