You’re Fired! Not so fast! Know the Risks Associated with Terminating an Employee for Poor Performance

It’s a common scenario: you hire an employee for a position and after their training period they continuously make mistakes and do not meet your performance expectations. The poor performance could be for a number of reasons: they need further training, they have personal distractions keeping them from performing up to par, or maybe they’re just not the right person for the position at your company.  So you decide to terminate their employment and find a new employee to take over their job responsibilities.  Without proper documentation to support your termination, you could be facing a number of potential liabilities.

Unemployment Liability

If a terminated employee files for unemployment, it is the employer’s burden to prove that the reason for termination should disqualify an employee from receiving unemployment benefits.  This is next to impossible without documentation to support the termination.  In some states, like Michigan, in order for an employee to be disqualified for performance related reasons the employer must show that the employee’s performance was intentionally poor (gross misconduct) or else show that the employer provided additional training and resources to the employee to improve their performance and warned the employee that failure to improve their performance could result in termination.  Performance related terminations are the hardest involuntary discharge unemployment claims to protest successfully.

Discrimination and/or Wrongful Discharge

A terminated employee can also file a lawsuit for wrongful termination or allege that he or she was terminated for a discriminatory reason (based on age, gender, race, disability, or any of the other protected classes).  This is another reason why documentation is critical for an employer to maintain for performance issues.  Without documentation detailing examples of the poor performance it becomes a he said, she said battle and the employer has no way to prove that the reason for termination was not discriminatory.

Here’s an example: a 55 year old woman is terminated for poor performance.  She has had a history of forgetting tasks and not meeting deadlines. Her manager has never documented any of these issues and the employee was never given a formal warning that her performance was not meeting expectations.  After the termination, the former employee files an age discrimination complaint.  The employer will have a difficult time fighting this claim without documentation proving that the performance issues were the reason for termination.

Tips for Handling Poor Performers

When an employee has performance issues, document the issues thoroughly.  Make note of the date and a specific description of what the issue was.  Address the issue with the employee as soon as possible.  Termination for performance should never be a surprise for an employee – they should know through previous warnings that termination is likely.

Performance Reviewsstamp-330341_1280

When giving performance reviews, it’s very important to be honest with the employee regarding where they stand in terms of performance.  An employee with a favorable performance review that does not mention any performance issues can use that against the employer if he or she is then terminated a short time later for performance issues.  Use performance reviews as another method for documenting any performance related problems the employee has had.

Performance Improvement Plan

Before the performance issues compile to the point you feel termination is the only option, sit down with the employee and go over all of the problems and give suggestions for improvement.  This can be done via a formal improvement plan where you set specific guidelines and objectives for the employee with a timeline of when these objectives should be achieved.  You should have the employee sign the improvement plan and touch base with the employee regularly to make sure the guidelines and objectives are being followed.

If the performance issues do not improve after continuous (documented) coaching/training and discussions with the employee, you may be in a better situation to terminate employment.  If you have any question as to whether you would be able to prove the termination was due to performance issues only, you may want to seek the advice of an employment attorney prior to the termination.

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