Wrongful Termination Lawsuits:
an Ounce of Prevention is Worth a Million Dollars of Cure
Susan Keenberg, Esq.

Employers can’t afford to win or settle (let alone lose) when they are sued by disgruntled former employees (DFE’s) for causes of action based on wrongful termination related to issues like sexual harassment or the well-known protected categories such as race, religion, pregnancy, national origin, gender, gender orientation and age. The bottom line: settling such lawsuits early on can easily cost an employer upwards of $10,000 or $15,000 or more and going all the way to trial and winning can cost $100,000 or more. Unquestionably, this is one area of your business in which it is much more cost-effective to take some preventive measures than to wait for the process server to show up on your doorstep. Bury your head in the sand and you leave a much more sensitive part of your anatomy exposed!

Proper Documentation: The Business Owner’s Best Friend

To avoid lawsuits, you must make yourself an unattractive target to attorneys who specialize in wrongful termination litigation. It’s a multi-pronged process, but one of the most important steps you can take is to properly document performance problems as they occur. (Please note that this is also the best way to give the employee a chance to improve his/her performance to an acceptable standard, which should be the real goal of every employer. It is usually much less expensive to help under-achieving employees improve their performance than to fire them and go to the expense of hiring and training new people.)

Notice the use of the word proper in the phrase “proper documentation.” Many employers, especially those who employ just a few people, hate the thought of sitting down with their employees and discussing performance issues frankly, let alone memorializing these conversations in writing and then requiring the employee to sign the memo. “We’re like a family here,” they say. “I get queasy just thinking of asking an employee to sign a memo.” But when was the last time you had to worry about one of your family members suing you for wrongful termination? Without written proof that you have informed the employee of the performance issue(s) and given the employee the opportunity to correct the problem, it is awfully easy for a plaintiff’s attorney to make it look like you fired the employee for a bad reason or that you treated the DFE differently (worse) than your other employees, probably because the DFE was a member of a protected group. “If you had appropriate motives for firing the employee, why didn’t you document them?” you’ll be asked later. “How was the employee supposed to know about these performance issues? Didn’t you really fire him because of his race/age/gender, etc?”

Proper documentation of performance issues does not mean scribbling a note and stuffing it into a desk drawer or writing copious notes in the employee’s personnel file the day after you fire her or are served with a lawsuit. If you have spoken to an employee about a performance issue once and there has been no improvement, you should prepare a memo to the employee. Then sit down with the employee and go over the memo point by point. Be sure to include the following items:

• Mention that first incident, which you should have noted in the employee’s personnel folder even though you didn’t give the employee a written memo about it. For example, “On January 3, 2009, I told you that you had been taking too many breaks and that your breaks were longer than is allowed by our rules. We allow two breaks per day; one in the morning and one in the afternoon of 15 minutes each in addition to your lunch meal period, which is an hour long. When we spoke on the 3rd, you agreed to limit your breaks to one 15-minute break in the morning and one in the afternoon.”
• The specific behavior that led to the current discipline. Behavior can include conduct and statements. Following along with the example above, you might say, “Despite the promise you made on January 3rd, you have continued to take extra breaks. Specifically, On January 5th, you were observed leaving the building 4 times during the day other than during your lunch break; on January 6th, you were observed leaving the building 6 times other than during your lunch break and on January 10th, you were observed leaving the building 5 times other than during your lunch break. You did not obtain permission for any of these extra breaks.”
• Clearly state what you expect the employee to do in order to correct the problem and how much time he/she will be given to correct the problem. “I expect you to stop this behavior immediately,” may be the right statement for some behaviors while a more mild approach might be best in others. For example, an employee who is not meeting sales goals might be warned that he must bring production up to goal by a set date in the future rather than being told that the improvement must be immediate.
• Clearly state the consequences that will befall the employee if she is not willing to work on the problem or if she fails to achieve a satisfactory level of performance following this warning. “If you take any extra breaks without permission in the future, you will be subject to discipline that may include suspension without pay or immediate termination.”
• Be sure to date and sign the memo and MOST IMPORTANTLY, include a place for the employee to date and sign the memo. The employee will not be agreeing that the contents of the memo are correct, but simply that he has received a copy of the memo and that the contents have been discussed with him. The signature line for the employee should be below a paragraph that reads, “I am signing this memo as an acknowledgment that I have read this memo and its contents have been discussed with me. By signing below, I do not necessarily indicate my agreement with the contents of this document. I understand that if I wish to respond in writing to this memo, I may do so and have my response placed in my personnel file.”

Once you make a habit out of properly documenting performance issues, you’ll feel a lot more secure about your ability to terminate employees who persist in performing poorly. In fact, once you have your head out of the sand, you may feel like you’re walking on air!

© 2009 Susan Keenberg, Esq.