How to Fire with Impunity

Source: The CPA Journal

Here are some ideas for easing the pain and reducing the probability of a lawsuit:

• Make payments for salary, sick leave, vacation, etc. at the time of termination. It may help neutralize an employee’s hostility. Severance, if offered, should also be paid at the time of termination. But if severance is tied to a release of claims against the firm, the employee may consider it an admission of wrongful termination. A release, if used, should be prepared by an attorney.
• Don’t let anger be the cause of termination. If the problem is alcohol or drugs, consider a suspension while you prepare.
• If the employee file contains previous warnings, the probability of litigation is reduced. If the offense is the first one, a written warning may be more appropriate.
• If the firm has a documented termination procedure, be sure to comply with it. Otherwise, a court may deem the dismissal as lacking appropriate reason. If there’s no documented procedure, assume that past methods have set precedents.
• Timing can be a problem as, for example, when a pregnant woman is terminated. There may be a presumption that pregnancy is the real reason.
• Although employment at will is widely accepted, employees can claim to be members of protected classes, e.g., race, gender, religion, pregnancy, sexual orientation, age, or disability. Therefore, any legitimate reason for termination should be documented in the employee’s file.
• Avoid the temptation to soothe an employee’s ego with fabricated reasons, e.g., a layoff when the firm intends to replace the employee.
• Terminations should be done face-to-face with the supervisor and another member of the firm present, preferably a man and a woman.
• A termination letter helps you to carefully think about what you’re going to say in person. Deliver the letter at the termination session.
• Suppose an employee’s performance seriously deteriorates and you suspect the cause is alcohol. The reason for termination should be the poor performance, not the alcohol, which may be difficult to prove.
• Be diplomatic and considerate of the employee’s feelings. Being disrespectful may increase the probability of a lawsuit.
• Keep the termination conversation short and on point. Let the employee read the termination letter. Excessive discussion can lead to argument. Don’t use complimentary expressions that aren’t true. They may come back to haunt you.

From The CPA Journal, A Publication of the New York State Society of CPAs, September 2007. For the complete article, click here, then select the article Ten Practical Suggestions for Terminating an Employee.