“Employment at-will,” the bedrock principle of American labor and employment law, makes it sound so easy and simple: “Employment at-will provides that absent express agreement to the contrary, either employer or employee may terminate their relationship at any time, for any reason.” Black’s Law Dictionary, at 525 (6th ed. 1990). When advising clients, employment lawyers often append a catch-all exception at the end of the definition: “except for an unlawful reason.”
That last bit (“except for an unlawful reason”) is the exception that swallows the rule, as most employment lawyers, human resources professionals, and seasoned managers know. In the U.S., employees in the 21st century have an almost endless of array of common law and statutory protections relating to their employment. Most of these claims entitle plaintiffs to a trial by jury, and juries have shown an increasing willingness to award jaw-dropping sums to an employee whom they feel has been wrongfully fired. See, e.g., Braden v. Lockheed Martin Corp., 2017 U.S. Dist. LEXIS 207236, 2017 WL 6447867 (3d Cir. Dec. 18, 2017) (noting, but vacating, $50 million punitive damages jury verdict in New Jersey age discrimination in employment claim).
With these basics in mind, this paper and presentation are designed to guide employers as to the best practices to ensure that when a supervisor or employer seeks to terminate an employee, the process is handled properly, the decision is clearly documented, and the dismissal is implemented in a way that complies with the law, treats the employee with respect and dignity, and avoids litigation.
II. Overview Of Laws That Protect Employees
Federal and state laws that are most commonly the subject of litigation relation to terminations of employees include the following (not an exhaustive list):
A. Federal laws
- Title VII of the Civil Rights Act of 1964, as amended (prohibits discrimination and harassment based on race, color, ethnicity, religion, creed, nationality and sex)
- Americans with Disabilities Act
- Age Discrimination in Employment Act
- Section 1981 (42 U.S.C. § 1981)
- Equal Pay Act
- Family and Medical Leave Act
- Fair Labor Standards Act
- National Labor Relations Act
- False Claims Act
- Pennsylvania Human Relations Act
- Pennsylvania Whistleblower Law
- Pennsylvania Constitution
- Workers Compensation retaliation
- Wrongful discharge in violation of public policy
- Pennsylvania Minimum Wage Act
- Pennsylvania Wage Payment and Collection Law
C. New Jersey
- New Jersey Law Against Discrimination
- Conscientious Employee Protection Act
- New Jersey Wage Payment Law
- New Jersey Opportunity to Compete Act
- New Jersey Pregnant Workers Fairness Act
- New Jersey Family Leave Act (and related paid sick leave laws)
- Millville Dallas Airmotive Plant Job Loss Notification Act
D. Workplace Torts and Other Claims
- Tortious interference with contract or business relationships
- Intentional infliction of emotional distress
- Invasion of privacy
- Breach of contract
This sampling, and it is far from exhaustive, provides a general indication of the breadth of laws that may apply and must be considered when contemplating termination of an employee.
III. An A.P.P.L.E. A Day Keeps The Lawyer Away
As a young lawyer, fresh out of law school, I developed a quick acronym (just like BAR-BRI would for the bar exam) to remind me of steps to apply when an employer called asking for advice and counsel on a contemplated termination. Twenty-eight years later, I still use it to guide me when going through the steps of evaluating whether termination is warranted – and defensible – with a client.
The acronym I developed was this:
A – Agreement
P – Policy
P – Practice
L – Law
E – Equity
More specifically, these steps of analysis are as follows:
A – Agreement.
First and foremost, be sure the client checks the personnel file and other employer records to determine whether an offer letter, employment agreement or other agreement with the client applies and sets rules for handling the situation at hand, and/or terminations in general. It sounds so basic (and it’s part of the “at-will” definition quoted above), but it is amazing how many clients – and sometimes outside counsel – fail to check for these agreements before plowing ahead with a termination. Especially in the case of executives, this is a mandatory starting point because the employer and employee may have contemplated and decided years (or decades) ago what standards would apply to terminations, including severance pay, notice, and cause. Moreover, the agreements may include restrictive covenants – which the employer will want to know about – and may even alter the terms of such restrictions, depending on the nature of the termination. Failure to abide by the requirements of any agreements or contracts with the employee upon termination will hand the employee a breach of contract claim and possibly a wage payment claim, with penalties. In almost all cases, outside employment counsel will want to review such agreements as an essential step to advising on a termination.
P – Policy.
This step is the next one down from a contractual claim, and requires the employer to examine whether it has any written policies or procedures that apply. Common sources for such policies are employee handbooks and policies published on the employer’s intranet. Policies that commonly arise and apply are those that provide for progressive discipline, a set number of absences before termination, or ambiguity as to what an employee should do in certain circumstances (e.g., how to report a workplace accident, who to call with an unexpected absence, or how to handle medical leave issues). Employment lawyers should ensure that their in-house contacts carefully check these policies and handbooks and oftentimes will want to examine the documents themselves as part of advising on the situation.
P – Practices.
Written policies and agreements are not the end of the process, of course. In making any employment decision as to termination or discipline, an essential step will be to ask what the employer’s practice has been in handling similar situations in the past. For example, are all employees terminated after three unexcused absences, as the employer proposes here? Have all employees who have posted risqué or offensive content or comments on their personal social media been terminated? Have all employees who have emailed themselves confidential information been fired? Failure to treat an employee consistently with others or with past practice is a sure set-up for an argument of pretext and unfair treatment.
L – Law.
This step ventures beyond the facts, policies and contracts, and requires an employment lawyer to review the situation to determine whether any laws apply. The most common legal claims involve allegations of discrimination, harassment or retaliation. Therefore, the lawyer and the decision-makers must probe the circumstances leading up to the decision to determine whether any legal protections apply. Common questions to ask include, is the employee the member of a protected class (everyone is)? Has the employee recently had a serious medical issue or needed Family and Medical Act Leave? Has the employee complained of unlawful conduct, discrimination or harassment? Has the employee complained about his or her pay being “unfair”? Are there concerns as to whether the employee has been paid in compliance with the Fair Labor Standards Act (e.g., is her role as an assistant manager truly exempt from overtime pay)? The list goes on and on, as noted in Section II above, but it is essential that counsel, knowledgeable in employment law, reviews these issues to alert the client to any potential risks and/or to scrutinize the decision-making to determine whether unlawful animus may be at work.
E – Equity.
Applying the famed standard of Chief Justice Earl Warren, “Is it fair?” This is also known as the “smell test.” All things considered, is there something about this proposed firing that seems unjust, excessive, harsh, or unwarranted (or un-Warren-ted)? The full panoply of considerations come into play here and may include factors such as the employee’s longevity with the company, recent deaths in the family, whether the employee received training in the performance or conduct issue, or whether the employer is applying a Scrooged intolerance about the employee’s private, lawful off-duty conduct. For example, while it may seem fair to terminate a six-month employee for stealing a small bag of potato chips from the employer, to do the same to a loyal 35-year employee nearing retirement seems unfair, even putting aside the issue of age discrimination. Likewise, while firing an employee for posting on her Facebook account to 50 friends that “Trump Is an A—hole” might truly violate the company’s social media policy, one could worry about how a jury in Philadelphia might view it. A key reason for this “equity” standard, in fact, is consideration of how a jury might see the case, and whether a creative plaintiff’s lawyer can “massage” or wedge the facts into a viable legal claim. As someone who does evaluate plaintiff’s claims on occasion, I can tell you that three “equity” issues will motivate me to take an otherwise weak case and fight hard for the employee: (1) long tenure with the employer (i.e., “she devoted her entire career to ABC Widgets, and they fired her for this? Come on, get real!”), (2) unduly harsh and mean treatment of a vulnerable or loyal employee, and (3) terminating an employee for rather minor and inconsequential conduct when she or he had not been warned of such consequences. In sum, my experience suggests that a plaintiff’s lawyer, mediator, judge and jury will all fight for justice – including finding a way to punish uncaring and harsh treatment by an employer – despite the “at-will” doctrine, and this “E” factors helps protect against the defense mindset that only clearcut violations of the law warrant concern about litigation, liability and damages.
Other helpful questions to ask beyond the APPLE analysis:
- Did the employer clearly communicate the standards of conduct and performance to the employee?
- Did the employer investigate the issue and father all facts before deciding to terminate the employee, or was it the other way around?
- Is there a decision-maker who is biased, unfair or “poised the well” of the process?
- Does the employer bear responsibility, in whole or part, for the circumstances leading to termination?
- Was the termination decision reviewed at a level beyond the immediate supervisor?
IV. Document, Document, Ducks In A Row – Start To End
Employment lawyers often preach to their clients, “If it isn’t documented, it didn’t happen.” While it is an overstatement, the advice is sound. Employers must document their employees’ performance issues, warnings, progressive discipline, comparative treatment of others, and decision-making process, if they want to have the best chance of defeating a challenge to a termination decision. All of these should be as contemporaneous as possible – with email, Microsoft Word’s metadata properties, and other electronic programs providing helpful timestamps to authenticate timely communications and decisions.
Here is an example of some of the recommended considerations in reviewing the record when making – and preparing – for an employee’s dismissal due to performance-based concerns (consolidated from a Lexis-Nexis summary):
- If the termination is for misconduct, is termination consistent with the employer’s employee handbook or other written policies or warnings that such misconduct could warrant immediate dismissal?
- Or is the misconduct so extreme – physically attacking a co-worker or customer – that no such written policy is needed?
- Are there performance-based documents (evaluations, warnings, feedback, etc.) consistent with the employer’s performance management process and other relevant policies?
- Is the employee’s termination justified by the performance level reflected in the documentation?
- How did the employee’s performance compare with similarly situated employees who are not in a protected group and/or have not engaged in protected activity?
- Was the employee’s evaluation based on the skills, duties, and other responsibilities contained in the job description?
- Can the performance deficiencies reflected in the documentation be objectively established?
- Do inconsistencies exist in performance-related documents (e.g., the employee recently received commendations, raises, or promotions), and can they be adequately justified?
- Is there missing or incomplete performance-based documentation that could undermine the termination?
- Did the employee submit a self-evaluation or objections to his or her evaluation? If so, does the employee have a legitimate basis for his or her position, and/or can the employer rebut the employee’s claims?
- Does evidence exist that the employee received relevant performance-based feedback?
- Is there evidence of the employee engaging in protected conduct (e.g., a complaint of discrimination, harassment or unlawful conduct, or seeking a medical leave or accommodation for a disability) prior to the termination?
If the review of the written record reveals a weak or inconsistent case, potentially unlawful motives (or at least claims of such), or a situation that is not yet “ripe” for termination (i.e., it would be a complete surprise to the employee), the employer should consider postponing the severe sanction of dismissal. Often a weak case without a good record can be corrected and cleaned up over a few months, giving the employee written notice and an opportunity to prove. The best advisors and managers recognize this and will not rush to terminate an employee when a little time and documentation can drastically reduce the risk and any perceived unfairness or questions about the decision. Of course, such delay also comes with risk – including that the employee sees the writing on the wall and begins to make legal claims or becomes a negative force in the workplace. For these reasons, again, it is important to document the concerns and decision-making at each step of the process, which may help demonstrate that the performance concerns preceded any claimed protected conduct, not vice versa.
V. Making And Documenting The Reason For Termination
Once a manager has determined that termination may be a possibility, it is vitally important to be sure the employer understands who will be the decision-makers, solicit their input to obtain consensus and unity, review all pertinent documents (each manager may have a different set of emails or other documentation), and then make and document the decision.
