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Firing Right — Part 1

Denise Rondini June 28, 2012

There are procedures to follow when terminating someone for performance issues and repeated policy violations.

By Denise L. Rondini, Executive Editor

drondini@randallreilly.com

No business owner or manager likes to terminate an employee, but sometimes it is necessary. And when must be done, it is important that the termination be carried out properly.

A dealer’s entrepreneurial skills that have served him well in growing his business can be a liability when it comes to dealing with employee issues, according to Chris Durham, attorney at Duane Morris. “I think sometimes dealers don’t appreciate the fact that [employee relations] is one of those areas where you really need to take a step back and make sure your ducks are in a row before moving forward with something like terminating an employee.”

Dealers need to develop policies and procedures regarding human relations issues including those regarding non-discrimination, retaliation, discipline and performance expectations. In addition, managers need to be trained on these issues as well.

“This is an investment that pays off in spades when you are able to avoid liability down the road or at least significantly reduce the risk of liability going forward,” Durham says. “It is a lot cheaper to some policies and procedures in place and conduct the necessary training then it is when someone sues you and you incur ligation costs.”

The type of policies and procedures to follow will depend on the situation, but regardless of the situation, Durham’s mantra is: document, document, document. This is especially important for issues that lead to termination, which is where you are most likely to end up in litigation.

Part 1 of the Firing Right series will focus on performance and repeated policy violations. These are situations where the employee’s performance is not up to snuff, they are repeatedly late or their attendance is poor.

“These are not immediate issues justifying termination, but become issues over a period of time and might ultimately lead to termination,” Durham says.

“Here it is important not to be lulled to sleep, not to just allow these things to build up to a breaking point and then realize you  have not taken the necessary steps nor documented the problem properly.”

The first time there is an issue with an employee’s performance, you need to document it. Durham says you can use a memo to the file that states that expectations are not being met. It should give specific examples of when the expectations are not being met.

The next step is addressing the issue with the employee. “You want to sit down with the employee and make him aware that there is an issue,” Durham says. “Often employees don’t believe there is an issue. They believe their performance is acceptable. There is an astounding number of employees who believe it is acceptable to be late for work.”

It is important to meet with the employee, highlight the fact there is an issue and communicate clear expectations going forward.

“If the employee is habitually late, you need to say something like ‘You need to start being on time for work,’” Durham says.

You may want to have a first verbal warning step and after that follow a progressive discipline process that in includes written warning and counseling.

“Regardless of whether you give the employee any documentation, if it is a verbal warning, you want to document the meeting,” Durham says. Document all counseling or discipline that has occurred. Document the expectations going forward with the employee, and finally document the consequences of not meeting the expectations.

“You do not want to find yourself in a situation where an employee can say ‘I didn’t know that if I did not meet expectations going forward that I would be suspended or terminated.’ So it is important to make sure you are on the same page,” Durham says.

Employees need to understand what the issues are, what your expectations are and the consequences of not meeting them.

If the issue persists, you should continue to document it.

“Initial documentation is great, but you want to build up evidence in the event someone eventually challenges your termination decision,” Durham says. “You want to have a body of evidence to point to where you can say, ‘Tthis happened over a period of time. We documented it. We addressed it with the employee and they knew the consequence if they did not meet expectations.’”

If you have to terminate an employee, you want to communicate the reasons for the termination to the employee. “I can’t emphasize enough how important it is to be upfront with the employee,” Durham says.

If you are evasive with the employee in your reasons for termination it can create problems. “They may not feel like you are being upfront with them and that something is lurking below the surface, which might make them more likely to say ‘I think it is because of my race’ or “It is because I am a woman.’ When you are not clear with the employee about the reason for the termination, they begin to imagine worse-case scenarios in their heads and that is when they go talk to a lawyer,” he says.

Additionally, if they do sue you those shifting reasons alone can be enough to get a case before a jury because they create inferences.

“Documenting throughout the [discipline] process provides a contemporaneous record of the reasons for termination. A contemporaneous record is going to serve you immensely because it is not a situation where you are justifying your actions after the fact or where the employee can deny that he met with you and was informed about the behavior and given warnings,” Durham says.

“You have your evidence in a row and frankly that is something a jury is going to expect in assessing whether or not you acted lawfully.”

He adds, “I think notice to the employee about the problem is often an issue of fundamental fairness. Generally speaking dealers want to develop good relationships with employees and help them succeed. Providing constructive feedback on performance and behavior issues and addressing those issues and discipline is part of that relationship.”

Employees who feel they have been given a fair shake are less likely to sure after termination.

“Simply put, an employee should never truly be surprised by a termination that results from a history of poor performance or behavior because the issue should have been communicated to the employee along with clear expectations for their performance or behavior going forward,” Durham says.

“When I talk about fairness, it is important to remember that juries are the ones who decide whether a dealer is liable for an employee’s discrimination claim, and it is important to remember that juries by and large consist of employees.”

Note: Part 2 of Firing Right will focus on proper termination procedures for emergent issues. It will appear in the May 31, 2012 edition of the Successful Dealer Weekly Newsletter.

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