Managers who want to avoid the confrontation associated with progressive discipline and terminations often look to the path of least resistance—a no-fault layoff—because it appears to provide a quicker solution to ending employment. With a layoff, however, there are certain guidelines that you will need to follow to defend that decision. Specifically, you'll need to evaluate the business case for a layoff, as well as who is the appropriate employee to be laid off, how long you'll have to wait before refilling that position and what could happen if you were legally challenged for having improperly laid someone off.
"First, keep in mind that with a layoff, you eliminate positions, not people," said Lara de Leon, shareholder and labor and employment attorney at Ogletree Deakins in Costa Mesa, Calif. In other words, your written records must first reflect that a position is being eliminated because of a lack of work or other financial constraints and then that an individual employee must be impacted because there's no longer a job for that person. "If removing a problem performer is your goal, then eliminating that individual's job may be a big mistake. After all, you'll still need to get the work done," de Leon said.
Peer Group Analysis
Second, determining which employee should be laid off once you've established a legitimate business need to eliminate a position can be difficult. Remember, you can't arbitrarily select someone for a layoff simply because you believe he or she is the weakest performer or even because that person happens to be sitting in the seat that's being eliminated. Instead, you're obligated to identify the least qualified person in the department or unit. The least qualified person on paper, however, may end up being your best (albeit newest) performer.
For example, if you have three social media coordinators in your communications department and you decide to eliminate one position, you now have a selection pool to choose from. As a result, your company will be required to conduct a "peer group analysis" to see which of the three individuals is the least qualified to assume the remaining job responsibilities once the position is eliminated. Sometimes, the three employees will be invited to interview for the two open positions. "More typically, the company will select the person based on a review of relevant factors, such as skill, ability or experience and notify them of the layoff," de Leon said.
Once performance reviews, progressive discipline records, education, technical skills and other criteria are considered, a final decision can be made; the key is ensuring that the documentation supports the decision. "Don't be too surprised, however, if the poor performer you're looking to eliminate has the most tenure or the strongest record on paper," de Leon cautioned. "In such cases, the documentation won't support your selecting that individual for layoff."
If your records don't support separating the problematic employee in question, then a layoff would no longer be a viable option since you can't use that rationale to eliminate the individual who's causing the problems. Instead, you'd have to revert to managing that problematic employee's performance via documented progressive discipline.
Leaving the Position Unfilled
There is another key consideration when determining if a layoff is the appropriate employer action when dealing with an underperforming employee. Courts and juries have certain expectations about employers' responsibilities when eliminating positions and laying off workers. The logic is simply this: If a company has a legitimate business need to eliminate a position, then it probably shouldn't have a need to recreate that position in the near future. If the company were to do that, it could appear to a judge or jury that the company's original action was pretext. In other words, the court could be persuaded that the so-called layoff was really a termination for cause in disguise. This could obviously damage the company's credibility during litigation.
How long does the position need to remain unfilled? That depends on your state. "There is usually a one-year or two-year statute of limitations on wrongful termination claims, so backfilling that position in less than the one- or two-year statute of limitations period becomes legally risky unless you have a legal release from the ex-worker precluding them from suing you for wrongful termination," de Leon said.
What if an employer were willing to gamble and fill the position after, say, six months? If the ex-employee learned that his or her previous position was filled and then engaged the services of a plaintiff's attorney to pursue the matter, the damages sought could be similar to a wrongful termination claim, including reimbursement for lost wages, compensation for emotional distress, plaintiff's attorney fees and, in egregious cases of employer misconduct, punitive damages.
A Release May Provide Some Protection—If You Can Get One
If the individual signs a release agreement in exchange for a severance package, then you should be able to backfill the position without much risk. "The only catch to this scenario is that you won't know upfront if the individual will be willing to sign the release at the time you notify him of the position elimination," de Leon said. If he opts not to, then you're pretty much stuck because you "showed your cards" and won't have much recourse if you try to remove the individual without progressive discipline. If you ultimately terminate the individual for cause, some sort of a retaliation claim may be leveraged against your company. After all, the individual will know that you originally wanted him gone at the time you discussed the layoff option, and a plaintiff's attorney will likely argue that the corrective action issued after that point in time was either pretext or downright bogus.
"Bottom line: Following your performance management or progressive discipline process is the optimal way to deal with substandard job performance or inappropriate workplace behavior," de Leon said. "Trying to hide behind a layoff may feel easier to implement on the front end but could leave your company vulnerable should the matter ultimately proceed to litigation."
If there's a performance issue, address it. Don't tiptoe around it by trying to eliminate the person's position. While this tactic may have initial appeal because it appears to be a tidy and efficient way of separating someone from the company, you owe your employees more than that. Hold yourself to the highest leadership standards and address critical performance or conduct issues head on. That's how the performance management system was designed to be used, and it's what great leaders do when faced with adverse employee performance situations. It's also healthier for your organization overall because it's honest and transparent, and employees respect their companies more when they feel that matters are treated above board, especially in difficult situations like these.
Paul Falcone (www.PaulFalconeHR.com) is an HR trainer/speaker/executive coach and has held senior HR roles with Paramount Pictures, Nickelodeon and Time Warner. His newest book, 75 Ways for Managers to Hire, Develop, and Keep Great Employees (Amacom, 2016), focuses on aligning frontline leadership teams and on key employee retention. A long-time contributor to HR Magazine, he's also the author of a number of SHRM best-sellers, including 96 Great Interview Questions to Ask Before You Hire, 101 Tough Conversations to Have with Employees, 101 Sample Write-Ups for Documenting Employee Performance Problems and 2600 Phrases for Effective Performance Reviews.