Discharging employees is a painful process. It also can be an expensive process. Discharged employees have many avenues to bring a claim against the employer including lawsuits and charges of discrimination filed with the Equal Employment Opportunity Commission, the Michigan Department of Civil Rights or the National Labor Relations Board. No one can guarantee that a lawsuit or charge of discrimination will never be filed. There are, however, steps an employer can take to minimize risk.
Don't Hire Bad Employees. This may sound silly, but the fact is that few employers conduct effective interviews. In most interviews, the interviewer does the vast majority of the talking, explaining the job and the wages and benefits available. The interview process provides the employer's best opportunity to do a gut check on the applicant. But this requires listening skills. In an effective interview, the applicant does 80% of the talking. The interviewer asks open-ended questions and carefully listens to the answers. "How much time did you miss from work last year? How many times do you think a good employee is tardy in a year? Tell me what it means to work within a team concept. Have you ever done this? Tell me about it." Good interviewers avoid hiring bad employees.
Protect Your Right to Discharge. Most nonunion employers elect to be "at will." This means that the employer may discharge with or without cause. It is important for employers to establish this understanding at the outset of the employment relationship. At-will language should appear in the application form and the employee handbook. (At-will language does not allow an employer to discriminate, however.)
Similarly, employers should not put language in employee documents which limits the right of the employer to discharge (for example, "This Company discharges only for cause;" "This Company always follows progressive discipline.")
Get the Employee to Quit. A voluntary resignation is the best resolution to a bad employment relationship: no lawsuit, no unemployment compensation claim and the applicant leaves on his/her own. How do you get a bad employee to quit? Effective management includes telling bad employees when they are performing poorly, what he/she must do to improve and what will happen if he/she does not improve. This is done through effective discipline and performance reviews. Why do employers insist on rating bad employees "adequate" or "average" in performance reviews? They do it because it is difficult to manage poor performers – but it is even more difficult to fire them. Most poor performers faced with an aggressive manager who will effectively discipline them will either improve their performance or quit.
Develop an Exit Strategy. Sun Tzu, in The Art of War cautioned his captains to always leave their enemies a bridge of escape. When pressed against a river, a defeated enemy must choose between fighting and drowning. By providing a bridge of escape, the battle can be won with minimal casualties.
Employers should also consider leaving discharged employees a bridge of escape. This typically takes the form of a negotiated termination agreement. It may include severance, continuation of health insurance and even outplacement assistance. Such agreements also typically include a release of claims by the employee. Termination agreements are often useful when the discharge involves an older or long-service employee. Such agreements are governed by specific laws; accordingly an employer should seek the assistance of a lawyer when preparing such a termination agreement.
Show Your Opponent That You are Ready for Battle. Most lawsuits are filed only after the discharged employee's lawyer looks over the personnel file (under Michigan law, an employee has a right to review his employee file). A well-documented history of poor performance and warnings perhaps is the greatest deterrent to a lawsuit. As children, we learned the rules of baseball. Although an employee may "line out" and be discharged for a single event (theft, insubordination, fighting), most employment discharges are governed by the three-strike rule (warned once, suspended once, discharged). The three-strike rule particularly applies to such problems as attendance, quality of work and quantity of work.
Conclusion. Effective discharge is really a process. It begins by clearly telling the employee what is expected. When the employee fails to adequately perform, the employer must step in and advise the employee (in writing) of the shortcomings, what must be done to improve performance and the consequences of a failure to improve. If this process does not resolve the performance problems, the employer should then consider developing a "bridge of escape" for the employee.
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Louis C. Rabaut is a partner in the Grand Rapids office of Warner Norcross & Judd LLP. He specializes in labor & employment law and has handled litigation involving trade secrets, covenants not to compete, wrongful discharge, and discrimination claims. Warner Norcross & Judd is a full-service law firm with 180 attorneys in four offices throughout Michigan: Grand Rapids, Metro Detroit, Holland and Muskegon. Lou may be reached directly at 616.752.2147. Because each business situation is different, this information is intended for general information purposes only and is not intended to provide legal advice.