The Right Way To Fire Someone
Firing an employee is the worst task most managers have. Here’s how to make it slightly less painful.
[Photo: H. Armstrong Roberts/ClassicStock/Getty Images]
GWEN MORAN 01/12/17 5:31 AM
One of the least enviable tasks managers and business owners have is firing someone. However, chances are that if you supervise people, you’re eventually going to have to let some of them go—even good employees.
Here are some dos and don’ts from experts.
CREATE A PAPER TRAIL
While it’s not legally required to create a paper trail documenting the reasons you’re firing the employee, doing so can help you protect the company and you if the terminated employee , says labor, employment, and human resources attorney Charles A. Krugel.
If you’ve tried to help the employee perform better or curb their behavior, note those actions—and be sure to document each event immediately after it has happened for greatest credibility. If you’re going to give employees second chances, it may make sense to give them a third chance, too, depending on the circumstances.
“I think ‘three strikes’ is kind of a rule of thumb,” Krugel says, although that’s more a cultural norm than a hard-and-fast rule. “That’s usually what unemployment comp administrators look at. They seem to look for two warnings and then a third strike and you’re out. However, obviously, that’s going to also be contingent upon the nature of the problem,” he adds.
TAKE CARE OF HOUSEKEEPING AND KNOW YOUR STATE’S LAWS
Different states have different rules and regulations when it comes to terminating employment, says Steven Lindner, PhD, founder of The WorkPlace Group, a recruitment firm. For example, California requires that the employee’s final paycheck be delivered immediately when an employee is fired. The employee may also be entitled to compensation for accrued vacation time, continuation of health insurance coverage, and other accommodations, depending on your company’s policies and the state and federal laws and regulations that apply to your business.
Lindner recommends working with your human resources department or attorney to ensure that you comply with any requirements. In addition, compile a list of any company-owned equipment or data that need to be retrieved from the employee.
DO IT IN THE MIDDLE OF THE WEEK
Have you heard that “sage” advice to fire someone on a Friday afternoon? Don’t do that, says Deanna Arnold, owner of human resources consulting firm Employers Advantage, LLC. “If you do it at the beginning of the week or the middle of the week, it gives people the opportunity to jump back into the job search,” she says. When you fire someone on a Friday, they have all weekend to ruminate over the situation, but can take very little concrete action, such as tapping outplacement services or contacting people in their network, she says.
STICK TO THE FACTS
When you’re doing the actual employment termination, keep it short and fact-based, Krugel says. Don’t defend your actions or get into long explanations. The more you ramble, the greater the likelihood that you could inadvertently say something that could be understood as discriminatory against protected classes, he says. He points to Johnson v. Securitas Security Services USA Inc., a case where a supervisor’s alleged comment to a 76-year-old employee who was fired that it was “time to hang up your Superman cape,” was enough for a terminated employee to state a claim for age discrimination.
HAVE A WITNESS
Lindner advises that you always have a second person on hand to act as a witness to the event. That way, if the former employee later alleges any wrongdoing, you have backup to support your side of the story, he says.
BE HUMANE
In most cases, it’s not necessary to immediately march someone out of the office escorted by a security guard. Of course you need to protect your company, but it’s usually a good idea to give the employee time to gather their things and say goodbye to coworkers.
However, it’s also important to gauge the reason for firing and the temperament of the employee. If you think they will be explosive or exceedingly disruptive, it may be best to handle matters by phone, Krugel advises.
LOOK FOR THE LESSONS
Once you’ve fired the employee, look for any clues in the situation that there are cultural or other issues that may need to be addressed, says Krugel. Once, a member of his team was fired for sexual harassment. Immediately after the termination, he called an employee meeting, reminded his employees that the workplace had zero tolerance for such behavior, and invited any employees who had concerns to discuss them. Your team may need reminders, training, or other support to address issues that arise.
In addition, consider the lessons for hiring employees in the future. Are there questions you should be asking during reference checks or other red flags for which you should be on the lookout? Take the lessons you learned and use them to strengthen your processes.
You’re Being Sued: A Guide to Handling a Business Lawsuit
By Nicole Fallon Taylor, Business News Daily Assistant Editor; January 14, 2016 09:05 am EST
You hoped it would never happen, but in the back of your mind, you knew it could: Your small business is being sued.
Whether it has been filed by an employee, client, vendor or even another business, a lawsuit against your company will likely cost you a lot of money, whether you win or lose. It’s normal to feel overwhelmed, upset and indignant, but if you want to keep your business and its reputation intact during this time, it’s important to handle every step of the process carefully.
