Avoiding the Rush to Terminate

​One of the biggest missteps within many organizations is rushing to terminate an employee before the record is ready to support it. When the lawsuits inevitably pop up, employers suddenly realize they moved too quickly to separate someone's employment without having all the facts to justify a dismissal decision or to support a termination for cause.

"Employers, often senior executives who are extremely frustrated with a direct report's ongoing performance or conduct challenges, push HR to 'pull the plug' before the record is in place to support that decision," said Chris Olmsted, an employment law attorney with Ogletree Deakins in San Diego.

Six to 18 months after the firing, as they sit at a hearing or trial, these company leaders realize in hindsight that they may have rushed to judgment without completing the homework necessary to support the termination decision. 

"And even if the decision was legal and appropriate, an incomplete record and perhaps problematic shortcuts hamper the organization's defenses to legal claims," Olmsted said. "Had the company simply slowed down at the finish line, and had HR been able to preserve a record substantiating the senior executive's fiat to terminate at that point, much of the legal imbroglio could have been eliminated or at least mitigated."

But how do you do that? What mechanism is available, either at the conclusion of a workplace investigation or a termination-for-cause decision, to slow things down administratively before an employee is handed walking papers? What tool will satisfy the demanding CEO or senior executive who wants the change to happen immediately while also allowing the organization some breathing room to delay the termination decision until the record rests in the employer's favor? 

"Paid investigatory leave or paid administrative leave goes a long way in preventing expensive lawsuits later down the road," Olmsted said. "You're actually getting something done, per the CEO's command, while buying your organization time to complete its investigation, interview remaining witnesses or hear the soon-to-be-terminated employee's side of the story, and check further into the facts."

Paid Investigatory Leave

Workplace investigations can be complicated and time-consuming. 

"To be effective, employers must ordinarily conduct workplace investigations thoroughly and promptly," said Eric Mackie, employment litigator and advisor at Morgan, Lewis & Bockius LLP in Chicago. "Appearing to rush at the finish line may undermine the goals of the investigation and increase expense and risks of litigation. After all, plaintiff lawyers commonly argue that an employer who has not taken certain critical steps prior to terminating an employee has likely skipped other important steps in the process or altogether failed to conduct a 'thorough investigation.' "

When conducting an investigation, leave no stone unturned, especially regarding any witnesses that the employee in question may proffer during the process.

"During the investigation, certain witnesses may be out of the country, on leaves of absence or otherwise unreachable," Mackie cautioned. "But failure to ensure that a thorough investigation has been conducted may increase litigation exposure and leave an employer defenseless."

For example, if you've interviewed five of six witnesses, and the sixth is unavailable overseas on vacation with no Internet or cellphone access, it's likely reasonable that you'll have met the "timeliness" and "reasonable investigation" standards. Under different circumstances, however, if the person in question is the strongest witness in the employee's favor, then extra time and effort may be needed to reach that witness, despite the challenges. Placing the employee on a paid investigatory leave of absence while you chase down that final witness can be a simple way to both remove the individual from the workplace (the CEO's goal) while buying your organization time to complete the investigation.

"Consider it an inexpensive insurance policy," Mackie said, "where you buy yourself time to complete your investigation and accord the individual workplace due process. When weighed against the risks and costs of litigation, this decision could be well worth the investment of a few extra days of the employee's pay."

Paid Administrative Leave

For our example, let's assume that a senior executive wants someone terminated for performance or conduct-related reasons. "I've had it with this Paul Falcone fellow, and he's got to go ... now," the CEO said. "His performance remains sketchy and inconsistent, and his attitude is always negative and caustic. I've been putting up with him for way too long, and I just can't take it anymore." Fair enough. Your challenges? The employee in question is a fairly long-term worker with a history of positive performance reviews (showing that he's met overall expectations year after year) and no progressive discipline to speak of. He's also over 40 and is a member of a protected class.

