7 minute read
How to Avoid Wrongful Termination Suits
By JEN BENDER and SARAH RODEHORST
Employee separations are hard, regardless of reason. But, if asked, the majority of HR professionals — and anyone who manages people — would rank terminations for cause atop the list of most-unpleasant tasks. For-cause terminations often involve violations of company policy or performance, such as failing to meet productivity standards, poor attendance, or personal misconduct. Unlike other types of separations that are simply part of doing business, such as a reorganization or downsizing, terminations for cause are generally in response to an employee’s actions — or failure to act, in most situations.
Employees who believe they were wrongfully terminated can pursue two main avenues: file a complaint with the EEOC or work with an attorney to file a lawsuit. Examples of wrongful termination reasons include discrimination based on protected class (e.g. disability, race, age); retaliation against an employee; and/or redress for taking leave under the Family and Medical Leave Act (FMLA). When terminating an employee for cause, it’s important to have thorough documentation of the issues that led to the firing. If an employee’s file is incomplete, it could create the perception of a wrongful termination.
When firing an employee for cause, companies should keep several things in mind. Otherwise, you could end up in court defending a wrongful termination suit.
Maintain detailed documentation regarding performance and discipline
Employers should maintain thorough documentation regarding any employee concerns. A for-cause termination is hard to defend without a paper trail.
For example, 62-year-old Walter Mikulan worked at the Allegheny County Jail in Pennsylvania for almost 30 years before he was terminated for poor performance. However, there was no documentation in his file to suggest he wasn’t performing up to par. Mikulan sued for age discrimination and received a $1.15 million settlement.
There are a few ways employers can address underperforming employees — through performance improvement plans (PIPs) or written warnings, both of which include thorough documentation.
PIPs are generally more comprehensive than written warnings. For example, where a written warning may address a single, tangible employee behavior that is problematic, a PIP tends to focus on the employee’s overall performance and what the employee needs to do to correct the issues. If, for example, an employee rates poorly on their annual performance review, the employer may develop a PIP to outline what specific areas the employee needs to address, how to address them, and when the employee’s performance will be reevaluated.
Ultimately, a PIP should 1) communicate to the employee their need to improve, and 2) state that failure to do so will lead to termination. That said, most PIPs outline action items and due dates — i.e. objective, measurable improvements and the time expectation for each.
Written warnings aim to quickly address poor behavior and/or immediate performance concerns. The warning is just as it sounds: fix this now or face the consequences. Concerns that might warrant a written warning include attendance problems, behavioral issues, or the need to follow certain processes.
Whether using a PIP or written warning, it’s important to gain employee acknowledgement that they understand the expectations being presented to them. Additionally, PIPs and written warnings are more likely to be successful if the employee helps identify solutions for improvement and agrees with the information documented. However, if that’s not the case, it’s imperative that, at a minimum, employees acknowledge they have received the document.
Be mindful of other employee relations issues and how they were handled
It’s also important to know whether employees have recently filed any formal grievances — e.g. sexual harassment claims or whistleblower complaints. Even if an employee’s for-cause termination reason is justified and thoroughly documented, firing someone after a recent accusation could be perceived as retaliation. Your company may have a solid defense in court, but that doesn’t mean you won’t receive negative press that impacts the corporate brand.
In one wrongful termination case, two former University of Colorado employees, Richard Siani and Michael Law, uncovered the fact that hazardous waste wasn’t being properly disposed of at the university. The employees reported their concern and were fired. Siani and Law believed their terminations were a form of retaliation, and a jury awarded them $600,000 at trial.
In addition to noting any potential retaliation claims, you should know how you’ve handled similar issues in the past. In an example out of the EEOC’s New York District Office, a Cambodian female was terminated for cause, citing her inability to read, write, and understand English. However, the EEOC determined this to be discriminatory because the company employed other non-English speaking employees in the same role. The company paid $30,000 in monetary and injunctive relief.
Be aware of any recent employee relations issues that could appear retaliatory based on timing. Also be consistent in how you handle concerns from one employee to the next.
Ensure confidentiality of employee information
Employers should go to great lengths to develop policies and procedures that protect employee information. The information should only be accessible on a need-to-know basis. There are several types of employee information, but the two most commonly referred to are Personal Identifiable Information (PII) and Protected Health Information (PHI).
The HIPAA Privacy Rule outlines certain measures that must be taken when handling an employee’s PHI. For example, an employer can ask an employee for documentation corroborating an absence due to illness. However, the Privacy Rule prevents healthcare providers from sharing an employee's medical information without written consent.
Additionally, the Americans with Disabilities Act (ADA) mandates that employers maintain the confidentiality of employee medical information obtained when determining reasonable accommodations, assessing fitness for duty, or evaluating for workplace safety concerns. The Family and Medical Leave Act (FMLA) also restricts sharing employee medical information.
Chipotle employee, Jeannette Ortiz, was awarded nearly $8 million when a California Superior Court agreed that she was wrongfully terminated. Her employer claimed she was fired for employee theft, but Ortiz suspected it was retaliation for her previous workers’ compensation claims and leave taken under the Family and Medical Leave Act (FMLA). Ortiz’s employee file contained no documentation related to her supposed theft, so the court ruled in her favor.
Limit access to employee files on a need-to-know basis
To mitigate the risk of wrongful termination suits, all employee data should be treated with caution. A general rule of thumb is to apply the principle of least privilege (POLP) — or “minimum necessary” — to all employee information. In other words, users should only have access if it is required to perform their job functions.
This not only helps maximize cybersecurity, but it’s also a good policy to have in place should you face a wrongful termination suit. For example, if an employee files a suit alleging that a “for-cause termination” was actually for medical reasons, it’s beneficial to know which specific employees had access to records related to employee health information, or PHI.
Employee files typically include basic information, such as documents related to general employment (contact details, signed agreements), payment details (tax documents), hiring information (job description, résumé), and documentation related to job performance and/or discipline (annual reviews, written warnings). PII data includes social security numbers, employee identification numbers, driver’s license numbers, and date of birth.
Although all employee information should be safeguarded, extra security measures should be in place related to particularly sensitive data. This may include personal documentation about an employee’s benefits enrollment, background/credit checks, wage garnishment, etc. Any legal information should only be accessible to counsel. Employers should also maintain a separate file for medical documentation, like workers’ compensation information and accommodation requests.
Make things right before they go wrong
With the right processes and procedures in place, companies can execute for-cause terminations without significant danger of a wrongful termination suit. However, if documentation is sparse or accessible to people who don’t need to see it, companies can be exposed to greater risk.
When it comes to wrongful termination, proactivity is key. Employers should maintain thorough documentation related to performance or disciplinary concerns, as well as other employee relations issues. That way, if an employee is at risk of being fired, companies can ensure they’re viewing the most comprehensive personnel information available. SVP People Solutions Change Healthcare jennifer.bender@changehealthcare.com www.changehealthcare.com
Jennifer Bender is the SVP of People Solutions HR Shared Services at Change Healthcare. Jennifer oversees the company's HR operations, ranging from talent acquisition to offboarding. This includes managing complex layoffs and ensuring coordination among all pertinent teams. She has worked in senior HR leadership roles for more than 25 years and has handled many projects related to outsourcing and reductions in force, totaling over $100M in company savings.
Sarah Rodehorst
CEO & Co-Founder Onwards HR sarah@onwardshr.com www.onwardshr.com
Sarah Rodehorst is the Chief Executive Officer of Onwards HR, the leading offboarding platform that streamlines employee separations in compliance with corporate policy and employment laws. Her mission is to help HR and legal teams ensure consistent, fair and supportive employee exits. Sarah co-founded Onwards HR after more than two decades of experience launching SaaS products in the human resource sector at startup and Fortune 500 companies. Sarah is a sought-after thought leader and speaker on employee separations, DEI in the workplace, and women in technology.
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