Common business owner question: How do I terminate this employee without fear of a legal challenge? In general, there are two ways to tackle this. First, create a hiring process that identifies employees that may be poor performers before they are hired. Second, minimize liability by complying with labor laws, and hiring managers that are effective.
Costs and Damages of Poor Performers
The best practice is to not hire them in the first place. Remember that turnover of an employee tends to cost 1-2 times of the position’s annual salary. This includes the cost of time to interview a replacement, overtime or temporary help costs, lost sales and/or lost productivity.
When poor performers continue to stay actively employed, they can do immense damage to the bottom line. Quantify how much you are paying them, versus what their output is? Are you getting a return on the dollars you are investing in their salary? A poor performing employee can also hinder their supervisor’s work quality and quantify, and diminish team productivity by hurting morale. These are reasons enough not to turn a blind eye.
Successful “Hostage Taking”
Fear tends to be the driving factor. But fear of what? Do you feel the employee in question can successfully claim: Discrimination, Retaliation, Defamation of Character, Illegal Acts, Labor Law violations, Breach of Contract? If your answer is yes to any of these, minimize your fear by taking the necessary steps to eliminate the employee’s chance of succeeding. This is where HR can be your friend. An HR audit, with consultation on labor law compliance and best practices will put your company on the correct path towards eliminating fear of legal challenges.
Identifying a Poor Performer, Pre-Hire
The clearest way to not be held hostage, is to not hire a poor performer in the first place. How effective is your recruitment and selection process? Resume review must include a scan for grammar errors, misspells, gaps in employment and lengths of stay. An effective phone screen should be your first attempt at having the candidate put forth the effort to prove motivation and qualifications. What is their motivation to make a chance? What was the reason for leaving past positions? Listen for red flags. If you hear red flags during the phone screen, are they worth spending precious time with during an in person interview? If granting an interview, what is the best method of making sure a candidate is motivated and fits the job? Behavior Based Interviewing. Open ended, position specific questions. Apply the 70/30 rule – the candidate should be talking 70% of the time or you won’t get the information and red flags you need to make a quality hiring decision.
The First 90 Days
Many business owners are under the impression that if an employee is within their first 90 days, you can cut them lose for no reason. Unless under contract, on the surface, in the land of “at will”, that looks to be true. But the truth is, once an employee is on payroll for 60 days or 6 years, many of the same liabilities apply. What you can do in the first 90 days, is provide the employee a reasonable chance to succeed, and document, document, document. The company employee handbook is a real asset, particularly during those first few months of employment, as it establishes standards of performance, conduct and outlines grounds for corrective action. A trusted advisor and mentor should be assigned – one that has the ability to give the manager or supervisor constant feedback on progress and concerns. The best way to stay on top of a new employee’s performance and productivity is short daily meetings during week one, and weekly meetings thereafter, so there is always open discussions going on about progress and concerns.
Managing a Poor Performer
Are the managers and supervisors you have in place increasing or decreasing potential liability? A good manager, to name a few: Fits the definition of a reasonable person; Limits liability by handling issues fairly and consistently; Understands when to seek HR assistance, but does not want HR to do the job for them; Has the courage to counsel employees; Leads by example. If you have that type of manager in place, you are off to a great start. To be effective at minimizing risks associated with terminating a poor performer, managers need to: Plan on how to stop the “bleeding”; Understand discrimination and other employment law liability; Follow “Due Process” and provide immediate feedback; Document, Document, Document all concerns – with the employee’s signature; Create an Performance Improvement/Action Plan; follow through on dates. If a deadline for improvement is set, and the manager lets it slip by without a re-evaluation, they’ve lost credibility and the termination window.
This isn’t working – Now What?
Before you terminate, ask these questions: Was “due process” followed?; Has HR reviewed and/or consulted on the documentation?; Would a “reasonable person” categorize this employee as a poor performer?; Is there a legitimate reason for poor performance?; Is termination consistent with previous action?; Do they have pre-termination rights? Review the offer letter, your handbook and state law to be sure.
If you are still ready to move forward, here are some best practice tips: Determine if legal advice is necessary; Notify IT and other security departments ahead of time; Have a silent witness present; This should not be a surprise, if prior discussions were held and good documentation exists – be prepared to prove consistency; Keep the conversation direct and short – don’t be pulled into what could become a hostile debate; Never leave them unattended while they collect belongings; Collect company property; Abide by state final wage payment laws. Last but not least – cut your unemployment claim exposure by terminating on the business day closest to the most recent infraction.
Remember that anyone can sue you at anytime, for any reason. Let go of fear (it may be unnecessarily costing you) and realize that minimizing liability is within your control, and good documentation is your defense.