I've had the opportunity to answer more than 3,000 "hotline calls" in the past 10 years. On many of those calls, the employer wanted to know if they'd be sued for terminating someone.
After representing hundreds of employees during my litigation career I can tell you that "how" an employer fires an employee has a lot to do with an employer's propensity to get sued. For additional background, see Understanding Employee Termination and Rights.
Guidelines for terminating employees
- Don't create a lie to make the terminated employee feel good. Recently I received a hotline call which described how an HR consultant working with the company advised them to lie about the reason for the employee's termination by claiming that it was a "layoff." Horrible advice! The problem with this approach is if the employee ends up suing you for whatever reason you'll then have difficulty proving that poor performance, etc. was the reason for their termination. Telling employees the truth is the best way to stay out of the courtroom -- and don't ask HR people legal questions that require a lawyer's judgment!
- Don't underestimate how traumatic the event will be for the terminated person or tell them how tough it was on you. Yes, it's tough for you, but guess what? It's even tougher on them and their family.
- Don't lose sleep over the termination. Where did management fail this employee? Did the relationship begin with a bad hire? If you've done everything you can to be responsible to the employee, then you should have no fear or other negative emotion associated with letting them go.
- Don't embarrass the employee. Try not to terminate them in front of the rest of the team, make a scene of their walking out of the office, etc. Terminate in a dignified manner, even if the employees have been less than dignified themselves.
- Don't turn the termination into a one-hour conversation. By now there should be no surprises. Employees should have known that if they didn't improve their performance they would be off the bus. Don't negotiate or sympathize -- just let them go.
- Don't make promises you'll regret. In a well-known case, a school concerned about the employee's backlash offered a letter of recommendation on which a subsequent employer relied. When the victims of this alleged conduct sued the new employer, they cross-complained against the previous employer for misrepresentation.
- Finally, don't try to buy off terminated employees with a release for two weeks of severance -- all this will do is invite them to see a lawyer. Don't offer a release when you fire employees for poor performance or because you're in fact in an economic downturn.
For employer-side issues see Understanding Employee Rights and Termination.
If you're an HR That Works Member, follow the Pre-termination Checklist.
Frequently Asked Questions
Can I be sued for firing an employee?
Yes, any termination can lead to a lawsuit, but documented, nondiscriminatory, and well-communicated firings are far less likely to result in successful claims.
Should I tell an employee the exact reason for termination?
Be truthful and concise about the reason, focusing on documented performance or business reasons rather than personal judgments.
Is offering a small severance and a release a good strategy?
Small offers can sometimes prompt the employee to consult a lawyer and pursue claims; consider your goals and consult counsel before offering releases.
How should I handle a termination to reduce the risk of retaliation or escalation?
Handle the meeting privately and respectfully, keep communication brief and documented, and offer clear logistics for final pay and benefits.