Category Archives: Terminating Employees

To Pay or Not to Pay…That is the Question

Contributed by Julie Proscia

When terminating an employee, particularly a long term employee, one of the first questions that an employer asks is: “Am I required to pay severance?” Which is quickly followed up by: “If so, how much should I pay?”

First, regardless of what you heard (from your friend Bob who heard from his cousin, who heard from her sister) there is no requirement in the State of Illinois, or on the federal level, that employers must give employees severance when conducting a lay off or termination.  Individuals frequently confuse severance pay with the requirement to pay out PTO/vacation. PTO/vacation time, if earned and accrued, must be paid with final wages at the next regularly scheduled pay period following separation. There is no requirement to pay severance. The two (final wages and severance) are different; one is payment for monies already earned and accrued while the other is money that has not been earned.

Think of severance as free money that you are giving to buy peace of mind (i.e. release agreement and/or reward for service).  The only time that you are required to give severance pay is if you have an internal policy, collective bargaining agreement or employment agreement that designates the same. In the absence of an internal document requiring the payment of severance it is a company’s sole discretion as to whether or not it wants to give severance.

Likewise, if an employer chooses to give severance there is no designated amount that it is required to give. I frequently hear employers ask if they are required to give one week for every year of service. There is no requirement to do so. This was often the case in high level executive separations in the boom time of the eighties but quickly dissipated with the bust of the 2000s.

In the new era of mass layoffs severance is often impractical (it is hard to lay off 100 people because of budgetary constraints and then pay them each severance) and is thus irregular for large separations.  In these cases, severance, if given, is done more to assist the employee with COBRA payments or to continue an employee’s salary to the end of the month.  On an individual basis severance is frequently only given to be consistent with past practices or to prevent a “risky” separation from turning litigious (i.e. to the only employee in the group who is over 40 and who also recently filed a harassment complaint, not the 25 year-old Caucasian male). The analysis of whether or not you should give an employee severance is one that should be done with your labor and employment counsel to determine the legal risks of the separation and the cost-benefits to the package.

So then the question becomes whether to pay or not to pay. Just remember, if you choose to pay make sure that the package includes a release agreement.  The release agreement is imperative; there is nothing that irritates a company more than when it gives an employee $10,000 in severance and the employee gives that money to an attorney for a retainer for his wrongful termination lawsuit….

Don’t Set Up Employee to Fail: Internal Email Precludes Summary Judgment for Employer in Age Discrimination Case

Contributed by Terry Fox

Employers are frequently faced with challenging terminations, often because they perceive a threat of litigation from the terminated employee.  Supervisors in these situations normally interact closely with human resources professionals.  In these instances, email communication should be closely monitored so as not to raise an inference of improper focus on the employee. 

In Phillips v. StellarOne Bank, Ca.No. 7:11-cv-oo440 (7/16/12 W.D. Va.), the human resources professional involved did not pay close attention to her choice of words.  As a result, the employer was denied early exit from the federal age discrimination and FMLA lawsuit, instead facing a jury trial.  In this case, a 51-year-old employee, Phillips, fell out of favor with his supervisor, apparently based on performance issues.  His supervisor gave him a negative performance evaluation in 2009 and put him on an improvement plan. 

Phillips’ supervisor vetted the proposed performance improvement plan with the company’s human resources department.  The response was transmitted via an email that became central to the lawsuit.  The email stated:

“There is a lot of room for him [Phillips] to “trip up” after this warning considering all the areas where he is below expectation and the magnitude of improvement needed.  I recommend that you consider how strict you are going to be on this (i.e., zero tolerance the next time he does not provide a timely report) and communicate accordingly so that he knows this is a true warning – and that his job is truly on the line.”

The author of this email testified that she assumed “trip up” meant setting performance goals so that Phillips couldn’t meet them.  The court found that a jury could conclude that this email, alone or with other evidence, proved the employee was meeting his employer’s legitimate expectation and that age and/or scheduled FMLA leave was the true reason for the termination.

While certainly no employee should be set up to fail, in challenging terminations where litigation is a strong likelihood, employers may want to consult competent counsel to vett the many issues involved.

A Jury Duty Refresher and Warning

Contributed by Julie Proscia

Lesson number one:      Know the Federal and State rules regarding jury duty;

Lesson number two:      When a Judge sends you a letter do NOT throw it away.

In a recent turn of events a federal judge, Judge Holderman, appointed a lawyer to represent an employee that was terminated while serving jury duty in his court room. The employee was hired as a sales associate by HHGregg in August 2011. In January of 2012, the employee was called for jury duty by the federal district court for Northern Illinois. He was picked for the panel and notified his employer that the trial could last as long as 10 or 12 weeks.

The trial began on a Thursday, and the employee reported for work the following Saturday. On Saturday the employee informed his manager that he couldn’t meet his Sunday work schedule. Approximately two hours later, the manager called the employee into his office and fired him, allegedly stating that the employee was being terminated for not meeting his sales quotas. While the employee had previously received counseling regarding his low sales numbers, he had never been disciplined.

