Managing Litigation Risks Associated With Employee Discharge Decisions
Virtually all states have adopted the doctrine of employment at-will. This means that an employer may, without notice, terminate an employee for any reason or no reason at all. There are well-known exceptions to the employment at-will doctrine. For example, anti-discrimination statutes prohibit terminating an employee on the basis of his or her race, color, sex, religion, national origin, age, disability or other protected characteristics. Most states prohibit terminating an employee in retaliation for asserting his or her workers’ compensation rights or for reporting the employer’s alleged misconduct to a law enforcement agency. Also, the at-will doctrine may be overridden by an express or implied contract between the employer and employee. Most often, a former employee who brings suit against an employer relies on one of these exceptions.
In theory, the employee has the burden of proving that the employer was motivated by an unlawful reason when it chose to terminate the employee. However, the reality is quite different. To succeed at trial, an employer has to convince the jury that it had no unlawful motivation underlying its termination decision. This article starts by setting forth some of the anti-employer preconceptions and misconceptions often held by jurors, and then offers guidance to employers on steps to take, when implementing discharge decisions, in order to minimize the likelihood that the employee will file a lawsuit and maximize the likelihood that the employer will prevail – even in front of a jury – if a lawsuit is filed.
The Reality for Employers Facing a Jury Trial
The cards are stacked against employers in employment cases that are tried to a jury. In order to have any chance of winning at trial, an employer must understand and be prepared to overcome the strong preconceptions and misconceptions that the typical juror has about employers and the way they operate. Jury research shows that notwithstanding the employment at-will doctrine and the fact that the employee legally bears the burden of proof, many jurors enter the jury box with firmly-held beliefs that:
- managers in companies often fire employees for personal rather than business reasons
- discrimination in the workplace has become more subtle and employers have become more sophisticated and devious in the ways they go about discriminating against employees
- retaliation for reporting perceived unlawful conduct (even internally) is common in the workplace
- when faced with a complaint of harassment, the human resources department typically will try to cover it up in order to protect the company
- managers who get caught harassing a subordinate typically get nothing more than a slap on the wrist by the company
- the best evidence of an employee’s work performance is the employee’s performance evaluations and alleged deficiencies not mentioned in a performance evaluation do not really exist, but are an afterthought by the employer to defend its unlawful conduct
- an employer must try to fix an employee’s performance problems before firing the employee, must properly document an employee’s performance problems, and must give an employee fair warning before terminating the employment relationship
- memos to the employee’s file, which are not given to the employee, are not proof that the employer actually counseled the employee about the performance problems noted in the memos
- large companies will lie to win a lawsuit
To succeed before a jury, the employer must be able to show, by its actions, that what the jurors believe the typical employer is like does not apply. Therefore, when discharging an employee, an employer should think about how its actions would be perceived by a jury. The available research points to the following four practices that an employer needs to follow:
- give employees due process
- treat employees with respect, but do not sugar-coat or hide the truth
- maintain good documentation to support your employment decisions
- maintain and implement policies designed to prevent and/or promptly correct any unlawful behavior by supervisors or co-workers in the workplace
Due Process and Respect: A Roadmap for Discharging Employees for Unsatisfactory Job Performance
Due process and respect may be thought of as industrial fairness. Fairness means that the employee understands what is expected, is told when and why performance is not meeting expectations, is provided an opportunity to improve, is told the consequences of failure, and is disciplined or discharged only if – after all of the foregoing – his or her performance still does not improve. The following steps should be followed prior to discharging an employee for unsatisfactory job performance:
- inform the employee of the employer’s expectations concerning his or her performance; the employer should communicate its expectations during the employee’s orientation, in written job descriptions for the employee’s position, in formal and informal performance evaluations, in work rules, and during meetings to discuss informal and formal disciplinary action being taken against the employee
- inform the employee of the nature of his or her performance deficiencies, specifically, in detail and in objective terms
- inform the employee of what is necessary to raise his or her performance to the expected performance levels, specifically, in detail and in objective terms
- give the employee an opportunity to improve by providing a reasonable and specific deadline by which he or she must be performing at the expected levels
- provide the training and support necessary to give the employee the best opportunity to succeed
- inform the employee, in advance, of the potential disciplinary consequences if his or her performance does not improve to acceptable levels by the established deadline
- be able to demonstrate that the expected performance levels were reasonable
- be able to show that the cumulative instances of unsatisfactory performance justified the degree of discipline imposed
If an employer properly conducts performance appraisals, reinforces the formal evaluations with regular and candid feedback about the employee’s performance, and follows the steps outlined above, then discharge should come as no surprise to the employee. It is the element of surprise – of unfairness – which often motivates employees to file lawsuits in the first place. Employees who believe that they were treated with fairness and respect are much less likely to sue.
Additional Due Process Considerations: Just Cause for Discharge
Since jurors have a preconceived notion that an employer needs a good reason to discharge an employee, an employer who can demonstrate “just cause” for its actions significantly improves its chances of successfully defending a lawsuit before a jury. Before taking action against an employee, the employer should ask itself the following questions:
- Was the employee adequately forewarned of the possible or probable disciplinary consequences of his or her conduct?
- Was the rule or managerial order which the employee violated reasonably related to the orderly, efficient and safe operation of the business?
- Did the employer conduct a thorough investigation before discharging the employee? This usually requires giving the employee an opportunity to present his or her side of the story, and actively seeking out and interviewing potential witnesses.
- Was the employer’s investigation conducted fairly and objectively?
- Did the investigation produce substantial evidence or proof of guilt?
- Were the employer’s rules, orders and penalties applied evenhandedly and without discrimination?
- Was the degree of discipline administered by the employer reasonably related to the seriousness of the employee’s proven offense and the employee’s prior work record?
Too many “no” answers to the above questions should tell an employer that it may be on shaky ground should its disciplinary decision be challenged in the courts, before an arbitrator, or before a government enforcement agency. On the other hand, consistent “yes” answers mean that the employer generally can implement its decision knowing that it will have a good chance of successfully defending its actions.
Good Documentation: Proving That Due Process Was Given
An employer must be able to demonstrate – particularly to a jury – that it gave the employee due process. This is done most easily through good documentation of the due process roadmap outlined above. Good documentation has the following characteristics:
- it is made contemporaneously with the events at issue or shortly thereafter (as opposed to long after-the-fact)
- it is detailed, accurate, signed by the author and dated
- it is typed or handwritten in a legible manner so that people unfamiliar with the author’s handwriting (such as a judge or juror) will be able to read it without difficulty
- it is as objective as possible; subjective judgments often are viewed suspiciously by jurors, even though they may suffice to support the challenged employment action from a purely legal standpoint
- it is given to and reviewed with the employee
- it is signed and dated by the employee; this serves to establish proof of receipt by the employee
- the employee is given an opportunity to present any rebuttal in writing
- the type and extent of documentation is consistent with the employer’s policies and practices
Proactive Policies: Prevention Is Best
The best way to succeed is to avoid getting in front of the jury in the first place. The key to avoiding lawsuits is to treat employees fairly and with respect. To achieve this, employers should maintain, disseminate, and implement policies designed to adequately inform employees of their performance deficiencies; provide them an opportunity to improve; and prevent and/or promptly correct any unlawful behavior by supervisors or co-workers in the workplace.