Top Legal Pitfalls in the Departure and Termination Stages

©2013 LinkedIn Corporation. All Rights Reserved.

(Part 3: Departure / Termination)

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Top Legal Pitfalls Hiring Managers Make Along the Employment Lifecycle

  Dan Obuhanych   Associate of the Employment Practices and Litigation Groups   Fenwick & West   https://www.linkedin.com/pub/dan-obuhanych/2/8a7/401

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Pre-employment

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Employment 2

Termination

3 Screening

Interviewing

Selection process

Background checks

Onboarding

Assessing termination risks

Performance management

Failure to performance manage

Tips and more!

Employee classification: Exempt vs. non-exempt

Worker classification: Contractor vs. employee, and interns

Performance management tips

Recording Available Today

Giving performance coaching / reviews

Avoiding employment discrimination claims

Including: Myths debunked and take-away action items

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Recording Available

q  At-will employment

q  Why is performance management necessary?

q  Because of discrimination and retaliation law: •  Rarely proved with direct evidence •  Often proved circumstantially

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Discrimination

Race

Color

National origin

Citizenship

Ancestry

Religion

Gender

Pregnancy

Sexual orientation

Disability

Age (40+)

Military service

Marital status

“Associa-tion”

Law prohibits discrimination in hiring (and other employment decisions) based on protected characteristics, including:

Tip

Can’t make decisions in the screening, interviewing, consideration, or selection process based on such characteristics

① Tina was doing a great job for the first year.

② However, now the scope of the job has changed and she is struggling.

③ Dana, Tina’s manager, notices this. Since Tina’s annual performance review is coming up in about a month, Dana decides to bring up this issue then.

④ One week before her performance review, Tina complains to Dana and Human Resources that she is not being paid as much as her male coworker.

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Complaints that impact the law or public policy •  Company violating the law •  Not following required protocol •  Discriminating against employees, etc. Refusal to engage in unlawful behavior •  Not reporting something to a government agency when required •  Covering up or lying about financial data, etc.

Unlawful to take adverse employment action against someone who engages in protected activity:

①  Henry is frustrated with his direct report, Sam.

②  Sam is not meeting expectations and is habitually turning in projects late.

③  Henry will terminate Sam in the next thirty days if he does not improve.

④  However, not wanting to deflate Sam’s spirit, and hoping he will turn things around, Henry gives him an overall score of 3 (Meets Expectations) in his performance review.

①  Manager grows intolerant of employee’s performance problems

②  A review of the employee’s personnel file reveals: No written record of what a judge, jury or arbitrator would consider dissatisfaction:

q  No written warning q  Nothing meaningfully critical in performance review(s)

Common Scenario

q  Often, the facts are inconsistent with

poor performance

•  Good reviews

•  Merit increases/bonuses

•  Stock option awards

•  Positive comments by manager

q  Manager’s explanation for the

inconsistent evidence is often not

compelling •  “I thought giving him a bonus would

motivate him to improve.”

The Common Scenario

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Manager Employee

“Nonsense. You are a poor performer. Your [protected characteristic] had nothing to do with it.”

“You [insert adverse employment action] because I’m [insert protected characteristic].”

“Prove it.” Must look at the performance record

①  Legal claims will survive (at least initially) where contradictory facts exist as to whether employer truly believed performance was poor

②  If employer lied about reason for the adverse employment action (e.g., position elimination, layoff, etc.), a jury may assume employer lied to cover up discrimination and/or retaliation

③  Results in $$$ for employee

① Starts with sturdy hiring practices:

q  Clear, comprehensive and accurate job descriptions

q  Background checks that confirm employment, education, and criminal history and reference checks q  Ask yourself: is this a job that will likely scale and if so, does this candidate have the right tool kit to scale?

② Yes, admit it, sometimes you make bad hires

What are the hallmarks?