Business News Daily spoke with legal, human resources and insurance experts to compile a step-by-step guide to help you through your lawsuit, along with critical mistakes to avoid along the way. Please note that this article does not replace professional legal counsel, and if your business is being sued, we urge you to consult an attorney before taking any action.
Step 1: Review the lawsuit with an attorney
The first thing you should do when you receive the suit papers is review them carefully with an experienced business lawyer. Attorney Braden Perry of Kennyhertz Perry said that you should check the caption and service information on the lawsuit to ensure that it contains the proper entity or person associated with the issues. If this information is incorrect in any way, you may move to dismiss the action in its entirety, Perry said. If it is correct, you should proceed with reviewing the allegations and put a litigation hold, or preservation order, in place. This requires the company to preserve all data that may relate to the legal action.
“It is extremely important that you preserve all records that have any relationship to the case, no matter how tangential,” said attorney Krishna Narine of Meredith & Narine law firm. “Such records include documents, electronic material such as email and Web pages, photos, videos and voice messages. If you have a document destruction policy, suspend it until you have consulted with your attorney. In addition, if appropriate, take pictures and/or video and be sure to include identification of the time and date of those images.”
DO NOT: Communicate directly with the plaintiff
Many of our expert sources reminded business owners that anything they say regarding the lawsuit can be used against them. For this reason, you should not attempt to contact the plaintiff before you’ve thoroughly reviewed the suit. From there, all communications with the opposing side should be conducted through your attorney and the plaintiff’s.
“Once a lawsuit has been filed, you should not communicate with the plaintiff at all,” said John R. O’Brien, a Chicago-based attorney. “The time for talking things out and resolving issues amicably ended when they filed suit, so all communication should be through your company’s attorney.
If the plaintiff is someone that you must communicate with — a current employee, or another company that you have an ongoing business relationship [with] — you should make clear that you will not discuss the lawsuit with them.”
Step 2: Inform your insurance provider
A variety of business insurance policies exist to cover companies in the event of a lawsuit. Ted Devine, CEO of online small business insurance agent Insureon, said third-party injury claims and accusations of defamatory remarks about a competitor are typically covered by general liability insurance. Client allegations that your work caused them a financial loss are often covered by a professional liability policy. Suits from employees may be covered by employment practices liability insurance or employer’s liability insurance, which is included in some workers’ compensation policies.
“Should the suit fall under the umbrella of what your policy covers, it’s common for your benefits to pay for attorneys’ fees, court costs and any settlement or judgment you’re found liable for paying,” Devine said.
If you believe one of your current policies does cover the suit, get in touch with your insurance provider as soon as possible.
“Most insurance policies require that suit papers be promptly forwarded to the insurer … to preserve any insurance coverage,” said David Turner, a partner at Schulten, Ward & Turner. “If the suit is covered, the insurer or counsel retained by the insurer will defend the lawsuit.”
Turner noted that companies should keep their general counsel advised of any claims against them, even if an insurance company is involved in defending the case.
DO NOT: Assume your insurance will cover the suit
Certain types of lawsuits may indeed be covered by a general liability policy, but do not operate under the assumption that this case is covered. Turner advised business owners to consult with their insurance provider to confirm whether or not the lawsuit is covered, as the specific circumstances of the suit may exclude it from the policy.
Step 3: Decide how to proceed, and respond to the complaint
When you receive a lawsuit, you are issued a deadline to submit a written response to it, typically within 30 days, although this may vary from state to state. According to a blog post on the Foster Swift law firm website, your answer should include the following items:
- Admittance or denial of each of the plaintiff’s allegations.
- Your defenses and counter/cross-claims against the plaintiff or other defendants.
- Whether you want a jury trial or an alternative resolution (e.g., an out-of-court settlement).
Before you respond, there are a few important things you need to consider.
“You need to understand the nature of the claims against you and the potential liability and exposure to your business so you can make a business decision on how to proceed with the case,” said Jessica Gray Kelly, a partner at Sherin and Lodgen. “Litigation costs can rise quickly, so if the claim is only for short money, or there is a nonmonetary way to settle the dispute, that may be a better business option for the company.”
Kelly recommended asking your lawyer to explain the litigation plan, potential exit strategies and estimated costs at different stages of the proceeding. You should also discuss whether it makes sense to propose alternative dispute resolution to the plaintiff.
“[Ask about] the pros and cons to proceeding with the lawsuit,” added Merlyne Jean-Louis, a New York-based attorney. “Although you may not be at fault or have violated any laws, it is sometimes in the best interest of the business to settle.”