Many a termination decision has gone down in flames in litigation because a manager in the chain of command (often the front-line manager) has not been consulted about the decision, and then testifies under oath in deposition (or at trial) that he disagreed and was not consulted. In general, all managers involved in supervising the employee should be consulted, as well as the next level manager above, and a Human Resources professional. In addition, an employer should consider a final review and approval process (by a higher-level manager, Human Resources executive, General Counsel’s office, or outside counsel) before final implementation. If a termination passes muster at each of these levels and with all of these managers, then it is more likely to hold up to scrutiny from an employee or the employee’s lawyer.
Each step of this review process, and those involved, should be documented in some way, often with meeting notes or confirming emails or memos.
Part of this process should be to refine the statement of the reasons for the decision, and how the employee’s poor performance or misconduct has negatively affected the business, if applicable. Employers and their managers should strive to demonstrate the fair and reasonable basis for their decision through detailed, objective facts, not subjective or general conclusions.
Here are examples:
GOOD: Joe was late for work by 20 minutes on January 2, 42 minutes on January 3, and was a no call/no show on January 4. His absenteeism has reduced our productivity for the week and slowed down other workers who must wait on him to get their tasks done. Joe received two written warnings as to his attendance and tardiness in November and December of last year and was provided with a reminder and copy of Company’s attendance policy. Supervisor Jane reminded him in a meeting with Harriet of Human Resources on December 15, 2022, that if his tardiness problems continued in January, he would be terminated, as reflected in the December “Final Written Warning.” Because Joe has far exceeded the number of unexcused absences and tardiness provided in Company’s policy, and his attendance has not improved despite repeated warnings, he is being terminated effective today.
NOT SO GOOD: Joe is lazy, unmotivated and undisciplined and keeps showing up late to work, or missing days without an excuse. We cannot have a negative influence like that here, so we fired him today.
VI. Fire! – Communicating And Timing The Termination
Once a decision to terminate has been made, we generally recommend implementing it promptly. Waiting presents numerous risks, including (1) the employee figuring out what is coming and then taking steps to block or complicate the decision (such as taking FMLA leave, making a claim of discrimination or harassment, or whistleblowing); or (2) facts changing at work such that a situation that supported termination at Time A no longer makes as much sense at Time B (e.g., employee violated employer’s trust and duty of loyalty, but was allowed to stay on and complete a project for one month, and did a great job on the project).
This boils down to a basic rule: once an employer has made the decision to fire (and adequately reviewed and confirmed it, per the outline above), then pull the trigger.
In addition, those of us who receive and vet potential plaintiffs’ cases from terminated employees find that such workers are often as upset at the way they were treated in the termination decision as they are about the substance of the decision. Employers and decision-makers must think carefully about how they communicate the decision (the words, the communicators, the setting, and the timing) and use emotional intelligence in the wording and setting.
In general, the following guidelines apply:
- Have the key decision-maker and at least one witness on behalf of management attend, often a Human Resources manager/employee, to take notes and handle any basic questions or follow-up as to benefits, final pay, etc.
- Have written talking points for the decision-maker/key communicator and have at least one walk-through with Human Resources or outside counsel to ensure key points are covered appropriately. These talking points are evidence and should be preserved after the meeting. If the decision is expected to be challenged or there are concerns, the talking points should be reviewed with counsel before the termination.
- Talking points should be short and to the point. This is not a time for debate or lengthy explanations.
- That said, the communication should accurately summarize the key reason(s) for the termination. If more than one reason was involved, make efforts to mention all reasons, in order. For example, if Abe is being terminated for both failing to meet sales goals and for persistent failure to attend sales meetings without excuse, and both reasons have been vetted, they can both be mentioned.
