Thursday, March 2, 2017

Termination Due Diligence

The decision to terminate an employee is often difficult. Whether driven by economic necessity or based only on performance, it usually involves (and often requires) an analysis of the employee’s job history. When performance concerns exist over a long period of time, it’s natural for decision makers to see a proposed termination through that lens. When economic concerns exist, it’s natural for cost-cutting to become the primary consideration, and for careful selection of the affected employee to become a secondary focus. It’s important not to let either history or the pressure to eliminate a position quickly stand in the way of due diligence, carried out in real time.
We find that our clients make better decisions about who and when to terminate when they consider the following:
  • Is performance information current and complete? Employers shouldn’t rely on outdated evaluations or unsupported beliefs. Performance reviews should be current and consistent with the anticipated basis for termination. Warnings and performance improvement plans, if any, should also be consistent with reviews and should support the anticipated basis for termination.   
  • Are information sources reliable? A discredited supervisor should not be the only source of performance evaluations. Rumor and gossip should not form the basis of a termination decision. The information relied on in making a decision to terminate should be current and reasonably objective. 
  • Is documentation available? Whether the business reason for the proposed termination is economic or performance based, it’s important for the decision to be supported by written records that will be available if the termination is challenged. 
  • Are policies being followed? Regardless of financial pressures or severe performance concerns, an employer’s own termination policies, if any, should be followed.   
  • Have current applicable laws been considered? Employment laws and regulations change frequently. Employers should not assume that a termination analysis done in the past is sufficient.   
  • Have the employee’s circumstances changed? Is the employee now in a protected class that did not apply earlier in his or her employment history? Has the employee made a complaint, raised an issue, or been a part of a workplace investigation, which could make termination seem retaliatory or give rise to a whistleblower claim? 
  • Has the impact of the termination on others in the workplace been considered? Employee terminations, however justified, often have effects on other workers. The morale of remaining workers and the redistribution of work both deserve attention in advance of the termination. 
It makes no sense to retain an employee you can’t afford or an employee whose performance is inadequate, but it can also be expensive to hire and train new employees. Employers should be careful to consider the  business costs of replacing an employee and the economic benefits of employee retention. When a termination is necessary, real-time due diligence and analysis based on current, complete, reliable information is the best protection against legal challenges and legal liability.

Posted by Judy Langevin