The employee notified Judge Holderman of the termination and his belief that the termination was related to jury duty. Lesson Number one: Know the law, under both the Federal and Illinois judicial systems, employees cannot be terminated or retaliated against for serving on a jury. Although there is no Federal or Illinois law that requires employers to pay non-exempt employees for their service, they cannot be retaliated against for being called or selected for service. Because the employee was called for federal jury duty, federal law applied. Under federal law, the presiding judge can investigate the termination to determine if the termination appears to have been based on the employee’s jury service; if the Judge finds “probable merit” that the termination was related to the service the Judge can appoint a lawyer to plead the juror’s case and initiate a lawsuit against the company. And this, my friends, is exactly what happened.

First, Judge Holderman sent correspondence to the HHGregg store management, requesting an explanation regarding the employee’s termination. No response was given. Lesson number two: Do not blow off the judge. When no response was given the court proceeded to investigate the matter. During the investigation Judge Holderman learned that virtually all the sales associates were still “on a draw” for potential commissions, many were failing to meet their quotas, and only one other associate had been disciplined, but not terminated, for low sales. This news likely did not endear the company to the court. Instead the problem was compounded when the court learned that the company has a policy that requires employees on jury duty to be paid minimum wage for the first 30 days and one-half minimum wage after that. This led to the belief that the employee was terminated to avoid the payment of wages and this belief resulted in the appointment of counsel and a result that will likely not be favorable for the company.

Moral of the lessons learned, know your state and federal jury duty laws, if you do not know them, call your labor and employment attorneys for advice prior to effectuating an adverse action. Terminations during jury service appear suspect; make sure you have a good trail to explain why the termination is based on a legitimate business reason. And if a Judge knocks on the door don’t hide behind the door and pretend that you are not home — it did not work when we were teenagers, it is not going to work now. 

In re Henders, N.D.Ill., No. 12-c-1147 (Feb. 17, 2012).

Seventh Circuit: Among the Myriad of Protected Classes, Illegal Immigrant Status Is NOT One of Them

Contributed by Carly Zuba

Time for a quick labor and employment pop quiz…

Question: What do race, color, sex, national origin and gender all have in common?

Answer: They are all considered Title VII “protected classes,” meaning that covered employers cannot use these characteristics to discriminate against employees.

Question: Is immigration or citizenship status considered a protected class, thus falling under the umbrella of national origin protection?

Answer: No!  In fact, the Seventh Circuit recently weighed in on this precise question in Cortezano v. Salin Bank & Trust Co., deciding that Title VII does not protect against discrimination based on citizenship or immigration status.

The Facts:  While employed at Salin Bank, Cortezano named her husband as joint owner of her Salin Bank account and assisted him in opening his own personal and business accounts.  Cortezano’s husband was a citizen of Mexico who entered the United Stated without a valid visa.  At some point during her employment, Cortezano informed her supervisor of her husband’s illegal immigration status.  Salin Bank then embarked on an investigation and eventually terminated Cortezano, allegedly for refusing to attend a meeting regarding the investigation.  Cortezano sued Salin Bank, alleging Title VII national origin discrimination, among a number of other claims.

The Ruling:  The Seventh Circuit decided that even if it assumed that Title VII provides bias protections based on the race or national origin of an employee’s spouse – an open question in the Seventh Circuit – Cortezano’s claim fails because she alleged discrimination based on her husband’s immigration status, and not his Mexican ancestry.  The court noted that the phrase “national origin” has been defined by the U.S. Supreme Court as the country from which one or one’s ancestors came; the phrase has nothing to do with whether an individual who came from another country came to this country illegallySince the employer’s internal investigation concentrated on the husband’s undocumented status as opposed to the husband’s race or national origin, the court found that the bank’s actions did not violate Title VII.

While this case provides helpful guidance regarding the extent of Title VII protections, employers should always consult with their labor and employment attorneys before taking adverse actions based on a particular employee’s status.

How to Terminate that Troublesome Employee

Contributed by Julie Proscia

Once you have made the decision to terminate your troublesome employee (insert any of the following adjectives:Properly Terminating Employees poor performer, incessant gossiper, internet abuser and/or consummate slacker), how do you do it?

An improperly planned and executed termination can be a minefield that can present even more problems then the individual’s employment. The following tips can help you avert the most common mines in the field:

 1.) Team work – If at all possible conduct the termination with another person. Why? So you can have a witness to verify what was said and not said.

2.) Follow the Boy Scout motto: Be prepared – Before you even walk into the room develop a check list that includes: COBRA paperwork, timing and transmission of final wages/vacation, severance agreements (if applicable) the collection of company property, changing of passwords, the notification of the local police department and most importantly the removal of tissue boxes.

 3.) Script – Be organized, have a plan, know what you are going to say and say it. Do. Not. Deviate.

 4.) Keep it Brief – A termination should last no longer then seven minutes. Any longer and we are crossing into the danger zone. As human beings we feel the need to fill silence, apologize and explain. Avoid the urge.

 5.) Repeat Number 3. – Stick to the Script. EVEN and especially if the employee argues and/or cries. Once you have made the decision to terminate, the decision is final.  This is not the time to reassess or debate.

 6.) Collection Time – Obtain all company property at the time of termination, trying to get property after the fact is substantially more difficult. 

The balance between trying to be humane and trying to mitigate conversation to avoid litigation is a delicate one that can be walked with proper planning. Think of a termination like a band aid. Rip if off quick and it only stings for a minute.