Regular performance reviews that are:

①  Accurate q  No sugar coating! q  Disservice to employee – take away opportunity

to improve and keep job q  Acknowledge the good and bad

②  Fair and easy to understand

③  Factual q  Give specific factual examples q  State more than a mere “conclusion”

④  Consistent treatment

What are the hallmarks?

EXAMPLE #1

EXAMPLE #2

Conclusion: “Jane is not a team player;

she is not fitting in.”

Fact: “Jane was the only employee

in the department who did not volunteer to help out on

the XYZ project. The reason she gave was: ‘that’s not in

my job description.’”

Conclusion: “John deals with his co-workers in an abrasive

fashion.”

Fact: “John raised his voice to Jane

in a meeting on October 4, and said ‘Screw you. That’s

your job!’”

①  Address shortcomings as they arise, don’t wait for the performance review

②  Better to proceed directly to termination for some problems that are not “fixable”:

q  Serious misconduct q  Unmistakable lack of qualifications for work q  Seize on the egregious mistake/issue – don’t delay

What are the hallmarks?

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EFFECTIVE PERFORMANCE MANAGEMENT:

What Are The Hallmarks? What are the hallmarks?

 Progressive Discipline (not required by law)

Purpose: •  Fairness •  Appearance of fairness to other employees •  Don’t want employees to think the company is unfair or will

terminate without warning •  Appearance of fairness in court •  Create a paper record consistent with concerns

Consider performance improvement plans (PIPs), warnings, and other progressive discipline tools – HR will help you

One-on-Ones: q  Recommend biweekly

q  Take notes

q  Discuss performance, goals, training opportunities, job satisfaction

q  Great retention tool

Goals q  Don’t set and forget

q  Revisit, especially during 1:1s

Training

q  Boot Camp

Onboarding

q  Introduce new hires to peers

q  Check in on progress/integration with team

Retention

q  Watch out for signs of dissatisfaction

q  Address the issue proactively

①  Susan has decided to terminate Tim.

②  Historically, he has always been a top performer and she has consistently rated him a 4 (Exceeds Expectations) on his performance reviews, including his last review nine months ago.

③  However, since then, his performance has deteriorated. Although she has sent him a few emails over the past nine months that contain criticisms, she has not talked to him about his performance deficiencies.

④  Tim is disabled and 60 years old.

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Remember CAR

C

A

R

Consult with Human Resources

Assess Performance

Review Documentation

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Consult with Human Resources

C

q  Whenever you are considering termination, contact HR for guidance

q  Don’t wait until the last minute

q  HR can help with “A” and “R” steps

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Assess Performance

A

q  Are these issues that can be improved by training or further performance management

q  Consider a written warning or a PIP

q  Did you give the employee notice of performance problems?

q  Has the employee improved following notice?

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Review Documentation

R q  Formal warnings (e.g., PIP, written warning,

performance review)?

q  Emails about performance issues?

q  Written documentation is the key to success

q  If insufficient documentation, consider progressive discipline tools

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q  Notify HR – HR should already be involved

q  Separation agreement/severance

q  Final paycheck

①  Ivan is not performing up to par. Steve (his manager) decides to terminate him.

②  Steve has a one-on-one meeting with him and tells him that the company needs to lay him off.

③  When he asks why, he says it’s due to financial issues.

④  Steve offers to give him a good reference.

q  Tell the truth

q  Have a witness

q  Keep the conversation short

q  References – watch out (LinkedIn)

q  Cautiously compassionate

● Goal is not lawsuit avoidance, but to minimize threat and costs associated with legal claims. ● Balance against need to run business. ● Do not create proof of the “lie.” - Contradictory or lack of documentation. - Suspicious timing. - Facts inconsistent with actions taken. ● Performance management should be: - Accurate and transparent (no sugar coating) - Fair (i.e., reasonable) - Factual (not conclusory) - Consistent (same standards applied across the board) ● PIPs and progressive discipline used appropriately (not in all circumstances) ● Assess risks and documentation with HR or legal (particularly in high risk situations).

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