TERMINATING THE PROBLEM EMPLOYEE
By Shawn Smith, J.D.


TRUE or FALSE: If the law in your state is "employment at will," employees can be terminated at any time, and for any or no reason.

If you answered "TRUE," you are literally correct, but in reality, things really aren't that simple. The fact is, employers who have terminated employees without the proper procedural safeguards have opened themselves to significant legal liability and incurred substantial damages, even in instances where the terminated employee was a poor performer or had engaged in conduct clearly unacceptable in the workplace.

As employers are confronted with the challenge of developing a "leaner" workforce to remain competitive, it is more critical than ever that they retain the ability to replace problem employees with those that will make positive contributions. The proactive employer will ensure this flexibility by developing, implementing and consistently adhering to a system based on sound policies, guidelines and procedures to support its employee terminations. The system should contain the following action items:

  • Communicate company standards of performance and conduct, and provide feedback to employees when they fail to meet these standards
  • Adopt procedures to help improve the performance of under-performing employees
  • Apply appraisal, performance improvement and termination standards to all employees in a consistent manner
Communicate company standards of performance and conduct, and provide feedback to employees when they fail to meet these standards
  1. Communication is key. The employee handbook or policy manual is an excellent vehicle for communicating organizational expectations. Arriving at work consistently and on time. Devoting the work hours to the company's business. Treating all co-workers with courtesy and respect. And stating that those who do not meet these expectations will be faced with discipline and, if appropriate, discharge. Although some companies believe that these standards are fundamental and should "go without saying," a disturbing number of ex-employees have succeeded in convincing juries that they "never knew" their conduct warranted termination. Likewise, job descriptions are helpful in communicating performance standards, but the creation of job descriptions is not practical for many smaller companies.
  2. Institute a comprehensive performance review system. The review system should include a specified review period (i.e., first review after 90 days; thereafter, every 12 months), as well as set criteria by which performance should be judged (i.e., performance of primary job responsibilities, accuracy, teamwork, etc.). Reviews should be in writing, and conveyed during a face-to-face meeting between the manager and the subordinate. In the course of the performance appraisal, it is imperative that the evaluator candidly share any concerns about the employee's work or behavior. Although many managers have difficulty delivering negative reviews, it is difficult, if not impossible, to safely terminate a problem employee who's file is full of "excellent" or "good" performance ratings, or no reviews at all.
  3. Address serious issues immediately. There is never a need to wait for a scheduled performance review to deliver feedback, but in situations involving unacceptable performance or conduct, it is important not to wait to raise areas of concern. The employee may forget the details of the situation prior to the scheduled review date, or in waiting, the situation may further deteriorate. More important, the mere fact that the employer chose to delay acting upon the matter may be effectively used in court by the employee to downplay the seriousness of the employer's concern.

Adopt procedures to help improve the performance of poorly performing employees

Not only is it generally better for both organizational efficiency and employee morale to attempt to rehabilitate an employee's performance than to hire and train a new one, but the concept of performance improvement has legal implications as well. Even in situations when employers properly communicate performance concerns to the employee, the failure to offer the employee the opportunity to improve his/her performance can be held against the company in a legal proceeding.

To minimize the chance of liability in situations involving serious, job-threatening performance deficiencies, the employer should implement a performance improvement program promptly following the negative performance evaluation, providing the employee with explicit guidelines that must be met to achieve acceptable performance standards. A performance improvement program provides an effective mechanism for either bringing performance to acceptable levels, or properly terminating those employees unable or unwilling to meet expectations. The plan should contain the following elements:

  • A clear outline of the areas in which the employee's performance is considered deficient
  • A list of measurable criteria for determining acceptable levels of performance improvement
  • A time frame for measurement of improvement (usually 30-90 days)
  • A statement that if performance objectives are not achieved within the given time frame, the company may take appropriate disciplinary action, up to and including termination of employment

A carefully implemented action plan prevents the terminated employee from later claiming, "I was never told what was expected of me," or "I didn't know my job was on the line."

Apply appraisal, performance improvement and termination procedures to all employees in a consistent manner

This principle is critical. Even the most carefully worded polices and best systems will not protect the company that fails to use them consistently. Sometimes, individual managers will exert pressure on human resources to make individual exceptions. One may want to terminate a poorly performing employee "immediately," when a look in the employee's file reveals an "above average" performance review, and no notification to the employee that he is not meeting expectations. Another may claim that she does not want to "take the time" to use a performance improvement program to try to bring a subordinate's performance up to standard or lay the groundwork for less risky dismissal-- that she needs to replace this employee "yesterday." Of course, there are some situations involving egregious performance problems or other issues that can justify immediate termination without warning, but these exceptions occur very rarely. Unless the employer is convinced (ideally, after consultation with legal counsel) that it is dealing with such an exception, it is advisable to follow company policies and develop the written documentation to support the termination action.

Adoption of and adherence to sound company programs ultimately not only saves the employer money, but may also save the manager time and aggravation. There are few activities more time consuming and less productive than management involvement in defense of employee lawsuits.