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As a small business owner, you might not even be able to imagine the possibility of firing one of your staff members. Each of your employees provides value to the company and helps keep things running smoothly. You could never let any of them go, could you?
The unpleasant reality of running a business is that sometimes, people must be fired. Whether it's for reasons beyond anyone's control — an economic downturn, a shifting marketplace, etc. — or because the employee has exhibited poor behavior or work ethic, there may come a day when you need to make a decision about someone's future with your company.
Terminating an employee is never easy, and going about it the wrong way will result in an angry former staff member at best, and a hefty lawsuit at worst. Here's how to go about this difficult process properly, from both a legal and a professional standpoint.
Before the meeting
Donald Trump may make it look easy, but firing an employee is never as simple as saying, "You're fired." Proper termination is not a rash, spur-of-the-moment decision, but a well-documented process that must prove that you, as the employer, are justified in your actions. Otherwise, you're inviting the potential for a wrongful termination lawsuit.
In an article on Entrepreneur.com, author John Boitnott said that employers should do their research on federal and state laws that could protect an employee, such as the Family and Medical Leave Act (FMLA) and Title VII of the Civil Rights Act of 1964, which prevents discriminatory firing on the basis of age, sex, race, religion, disability, etc. He also noted that, if the firing is performance-related, any and all documentation of employee issues should be brought to the meeting, including formal warnings and performance reviews stating the need for improvement.
"These can serve as proof that the employer offered the worker the chance to turn things around," Boinott wrote.
The situation can be a little trickier if an employee is being let go as part of a downsizing initiative. Kathie Caminiti, a partner at labor and employment law firm Fisher & Phillips LLP, said that documentation is necessary to justify not only the reduction in staff, but how you determined which employees got cut.
"With a downsizing or reduction ... what is the business justification and what is the selection criteria for the person to be terminated?" Caminiti said. "If you're letting go of three people, the next question is, why those three people as opposed to [other employees]? That's where companies get into trouble."
To make sure you've covered your bases, Caminiti advised asking yourself these five important questions when preparing for a termination meeting:
- What is the reason for the discharge and what documentation exists to support that decision?
- What is the employee's background and history with the company? (Consider age, gender, protected class under EEOC laws, union versus non-union, whether employee has made complaints against company, etc.)
- Am I treating all other employees the same? (i.e., if the employee is being fired for violation of policy, would any other employee also be fired for the same violation?)
- Is this termination achieving business objectives?
- Am I following my own employer policies and procedures for discipline?
Breaking the news
As difficult as it may be to prepare for an employee's termination, the actual firing part will always be the hardest step in the process. Caminiti reminded employers that, while letting someone go does affect your remaining staff and their morale, the decision has an immediate financial and emotional impact on that person and his or her family. Therefore, the situation must be handled with the appropriate sensitivity and tact.
The employee you're terminating is likely going to be upset and have some questions for you once you deliver the news. Caminiti said you should anticipate this, and be ready to answer any questions posed in a respectful and succinct manner — don't drag it out, or you might say something that could land you in hot water.
"How a person is terminated often influences whether they file a lawsuit," Caminiti said. "If people feel treated with dignity and respect, they're less likely to file a lawsuit.
In a Nolo.com article, attorney Amy DelPo recommended preparing answers to common questions about the employee's current projects, clients and appointments, as well as when the employee should collect his or her belongings and leave.
"Before the meeting, you should come up with a plan for work that is in progress," DelPo wrote. "Will these projects be handed off to a co-worker? Do you need the employee to complete anything? Does the employee need to assist in the transition?"
Above all, Boitnott reminded employers to be careful of what you say, as it can be used against you should the employee file a lawsuit. State that you're dismissing the employee "for cause," but don't get too far into specifics, he said.
"The discussion should be brief, stating only the facts," Boitnott wrote. "If an employee gets emotional, the manager should continue to stay on track, keeping as professional as possible."
Next steps
Once the employee has learned of his or her termination, your job as the employer is to make sure that person is able to make a clean transition out of your company. This includes collecting any company-issued property like phones, laptops or keys, revoking any software permissions and passwords, and having all the necessary paperwork ready to go after the meeting.
Caminiti noted it's very important to make sure an employee's final notices — COBRA information, final pay, benefits administration, nondisclosure agreements, etc. — are completed, filed and issued correctly, so as to have a proper paper trail should any problems arise after his or her last day.
If you're offering the employee a severance package, Boitnott advised having a human resources representative or office manager sit in on the meeting to handle the paperwork right then and there. This will help the employee shift his or her focus to logistics rather than the firing. Severance pay can also help to minimize potential backlash from the terminated employee, Boitnott said.
Before the employee leaves the office for the last time, be sure to provide him or her with the proper company contact to assist with any follow-up questions regarding pay and benefits. From there, DelPo recommended trying to end the meeting on the most positive note possible.
"Wish the employee good luck and shake his or her hand," DelPo wrote. "If you can honestly say something positive about the employee's tenure at the company, by all means do so. And assure the employee that the contact person you've provided will be available to answer any questions that come up and assist the employee with the termination process."
More information
While you should consult with an employment law and/or human resources professional before moving forward with an employee termination, here are a few resources to help you prepare for the process:
- "Employment Ending Checklist" (About.com)
- "Fire Well: How To Avoid Wrongful Termination And Employment Discrimination Lawsuits" (Forbes)
- "The Best Way to Fire an Employee" (Inc)
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