Top 5 Termination Mistakes and How to Avoid Them

Executive Summary

Healthcare organizations, like other employers, cannot terminate an employee for any reason that violates local, state or federal law. It’s important that healthcare organizations understand how to properly terminate an employee to minimize their risk and avoid costly discriminatory termination lawsuits.

Recommended Actions:

• Ensure that you explain your company’s expectations and any company rules or policies before hiring a new employee.
• Ensure that your healthcare organization has a non-discrimination work policy in place.
• Ensure that your employees have a process for communicating any employment issues to the organization to address potential workplace issues early on.

Employment discrimination legal claims remain high. Each year, nearly 100,000 charges of discrimination are filed with the U.S. Equal Employment Opportunity Commission. According to recent data, the median employment discrimination jury verdict is over $100,000, though that number does not include the amount of money the employer paid its own lawyers.

Discrimination and harassment are exceptions to the at-will doctrine that was created by Congress and many states. Consequently, the reality is that the at-will defense is rarely an effective defense. Equally important, a former employee does not need “smoking gun” evidence that an employer acted unlawfully. The government and courts understand that discrimination is usually subtle and difficult to prove. As a result, courts allow plaintiffs to use circumstantial evidence to prove their case.

In this legal environment, employers must be careful when making employment decisions and they must be especially careful when terminating an employee. A termination is more likely to result in a legal claim than nearly any other employment decision. Consequently, employers would be wise to avoid these five common termination mistakes.

Mistake No. 1: No Documentation Supporting the Termination

An old Chinese proverb says the tiniest slip of paper is worth a thousand words. That certainly holds true for employers.

While there is no law that requires an employer to document an employee’s performance problems, doing so is a best practice. If someone is a problem employee, a court or jury will expect that to be reflected in their personnel file — and they will find it odd if it is not.

Of course, documentation does not only provide justification for terminating an employee. It is ultimately a tool to address performance problems and company expectations with your employees before termination becomes an issue. Unfortunately, sometimes you still must end your working relationship with an employee, and, hopefully, your documentation clearly shows your reason for doing so.

Mistake No. 2: Not Considering the ADA

Some employers are quick to terminate an employee who has exhausted all company leave time (including leave under the Family & Medical Leave Act, if applicable) and who is still not able to return to work. That is often a mistake.

The Americans with Disabilities Act (ADA) is a federal law that covers employers with 15 or more employees. The law requires an employer to provide reasonable accommodation to an employee with a disability unless doing so would cause significant difficulty or expense for the employer. A reasonable accommodation can include additional, unpaid time away from work due to a disability.

Unfortunately, there is no bright line rule for determining when an employee must be given additional unpaid time away from work as an accommodation for a disability. That decision must be made on a case-by-case basis. However, it is clear that an employer must engage in an interactive process with the employee to determine whether or not additional time off would be reasonable under the circumstances.

Mistake No. 3: Not Considering the Timing of Termination

While a picture is worth a thousand words, it is equally true that timing of a termination can be worth a thousand words. Most employment laws permit an employee to participate in “protected activity,” and they also prohibit an employer from retaliating against an employee who engages in such activity. For example, complaining about discrimination or harassment is protected activity. Taking leave for a disability is protected activity. Requesting a religious accommodation is also protected activity.

Courts have long held that the temporal proximity between an employee engaging in protected activity and his/her termination can be sufficient evidence of causality to establish a prima facie case of discrimination. As a result, if you have an employee who engaged in protected activity close in time to a possible termination, you should be aware of that fact. You may decide to move forward with the termination anyway, but you will at least understand that the timing of the termination makes it riskier for the company and you will have the opportunity to minimize risk to the company. However, you may also decide to move the termination to a later date.

Mistake No. 4: Not Being Consistent

Disparate treatment is one of the most common ways to prove discrimination. Former employees frequently try to prove a legal claim by showing they were treated differently than a coworker who engaged in the same misconduct or unsatisfactory performance.

For example, say that Jim fell asleep at work and was given a written warning. In contrast, two months later Sally fell asleep at work and was fired. Unless the company has a good reason for treating these two employees differently, Sally may argue the real reason she was treated differently was because of a protected characteristic — perhaps her gender.

Many employers are surprised to learn that a jury is permitted to rule in Sally’s favor based entirely on inferences drawn from such circumstantial evidence. If a jury concludes that the employer’s story does not line up with the facts or otherwise did not justify the action taken, they are free to rule in favor of the plaintiff and conclude the real reason for the employer’s action was unlawful discrimination.
As a result, before a termination, employers must be careful to determine how they have dealt with employees in the past who have engaged in similar misconduct or unsatisfactory performance.

Mistake No. 5: Not Being Honest

Some employers try to avoid discussing an employee’s performance problems by telling the employee that his or her job has been eliminated. Indeed, some companies have gone through extreme mental gymnastics to explain how a position is being eliminated.

This approach may create problems because it is sometimes not accurate or believable. The eliminated job is filled several months later. Or, worse, it never goes away in the first place. Courts and juries are good at seeing through those types of games.

Employers do better by addressing performance problems head on and having tough, frank discussions with an employee. Do not give employees a good legal claim against your company because you weren’t willing to have a candid discussion with them about unsatisfactory performance that led to termination.

Lessons Learned:

• Ensure that your healthcare organization regularly conducts performance reviews with all employees.
• Follow up all performance review conversations in writing to the employee and maintain this documentation and any other employee performance reports. 
• If there is a problem with an employee’s work performance, ensure that your organization has a conversation with the employee about the problem early on.

Potential Damages

Healthcare organizations that inappropriately terminate an employee could be liable for damages for discriminatory termination. Even if the healthcare organization is ultimately successful and found not liable for any damages, the organization will still have to face costly legal fees in defending itself.