- Try to do the termination in person, if possible, but Zoom/Teams sessions are more common. The in-person, face-to-face contact is important to show the employer’s concern and to read the employee’s reaction. This will be a traumatic day for the employee – the communication should respect that severe and negative impact to the person’s life.
- If any manager or person expresses a good-faith fear of violence or a disruptive reaction from the employee, have security or other personnel on hand to escort the employee off the premises. Do not underestimate concerns about violence.
- Time the termination session to be the least disruptive. That usually means the end of the day.
- Express compassion and support for the employee in an authentic way, but do not apologize for the decision or in any way express that there were mixed feelings about it with management, etc. (Different rules may apply to layoffs and down-sizing, see below.)
- Do not make reference to any status or characteristic of the employee that is protected by the law, such as age (retirement), family (“you can spend more time with your kids”), health issues (“you can focus on getting better”), etc., even if you mean them in a supportive way.
- At the end of the presentation, ask the employee to confirm that the employee understands and offer to answer any questions the employee may have.
- Have IT ready to cut off the employee’s access to company systems at the time desired. Could be same day/same time, or weeks later.
- Consider and plan communication to remaining workforce.
- With executives, professionals or others where a high level of trust has been built, consider extending the effective date of the termination to allow for an efficient transfer of duties, but do not over-extend that period.
VII. Group Terminations In A Reduction In Force
Any reduction in force (“RIF”) should be carefully planned to ensure employees are selected for legitimate business reasons and that there is no disparate treatment or disparate impact relating to any status protected by law, such as age, gender, race or disability. In addition, the A.P.P.L.E review above should be done to determine whether employment contracts, policies, severance policies, legal claims, etc., apply.
The best practices for structuring a RIF are to:
- Establish and document the employer’s basis and goals for the RIF. The employer also should consider all options for reducing costs before cutting regular staff.
- If the RIF is part of an overall restructuring or reorganization of the workforce, develop and document that reorganization, and the positions remaining; and
- Establish practice-wide or within appropriate facilities or units a process to be used to fill the new organization, and the criteria to be used in selecting individuals to fill the structure, where a position has changed or been eliminated.
Step 3 is the critical, most difficult step in terms of employment law. For positions that do not change, there is no problem. For situations in which the employer must cut the number of people doing a certain job, or it has to change or combine jobs in the new structure, the task is more difficult. The key to avoiding litigation and making the best decisions is to go through a deliberate process and document the decision-making.
Subjective & objective criteria.
In deciding the criteria for selection of who stays and who goes, most employers strive to retain the “best” employees who possess the skill sets that match the reorganized workforce needs. However, this description is rather subjective and, therefore, vulnerable to challenge. If possible, the employer should strive to create a more objective decision-making process that breaks down the selection process into a number of weighted criteria. Things like qualifications, experience, demonstrated skill set, past performance reviews, seniority, and cost are all legitimate considerations. Both subjective and objective criteria may be used, but objective criteria – and those based on past evaluations of performance — are generally safer from attack by a disgruntled employee.
Some of the easiest objective criteria to use include making selections based on seniority (or a modified version of seniority, in which any new hire who is within his or her probationary period is terminated) and selection of any employee under a performance improvement plan or a most recent review that is less than satisfactory.
Obviously, protected criteria such as age, sex, disability, Family and Medical Leave Act status, or past legal complaints or whistle-blowing activities may not be considered.
Creating and applying a decision matrix.
Once the legitimate business criteria are determined for each open position that is competitive (e.g., a position with more candidates than open positions), decision-makers should develop matrices for each position, which will be used to evaluate each eligible employee and select the best candidates for retention.
