Managers often find disciplining employees and making termination decisions challenging. With every decision you make, there’s risk of a lawsuit. Even the most experienced supervisors encounter stress and anxiety during the process.
Having a clear idea of proper disciplinary and termination procedures can prevent you from making costly mistakes. The more you know about how to handle these tricky situations, the more confidence you’ll have knowing you are within the limits of the law.
Contractual vs. At-Will
Employment relationships generally fall into two categories: contractual and “at-will”. If a contract exists, discipline and termination must be handled in accordance with the terms of the contract. Contracts can take many forms, from collective-bargaining agreements to executive-compensation agreements.
An employment contract ordinarily dictates your ability to fire as well as the employee’s ability to resign. It may also define the circumstances under which you may terminate the employee (e.g., “only for gross misconduct”) and how much advanced notice is required.
But much more common is at-will status. Unless your employees have contracts, their status is most likely considered to be at-will employment. Simply put, the at-will doctrine means that the employment relationship may be terminated at any time — by either the employer or the employee — for any reason or no reason at all (except illegal ones).
A survey of Progressive and Affirmative Employee Discipline Systems in Florida’s Hospitals asked HR Directors and CEOs about their views on discipline.
Key findings include:
- More than 84% say counseling is effective in improving employee compliance.
- Over 35% of the respondents think that non-compliant employees are likely to remain problematic and eventually wind up unemployed.
- On the other hand, a significant percentage — 36.2% — believe the opposite and think that employee behavior is correctable.
- Over 84% of those surveyed agreed that open communication between supervisor and employee is important in improving behavior and performance.
- More than 65% of respondents believe that existing employee disciplinary systems are effective in improving performance.
Laws Affecting the Employment At-Will Relationship
At-will employment sounds clean and neat, but in practice it’s not. That’s because there are exceptions to at-will employment, and these exceptions often give rise to legal claims.
What are the exceptions? When is it against the law to fire an at-will employee? When you break one of these federal laws affecting the at-will relationship:
These are the major federal laws that can restrict an employer’s ability to fire an at-will employee. But state laws can also come into play. So it’s important to research those restrictions, as well. But bottom line is you can discipline or terminate an at-will employee for any reason — except an illegal one.
Proper Documentation Can Save You
If you’re taken to court for wrongful termination, the employee must prove that you based your decision on an illegal factor (e.g., age, race, gender, etc.) and not on a legitimate business reason such as poor performance or violation of a work policy.
In almost any lawsuit challenging an employment decision, the employer should prevail if records clearly establish a legitimate business reason for the action. For example, if an employee alleges he was terminated unlawfully due to age, but the employer’s documents establish he was let go for repeated violations of company rules — and that others who committed similar violations were treated the same — the employer should have nothing to worry about.
Examples of Legitimate Business Reasons for Termination:
- Poor performance: The usually means an employee has consistently performed below expectations, in spite of you giving clear feedback that improvement was needed.
- Work rule/policy violation: This usually occurs when an employee’s conduct is in violation of a company policy or the employee has acted in a manner that significantly jeopardized the company or fellow employees.
- Layoff: This usually results from lack of available work or other financial/budgetary concerns.
Why It’s Important to Record Performance Issues
First, it’s important because it helps employees improve. Employees need to know what they are doing right and wrong to be successful. That’s why annual reviews are important — as are disciplinary measures. Here are more reasons you should document disciplinary issues:
- It’s Necessary for Fair and Effective Management: Without documentation, a manager may be unable to determine how a particular problem was handled in the past, making it difficult to render decisions that are fair and consistent with past practice.
- It Protects Your Business from Legal Liability: Thorough documentation will protect you and your company in cases challenging an employment decision. By documenting disciplinary issues, you can show that the employee acknowledged your concerns and prove that you addressed it.
- It Reduces Unemployment Compensation Costs: In most states, employers will not be charged for a former employee’s unemployment compensation benefits if the employer terminated him or her for “gross misconduct” or “good cause.” In other words, the employer must show that the employee caused the employment relationship to end. In unemployment-compensation cases, documentation (or lack thereof) can have a big effect on the decision.
Document, Document, Document
Failure to maintain proper documentation is the single most common mistake managers make when handling discipline or termination. It’s critical to understand that your company may have to explain a termination decision years after it occurs.
Managers who fail to maintain proper documentation may hurt the employer’s case in unemployment-compensation disputes, workers’ compensation cases and other legal matters challenging employment decisions. In the case of employees terminated for poor job performance or misconduct, this means having to retain all job evaluations, disciplinary write-ups and notes about what was said in each counseling session leading to the termination decision.
To maintain effective documentation, consider these tips:
- Include the Facts: Note the date, time and location of the problem. Where applicable, include the “five W’s“ (who, what, where, when and witnesses). Be as precise and thorough as possible.
- Focus on the Behavior — Not the Person: When describing a problem, focus on the incident or the behavior. Stick to the facts only. Do not comment on personality traits and do not include your personal opinions about the employee.
- Don’t Exaggerate: Avoid words such as “always” and “never” unless you can substantiate it. Exaggerating, even if done innocently, may cloud your credibility in court.
- Correctly Handle Repeat Occurrences: As a general rule, a formal warning should include any past incidents and counseling — but only for related offenses. If you are documenting a recurring problem, indicate the problem has occurred in the past or just refer to the previous write-up.
- Don’t Contradict Previous Documentation: If an employee’s annual review says he or she is meeting all goals, for instance, it would be difficult to reconcile a disciplinary report two weeks later stating the employee has failed to meet performance standards. It’s important for documentation to conform with previous records, such as annual evaluations, letters from customers, written complaints or past warnings.
- Identify the Rule or Policy Violated: If the employee has violated a rule or performance standard, specify what that is. Keep in mind that it’s always easier to justify a disciplinary action if the rule or standard is in writing and communicated to employees before discipline is imposed.
- Set Expectations for Improvement: If applicable, indicate exactly what you expect the employee to do to correct the problem. Give a specific directive so that the employee understands exactly what you expect to change.
- Indicate Disciplinary Action Being Imposed: Detail the action you are taking now as a result of the employee’s non-performance or rule violation (e.g., written warning, final warning, probation).
- Include Consequences: A formal write-up should indicate what action you will take if the employee doesn’t meet the stated objectives for improvement. Be sure to also state a deadline and next meeting date, if applicable.
- Get the Signature: You should sign and date the document — and so should your employee. If an employee refuses to sign, ask another manager to witness and sign, noting the employee’s refusal.
When confronting your employee, try to maintain a positive attitude and give constructive criticism. Always treat the worker with dignity and respect. The first goal of discipline is not to punish; it’s to help someone learn how to be a more effective and productive employee.
The Last Resort
If there continue to be issues after counseling, you may have no other choice than to terminate the employee. Here are some tips on handling the termination meeting.
- Be honest and clear about the reason for discharge.
- Have past performance documentation available in case you need it.
- Keep the meeting as brief as possible.
- Be courteous, confident and firm.
- Remember to bring a witness.
- Collect all company property.
- Offer to send the employee his or her personal belongings.
Make It Easier on Yourself
Addressing employee misconduct can be uncomfortable, but with the right tools and action plan, it’s possible to turn the situation around. Take control of employee discipline with the Progressive Discipline Smart App. This affordable solution will serve as your guide to building a consistent documentation process that will help your employees improve — and protect the business you’ve worked hard to build.