by John E. Lyncheski, Cohen & Grigsby
There were no charges of wrongdoing or misconduct, but moments after a Connecticut hospital terminated a social work manager, security guards brusquely led her away. The hospital left the woman's belongings behind in a plastic bag. She was told if she returned, she would be arrested for trespassing.
Her fellow employees gaped in disbelief. They thought the manner in which the employee was terminated was unfair. So did a civil court jury, which held the hospital liable for negligent infliction of emotional distress and awarded $105,000 in damages to the woman.
In this age of corporate re-engineering, many employers terminate employees for reasons unrelated to "cause." Many
employers reduce their workforce for legitimate economic and
business reasons. Once the termination decision is made,
effectuating the termination is full of legal landmines. By
mishandling a termination event, the employer may subject itself to
a lawsuit even though the reasons for the termination were
legitimate and well-founded.
There are several general rules an employer can follow to
minimize the chance of a lawsuit:
When the employee's conduct or performance does not meet the employer's standards, the employer often terminates the employee for "cause." But before terminating for "cause," the employer in most cases should forewarn the employee that their conduct or performance is unacceptable and could lead to further action up to and including termination.
The situation is quite different when terminations occur because of economic reasons, but the employer still can take steps to avoid surprising employees when a termination event occurs. The employer can make sure the employees understand circumstances - such as a poor business climate - that ultimately lead to the reduction in force.
The employees recognize the red flags. They still may be distressed that they are included in a reduction in force, but they cannot be surprised that the reduction in force occurred.
An employee who knows in advance that circumstances like a poor business climate have placed his or her job in jeopardy talks about the situation at home. When the termination finally happens, there is still shock, but the employee and family members at least knew it was coming. It typically is a bit easier to deal with.
By providing such warnings, the employer also may have an easier time dealing with employees who eventually survive the reduction in force. If they weren't expecting the workforce reduction, the remaining employees may react by attempting to unionize, possibly inserting an unnecessary tier between management and staff. In facilities already unionized, union challenges may increase.
Even when employees are expecting a termination, it still is a traumatic experience that leaves many feeling bitter and embarrassed. It is crucial for the employer to make sure the employee understands the reasons for the termination whether they be for cause or for economic reasons. Those who don't understand often suspect a hidden reason and feel mistreated, which motivates them to sue.
An employer can minimize the chance of an employee not understanding the reason for the termination by carefully selecting the right person to effectuate the termination. Managers uncomfortable with effectuating a termination may expose the employer to a potential lawsuit by hedging about the reason. Some employers pick a supervisor with whom the employee repeatedly clashed to deliver the news, which fuels the employee's anger.
It is crucial to permit an employee to exit with dignity. The employer can save itself legal problems later by taking steps when carrying out terminations to minimize the chance of employees perceiving that they've been humiliated.
Terminations should be scheduled so the employee will not be conspicuously terminated in front of peers or subordinates. The best time to handle terminations is near or at the end of the day. The employee can leave without having to explain to 10 colleagues what has just happened.
It usually is wise to get the terminated employee off the premises as soon as possible, but in most cases you don't need to take extraordinary security measures to protect your company's proprietary and property rights. For example, employers can code terminated employees out of the computer system.
Security guards can be covertly kept in close proximity in case they are needed. When aggressively using security guards, the employer risks charges of false imprisonment or intentional or negligent infliction of emotional distress, as was the case with the Connecticut hospital. Take only the security steps actually necessary and let employees leave with dignity.
Many times, an offer of severance or outplacement in return
for the employee's waiver of right to sue will result in an
amicable parting, with the employee pointed in the right direction.
Properly executed waivers will stand up in the courts, which
generally consider the following factors:
Employment lawsuits flourish, despite the fact that most states, including Pennsylvania, still recognize the doctrine of employment at will. An employer's insensitivity in how it effectuates a termination often motivates the employee to seek legal recourse. An employer can treat a terminated employee fairly and compassionately while protecting the company and saving legal problems later.
John E. Lyncheski is a director at the Pittsburgh law firm of Cohen & Grigsby; he concentrates his practice in representing management in labor and employment law.