Here is a sample matrix from a past client’s restructuring, with ratings of 1-5, with 5 being best, for the imaginary position of Nurse Manager. I have given each of the three criteria equal weight (33.3%), but an employer could change that, to fit the employer’s needs (and even desired outcomes).
|Requirements: RN & 5 years in job required
|Past Performance Reviews (33.3%)
|Teamwork, ability to work with smaller staff (33.3%)
|Cost (Salary) (33.3%)
|4.0 & qualified
|3.3 & qualified
|4.7, not qualified
If the employer needed only two Nurse Managers from this matrix, then A & B would be the only ones qualified. If it needed only one, then A would be most qualified. But what if the employer really wanted to keep C? Then it could reconsider the matrix, weighting, and job requirements and determine if a legitimate business case could be made for the selection of C. Obviously, risk, exposure, and discovery issues could arise, and privileged legal review would be highly recommended in such a scenario.
Who makes the decisions.
An employer also should consider who will be the decision-makers. Will the employer have a central group of top executives who make all the selections (would they have enough direct knowledge to do so?), or something more decentralized and at the facility level (where it will be harder to ensure confidentiality, consistency and objectivity)? There are benefits to both approaches. It is advisable to have at least some input and buy-in at the facility level, but also to ensure you have some centralized review to scrutinize the decision-making process and ensure consistency.
Keep in mind that the more subjective the employer’s decision-making is, the more it will be subject to challenge.
Individuals involved in completing the matrices, once designed, should be advised they are creating documents that could become “evidence,” if there is a challenge to a termination, and they need to be careful in their ratings and comments. Also, everyone involved should understand the requirement that they keep the process completely confidential.
The close RIF decisions should then be scrutinized by someone outside the decision-making process, usually outside counsel, in a “challenge day” to identify and work out potential problems.
Analysis of selections before implementation.
Once all selections are made, the employer will need to run an analysis of the impact on its workforce to ensure the RIF has not had a disproportionate impact on older workers, women, a racial minority group, or some other protected status. This analysis basically compares the makeup of the workforce before the RIF with the makeup after the RIF, to ensure that a protected group has not been adversely impacted. Usually this can be done informally, by the employer or outside counsel, to check that the impact is not disproportionate. If the impact is severe, or the employer is unsure of the impact, then an expert analysis may be warranted.
This analysis should not be ignored because under the law, a discriminatory impact can be unlawful, even if no one had a discriminatory intent. Moreover, if an employee can show a disproportionate impact from a RIF, then the burden of proof shifts to the employer to establish that it made the decisions for legitimate business reasons.
This review of selections also should focus on difficult decisions and ones in which the employer perceives a heightened risk of legal challenge. Review with outside counsel can identify ways to mitigate this risk and ensure proper documentation of the decision.
The employer also will need to determine whether it is offering the selected individuals severance pay and, if so, how much (the amount can vary, based on seniority, level or other criteria). If the employer chooses to offer severance pay (which is customary in most RIFs), then it should require employees to sign a Severance Agreement and Release, precluding them from filing any subsequent lawsuit against the employer.
The Older Worker Benefit Protection Act, 29 U.S.C. § 626 et seq. (“OWBPA”), has unique provisions for the waiver of federal age discrimination claims in group termination programs. The two key provisions are that (1) each employee be given at least 45 days to consider the release agreement before signing (as opposed to the 21-day period for individual releases) and (2) the employees be provided with certain information under OWBPA, including (a) identification of the class, unit or group of individuals covered and any eligibility factors for selection; (b) any time limits applicable to the termination program; and (c) the job titles and ages of all individuals from the appropriate class, unit or group selected for termination, and the job titles and ages of those individuals not selected for termination. The information in part (c) is usually provided in a table attached to the release agreement. Obviously, if an employer chooses to offer severance, it will need legal assistance in putting together the appropriate releases to comply with the OWBPA.
Logistics of termination.
Finally, on an issue that is more Human Resources than law – but just as important — it is helpful to review with clients their plans for the complicated logistics and details of implementing a sizeable RIF. These are challenging to everyone involved, and decisions must be made in advance as to how the communications will be made, what the remaining workforce will be told and when, measures to protect employer property and information from misappropriation or sabotage, coordination of pay and benefits issues for RIFed employees, etc.