A quick termination decision resting merely on the premise that Paul is employed "at will," while technically legal, does not account for all of the nuances in employment law. "If discrimination charges are alleged in litigation, a company will often need to present evidence demonstrating that it terminated the employee for legitimate business reasons in order to refute accusations of a discriminatory motive," Olmsted said. "A complete record contemporaneous with the termination decision helps the employer meet that burden of proof."

The remedy? Don't rush to termination. Give the employee warning that he or she is not meeting minimum expectations in terms of performance and/or conduct. Some employees may improve, and others may not. While it will take longer to terminate the incompetent employee this way, you'll be able to defend your actions in a court of law much more effectively. In fact, most plaintiff attorneys will argue that "if it wasn't written down, it never happened" (referencing complaints about the individual's poor performance or conduct). That's to your disadvantage as an employer. Turn the tables by issuing corrective action and turning the record in your favor.

But what if your CEO will have none of it?  No progressive discipline, no worry about the individual suing later down the road—the top executive just wants the person gone now, plain and simple. Again, a paid administrative leave may help, so long as it doesn't go on for more than a few days.

"Take the time to seek counsel from a qualified employment defense attorney to help ensure that you are not overlooking legal risks," Olmsted advised. "Think about options to put before the individual to entice him to leave the organization on mutually acceptable terms, including a separation package in exchange for a signed release." If the individual clearly isn't happy and the CEO simply wants him gone, attempting to negotiate a separation may make more sense than terminating now and hoping it won't come back to bite you with litigation in the future.

"Every case is fact-specific, so there's no one-size-fits-all solution to these types of situations," Mackie said. "And, of course, there's no guarantee that the employee will accept your package and may instead lawyer up on his own. But a negotiated settlement may be much more effective and a lot less costly than a trial where you have no record of your dissatisfaction with the individual's performance and that person is protected in multiple categories (e.g., age, race, disability status, etc.). True, there's risk in attempting to offer a package when there's no disciplinary action on file to use as a leverage to entice someone to resign, but, depending on the circumstances, it's likely wiser not to rush to termination and see if there's [a] dollar point that both sides can agree on to avoid litigation later down the road."

Unpaid Administrative or Investigatory Leave

The question often arises about whether investigatory or administrative leave should be paid or unpaid. "There isn't one right answer to that question," Olmstead said. "It often doesn't make sense to pay an employee who is likely to have engaged in significant misconduct. Where there is uncertainty regarding what happened, a company may be more inclined to pay the employee." 

Some organizations will pay for the administrative leave unless the conclusion of the investigation shows that the individual was guilty of some form of egregious wrongdoing, such as severe harassment, theft, embezzlement or forgery. In those cases, a company will typically opt not to pay the individual for the few days off while the investigation is pending. That decision, however, should be made after the investigation is concluded and all the facts are known in order to justify withholding pay while management completed its analysis and review of the matter.

Using investigatory and administrative leaves is a smart strategy, especially when key elements of an investigation are still pending or when a termination may need to take place with little written record on hand to demonstrate that the employee was accorded workplace due process. Leverage this tool wisely, especially if moving too aggressively toward termination will make the record look like you rushed to judgment. There's little need to terminate immediately when a paid leave will buy you more time to move the written record in your organization's favor or allow for a negotiated settlement to mitigate future litigation vulnerability.

Paul Falcone (www.PaulFalconeHR.com) is a frequent contributor to SHRM Online and has served in a range of senior HR roles at such companies as Paramount Pictures, Nickelodeon, Time Warner and City of Hope Medical Center. He's a member of the SHRM Speakers Bureau, a corporate leadership trainer, certified executive coach and author of the five-book Paul Falcone Workplace Leadership Series (HarperCollins Leadership and Amacom). Other bestsellers include 101 Tough Conversations to Have with Employees, 101 Sample Write-Ups for Documenting Employee Performance Problems, 96 Great Interview Questions to Ask Before You Hire, and 2600 Phrases for Effective Performance Reviews.