Terminating an Employee

Firing an employee isn't always cut and dry. Learn your rights before you get burned.

Imagine that you are sitting in a restaurant booth with your wife when your waiter tosses a paper hat at your head and misses. He then proceeds to pick it up and slap it on your head, saying, “that’ll take care of the shiny spot.” Behavior like this is actually expected of an employee at Chicago’s Ed Debevic’s restaurant, but it would likely result in immediate termination elsewhere (not to mention a lawsuit). Gray areas such as this illustrate the difficulties of identifying what type of behavior warrants termination. Unless employers have properly outlined the behavior expected of their staff, they could find themselves afraid to act when it comes time to fire an employee.

Small business owners often make the mistake of keeping problematic employees, according to Joe Healey, a business consultant and author of Radical Trust: How Today’s Great Leaders Convert People to Partners. “Often small business owners tend to want to keep a warm body around just because they are already stretched so thin,” Healey said. “They tend to minimize their business because of that.”

Healey remembers taking too long to fire an employee because she was incredibly productive. It took him six months to find a replacement for her and he ended up hiring two people to do the job. “She was incredibly good at what she did,” Healey said, “but over time she became arrogant and began to value herself above other people.” Healey ran into that particular employee again about a month later. “She said, ‘Joe, I want to thank you for firing my sorry ass,’” Healey stated. “She went on to tell me that she realized how arrogant she had gotten and how good she had it when she worked for me.”

Very few terminated employees, however, will agree that their performance hasn’t met company standards, and some will even become combative. For instance, Jeff O’Shea, founder of IntelliTouch, a small San Diego technology company, remembers having to fire an employee for falsifying documents. The employee became hostile when O’Shea confronted him. “As an ex-college basketball player, he was very large and quite intimidating,” O’Shea said. “He was escorted out of the office only to return 20 minutes later, extremely angry.” The former employee later filed a lawsuit but the case was dropped when he failed to show up in court.

He was escorted out of the office only to return 20 minutes later, EXTREMELY ANGRY.

While there aren’t any U.S. laws that prevent employers from firing employees for just cause—including unsatisfactory quantity or quality of work—you still face a significant legal risk every time you fire someone. Federal law makes it illegal for most employers to fire an employee based on an employee’s race, gender, national origin, disability, religion, or age (if the person is older than 40). Employers are also prohibited from firing an employee because they are pregnant or have recently given birth.

According to Title VII of the Civil Rights Act and Title 29 of the Labor Code of Regulations, employers also may not fire, demote, harass, or retaliate against an individual for asserting their rights under state and federal antidiscrimination laws. For example, a 2006 lawsuit filed by the EEOC against the Burlington Northern & Santa Fe Railway alleged that the company suspended a female employee, Sheila White, after she complained of sexual harassment by her boss. The laws also cover overt actions such as termination, threats, and increased surveillance, but do not cover slights and annoyances such as snubbing a colleague on an invitation to lunch or negative comments that are justified by an employee’s performance.

It is sometimes desirable for business owners to have a termination policy that outlines what an employee is entitled to when his or her employment ends. Such a policy should include a severance package that is commensurate with the length of the individual’s employment and his or her position in the company. It should also include payment to the employee for unused vacation days, provisions for continuing health benefits after termination, and whether a letter of recommendation is given for potential future employers. In some cases, employers will also help by providing outplacement services.

In order to make the termination process smooth and calm, business owners may want to consider the following tips: Keep proper documentation on the particular employee, give him or her written warnings, follow company procedure, show compassion toward the employee, and always have at least two witnesses present at any closed-door meetings.

While television bosses like Donald Trump can get away with firing employees in a very dismissive and cold manner, real-world business owners could possibly face a troublesome lawsuit.

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