Even after doing everything correctly, an employer can still face a wrongful termination claim. But what if an employer hasn't done everything correctly?
The price for wrongful termination includes the potential for complicated and possibly public legal battles, untold administrative headaches and, if the employee wins, possible punitive damages. Despite these risks, employers still have to fire employees.
This article will explain the importance of relying on objective and specific criteria for evaluating employee performance, and will focus on the critical need for documentation of that performance. Let's start with a quick primer on the red flags that suggest to juries that discrimination may have occurred.
Employers should be aware that certain specific factors can indicate to juries that discrimination has occurred. Three of the most frequent red flags are: utilizing subjective criteria to evaluate employees, providing poor documentation of employee performance and delaying the delivery of the termination message.
Generally, decisions about hiring, promotion, and termination are based on an employer's overall perceptions of an employee's job qualifications and performance. Although there are obviously positions in which subjective qualifications are important -- "leadership ability" is an example of such a qualification -- it is imperative that employers institute objective standards for evaluating an employee's work performance.
Further, these standards must be uniformly applied in an unbiased fashion. Otherwise, there may be cause for a wrongful termination claim.
It is not enough, for example, to state that an employee has had "performance problems" or "poor work habits." In the event of a wrongful termination claim, an employer is obligated to support its position that the action was taken for "legitimate business purposes." Generalizations will not adequately support that position.
Personal relationships and friendships may also stand in the way of a full and detailed employee performance review. The failure to be completely honest in evaluating an employee's performance may create grounds of "pretext" on which liability for discrimination may be based.
Employers should establish specific criteria for performance that can be objectively discussed and measured. Employment decisions, especially termination of an individual's employment, should be based on the employee's demonstrated skills in meeting the stated performance criteria, and should specifically reference that individual's work history. When evaluating performance, be specific and state what kind of performance problems have occurred.
The case law on the lack of objective criteria is increasing. In Mitchell v. Utah State Tax Commission, 26 F. Supp. 2d 1321 (D.Utah 1998), for example, an Hispanic employee had been passed over for promotion on numerous occasions. The attorneys for the employee argued that the employer's criteria for promoting employees was based largely on "attitude, assertiveness, professionalism, and communication" and that the company's subjective criteria offered a "convenient pretext for discrimination." The court agreed and denied the employer's motion for summary judgment.
Documentation of the Decision
When a determination is made regarding a specific employment action, the employer must fully document the basis for this action in writing. A lack of documentation can lead juries to suspect that discrimination was actually the basis for the employment decision. In response to a prima facie case of discrimination, an employer is obligated to prove that it had a nondiscriminatory reason for the employment action.
That means that an employer must be able to support its position with documentation of dissatisfaction with the employee. This documentation can include written performance evaluations, minutes of management meetings at which an employee was discussed, and disciplinary or poor attendance records.
As a general rule, employers should not terminate an individual's employment without documentation that could hold up under scrutiny by a jury.
At least one federal court has stated that a lack of documentation for an employment decision is sufficient to deny summary judgment for the employer.
In Halfond v. Legal Aid Society, No. 95-CV-3718 (E.D.N.Y. 1998), layoffs were required and an ad hoc committee was established to evaluate employees and determine which employees to suggest for dismissal. An analysis of the committee's recommendations showed that of those recommended for termination, half were over age 50. Moreover, the committee had offered no documented explanation of the criteria for its decisions.
Three employees -- all over age 50 -- filed claims of discrimination. Because there was no objective, documented criteria for the termination, the court denied the employer's motion for summary judgment, allowing the claims to be heard by a jury.
Timing the Message
Waiting to notify an employee of a pending employment action, especially after documentation is in place, also puts employers at risk. Though there are situations in which the implementation of a decision must be deferred for business reasons, it is generally more appropriate to promptly notify an employee of an employment decision.
Notice of the decision should be given in an appropriate and sensitive manner in order to avoid subsequent complaints. Otherwise, juries may surmise that the termination is not the result of the documented reasons, but may instead be discriminatory.
In Michael Nero v. Industrial Molding Corporation, 167 F.3d 921 (5th Cir. 1999), an employee who had suffered a heart attack was terminated. Although the company claimed they had decided prior to Nero's heart attack to terminate his employment, Nero was not immediately informed of that decision.
When he returned to work weeks after his heart attack, Nero was informed of the decision to terminate his employment. He filed a suit in federal court, claiming that the decision to terminate him occurred after his heart attack and was an attempt to prevent him from receiving company-provided medical benefits.
The delayed delivery of the termination message led the jury to surmise that Nero was right, and that the decision had not actually been made until after his medical problems arose. In addition, there was a lack of documentation indicating poor performance on Nero's part. All written evaluations prior to his medical problems indicated that Nero was performing "up to expectations." The jury found that the decision to terminate Nero was motivated by an intent to interfere with his rights under the company's benefits plan.
Sensitivity, professionalism, and timing are critical when terminating an employee. Objective criteria, proper documentation, and timely delivery can help employers avoid the red flags that juries may interpret as discriminatory actions in court.
The company's employment and termination practices and policies should be reviewed on a regular basis for compliance with all applicable laws and regulations. Fully compliant employment policies and procedures can help to avoid the expense and distraction of the lengthy legal battle that can follow a wrongful termination claim.
The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion.