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Full Service Law Firm | Michael Best & Friedrich LLP

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We are regularly fielding questions from employers about terminations/separations with underperforming employees. The typical call/email chain goes something like this:CLIENT: We’d like to fire Employee X.FIRM: Alright, we’d be glad to help. Can you tell us a bit more?CLIENT: The employee isn’t doing their job well.FIRM: Got it. Does the employee have an employment contract for a fixed period? Is the employee in a protected class? Do you have any documented performance reviews in their file?CLIENT: No, they don’t have a contract for a fixed period, but the employee is in a protected class. No, we’ve been really busy so we haven’t had time to do any performance reviews. But we’re in an “at will” employment state, so that shouldn’t matter, right? [INSERT RECORD SCRATCH]Terminating an employee is never an easy decision, but the process becomes even more delicate when the employee belongs to a protected class and has not received prior performance reviews. Protected classes include individuals based on race, color, religion, sex, national origin, age, disability, and other characteristics protected by law. Before proceeding with termination, it’s crucial to understand the legal implications. Federal laws like Title VII of the Civil Rights Act, the Americans with Disabilities Act (ADA), and the Age Discrimination in Employment Act (ADEA) protect employees from discrimination. Terminating an employee in a protected class without documented performance issues can lead to claims of discrimination or wrongful termination. Absent the existence of written performance reviews, the lawsuit many times becomes a story-telling contest… with the plaintiff lawyer telling a story about a mean-spirited, discriminatory employer and the defense lawyer telling a story about an employee’s poor performance. Of course, actual facts and written documentation go a long way in bolstering either side’s arguments. Well-documented performance reviews can be crucial in demonstrating a legitimate, non-discriminatory reason for termination.Also, it’s important to be honest and objective with performance reviews and not overly nice. We’ve seen a few fact patterns like the above where the employer HAS in fact done performance reviews. We review them and they turn out to be pretty generic, lacking much substance regarding the poor performance. Other times the performance reviews are actually very positive! This becomes even more problematic in a defense action because the employer is using poor performance as grounds for termination, but the written performance reviews don’t substantiate the narrative. Often times, well intentioned employers are afraid of direct, honest feedback in these types of performance review settings - which becomes very problematic on the back end when you are defending a cause of action.In addition to the legal ramifications, performance reviews obviously have a significant business value as well. Employees generally desire feedback so that they can improve and excel. Long periods of time without feedback, affirmation and constructive criticism can lead to dormancy and deterioration of culture and motivation. Performance reviews often provide a clear understanding of the company's expectations and objectives, and can result in improved employee morale and productivity.Our practical, bottom-line advice for busy employers. <ul><li style="text-align: justify">Review Company Policies: Ensure that your company’s policies and procedures regarding termination are clear and consistently applied. This includes understanding any contractual obligations or union agreements that may be in place. </li><li style="text-align: justify">Set a regular cadence of written performance reviews. Put it on a recurring calendar cadence or it won’t happen. There may not be a time when things slow down. </li><li style="text-align: justify">Train Managers and HR Staff: Provide training on how to conduct performance reviews, handle terminations, and comply with anti-discrimination laws. This helps create a fair and consistent approach to employee management. </li><li style="text-align: justify">Encourage your leadership to be direct, candid, and honest in their assessments and not overly positive. No one likes to communicate things that are hard to hear but overly positive performance reviews are problematic from a legal and business perspective. All companies (and all employees) have room to improve.</li><li>Gather Evidence: Collect all relevant documentation, including emails, reports, and witness statements, that support the decision to terminate. This evidence should demonstrate that the termination is based on legitimate, non-discriminatory reasons. </li><li>Consult Legal Counsel: Before taking any action, consult with legal counsel to ensure compliance with all applicable laws and to mitigate the risk of potential lawsuits. We are happy to make recommendations to HR professionals, resources and third party vendors that could assist your organization with performance reviews.</li></ul>Terminating an employee in a protected class without prior performance reviews is fraught with legal and ethical challenges. By understanding the legal landscape, conducting a thorough investigation, communicating effectively, and implementing best practices, employers can navigate this difficult process with care and integrity. <input type='hidden' id='passle-remote-hosting-tracking-shortcode' value='102ji9b'/><div class="passle-featured-image passle-featured-image-position-bottom"><img src="https://images.passle.net/fit-in/400x400/filters:crop(0,44,2121,1187)/Passle/5f6edd8e8cb62a0bec3e5fd2/SearchServiceImages/2024-09-03-18-41-05-234-66d758417e02bf7ebf1ae3c4.jpg" alt="Featured Image" /></div>

Firing Fumbles: Avoiding Legal Landmines with Underperforming Employees

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