Time to Say Goodbye: Making Sound Termination Decisions in the Era of Full Employment

By: Melanie Dunajeski

The economy is humming along, we are at functional levels of full employment, and every time we have an open position it seems to get harder and harder to hire a qualified person.  It is in these very times that employers may let down their guard, stop coaching or warning employees for routine indiscretions or  policy violations, or let slide myriad performance problems that in leaner times would have an employee shown the door. Why?  The available applicant pool is shallow right now, and employers may rationalize that it is “better the devil they know than the devil they don’t” or that they might not be able to backfill the position at all.  And what could possibly go wrong?

Plenty. For one thing, history teaches us that red-hot economies will always cool again, sometimes precipitously as did the US economy in 2008-2009. The resulting reductions in the workforce at almost every level cut much deeper than just marginal employees, often down into employers’ pools of long-term, effective and deeply loyal employees.  For another, tolerating a marginal or toxic employee, even during boom times, will erode your company culture and impact your ability to retain your effective and compliant employees. Finally, “kicking the can down the road” may perversely skew the objective criteria you later must establish for a necessary reduction in force in down times, allowing a RIFed employee to later claim they were fired because of their membership in some protected category and not on the basis of issues that were tolerated by you at the time.

So what can an employer do?  First, there is a category of infractions where employers should exercise the “One and Done” approach to discipline. These include physical violence or threats of physical violence, stealing, lying, falsifying records, reporting for work under the influence of drugs or alcohol, or willful destruction of property. In these cases, you should skip progressive discipline and move to immediate termination on the first infraction.  As Maya Angelou said, “when someone shows you who they are, believe them.” Whatever the cost of finding a replacement for this employee, it is lower than the potential liability that employee poses to your business going forward.

Second, don’t abandon your own standards. If an employee has violated policies or procedures, has behavioral issues, or is not performing up to expectations or standards, these issues need to be addressed as they arise with appropriate coaching, documentation, and even Performance Improvement Plans as necessary. These issues should never be ignored on an annual Performance Appraisal. Multiple Performance Improvement Plans and/or substandard Performance Appraisals are a red flag that this is a relationship that just doesn’t work. Don’t give the same rewards (merit raises, promotions, bonuses) to non-performing non-conforming employees that you give to the people who are meeting or exceeding your expectations. Doing so not only leaves you with an entitled sub-standard employee on your payroll, but also sends a tacit message to the rest of your workforce that their hard work and dedication has no value to you.

Finally, recognize that not every hire is a good one and not every employee is coachable. The ones who prove to you over and over again that they are not willing to behave and perform in a way that is acceptable to you on an ongoing basis need to be separated from employment. It should never be a surprise to employees in this category that their employment is in danger—you have advised them of their issues, what they need to do to improve, and what will happen if they do not. Follow through with the separation consistent with your prior communications with them. In the end, your consistent application of your own policies and procedures will protect your company from many claims.

Some separations for cause may pose unique challenges and potential liabilities to the company.  It is always a good idea to utilize a “final filter” for separation decisions and to determine whether you may want to utilize some kind of severance or separation agreement and release to mitigate those potential risks. To be effective (and enforceable) these agreements and the way that they are offered need to be tailored to the specific situation—so beware of using a form or cutting and pasting from prior agreements.

Do you need some guidance? The Employment attorneys at Drewry Simmons Vornehm LLP can assist you with your employee issues and help you to manage the risks of separations.