Your level of insurance coverage may impact your options for resolution. If the claim is not covered, O’Brien advised finding out approximately how much it will cost you to both defend yourself and pay the ultimate judgment should you lose the case. He also said that counterclaims could work in your favor.
“Ask your attorney if there is a basis for a counterclaim against the plaintiff, or a third party that might bear some or all of the liability,” O’Brien told Business News Daily. “For example, if a customer is suing because a product was not delivered on time, or was defective, there may be a supplier whose delay in delivering materials, or defective materials, caused the problem. Or the plaintiff may be filing as a defensive measure, knowing that they have some fault … and may be simply trying to win the race to the courthouse.”
Alternatively, you may wish to file a motion to seek immediate dismissal of all or part of the complaint in lieu of an answer. A judge will then grant or deny the motion.
Regardless of what you decide, be sure to have an attorney check your response or motion before sending it to make sure you’ve addressed everything properly.
DO NOT: Ignore the suit
Failure to respond to a lawsuit within the allotted time frame gives the plaintiff the right to file a Request for Default, after another 30-day period. This means the plaintiff will win the case, and whatever judgment the court makes against you will be enforced.
Step 4: Find a defense attorney (if you don’t have one)
If your company has a lawyer on retainer or your insurance carrier is providing an attorney, you won’t need to take this extra step to find someone to defend your case. However, depending on the complexity of the case, you may want to seek out an attorney who specializes in the type of lawsuit you were served.
“You will want to retain counsel who is familiar with the type of claims alleged in the complaint, and if possible, who is familiar with the court in which the case has been filed,” Narine said. “For example, defending a slip-and-fall case brought by a customer is substantially different from defending a defective-product case. This can be particularly important if a case is brought by an employee, as there are a wide variety of employer-employee disputes, some of which require very specific knowledge, such as employment discrimination cases.”
Charles Krugel, a management-side labor and employment lawyer, advised doing thorough research and getting recommendations from trusted colleagues. From there, you can evaluate the quality of the attorney by asking questions such as:
- Have you ever handled a case like this before?
- How much can I expect to pay at the outset, and where will the money go — damages, back pay, front pay, legal fees?
- Where is this case heading, or where can it go?
- Do you have testimonials from former clients?
DO NOT: Stick with a poor communicator
As with any important business matter, clear, consistent communication is the key to ensuring litigation goes as smoothly as possible. Legal defense is expensive, so you want to make sure you’re getting your money’s worth in the form of a knowledgeable, forthright attorney. Krugel said to be wary of lawyers who won’t give you a straight answer or attempt to withhold information from you.
“If a lawyer can’t explain something to you in plain English, run away,” he said.
Keith Dennen, a member attorney with the Nashville office of Dickinson Wright PLLC, also noted that a good lawyer should provide you with frequent status reports, as well as copies of all important pleadings and correspondence about the case.
During and after the case
The litigation process can be long and stressful, but here are a few pieces of advice to follow throughout the case and beyond.
Don’t try to cover anything up. “Be completely honest with your lawyer about the facts, they will come out sooner or later, and it is better for your lawyer to be prepared for them than be caught by surprise.” – Jessica Kelly
Be diligent and prompt. “Review the attorney’s invoices promptly. Ask questions when you have questions. The more you delay in responding to the attorney’s requests, the more it costs you.” – Keith Dennen
Stay focused on your business. “Don’t lose sight of the fact that you have a business to run, and a bottom line to think about. So put aside any feelings of anger or pride. Oftentimes I hear clients say, ‘We didn’t do anything wrong, why should we pay this person?’ The answer is that winning the case can cost a lot more than settling. You have to make a calculation: Will the company be better off, financially, if it pays the plaintiff $20,000 than if it spends $30,000 to win the case? As the saying goes, ‘A bad settlement is often better than a good trial.'” – John R. O’Brien
Protect yourself from copycat suits. “In light of any recent employment lawsuit, you should take proactive steps to create an HR foundation that includes creating or updating your handbook; delivering anti-harassment and anti-discrimination training to all employees and management; creating a detailed complaint procedure that is published to all employees; and providing management training on dangerous areas such as interviewing, discipline and terminations. This will not only make an impression on the current case, but it could also stop later accusers in their tracks.” – Joseph Campagna, owner of human resources consultancy My Virtual HR Director
Keep your head held high. “Do not let a lawsuit rattle your entrepreneurial feathers. Remain calm and continue to work in your business’s best interests.” – Merlyne Jean-Louis
Nicole received her Bachelor’s degree in Media, Culture and Communication from New York University. She began freelancing for Business News Daily in 2010 and joined the team as a staff writer three years later. She currently serves as the assistant editor. Reach her by email, or follow her on Twitter.
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