Tag Archives: termination

Document, Document, Document – A Mantra Revisited

Contributed by Carlos Arévalo

Failure to document performance or conduct problems is a common mistake employers make. Typically, employee handbooks contain provisions requiring periodic performance reviews.  Similarly, handbooks contain discipline provisions that include procedures dealing with the issuance of warnings related to the violation of work rules.  How employers use and apply these provisions can make the difference in successfully defending claims.

A recent decision out of the United States Court of Appeals for the District of Columbia illustrates how critical it is to properly document an employee’s behavior and performance issues. This decision also underscores the importance of making sure that the reasons for termination are clearly and consistently stated throughout the life of a claim. In Giles v. Transit Employees Federal Credit Union, 2015 WL 4217787 (July 14, 2015), an employee suffering from multiple sclerosis (MS) sued her former employer alleging wrongful termination in violation of the American with Disabilities Act (ADA) and the Employee Retirement Income Security Act (ERISA).

Prior to her termination, the employee was involved in a couple of altercations with customers. In one instance, the employee was engaged in an argument with a customer over a pen. The employee was given a verbal warning.  On another occasion, the employee improperly confronted a customer for entering the building through the wrong door. In response, the employee was issued a written warning with a two day suspension. The employee was then assigned to a different position. As for performance, the employee was given a combination of satisfactory and poor ratings in the two positions she held. When a leadership change occurred, the new CEO terminated the employee.

Because premiums for the health insurance plan increased 57% over a period of two years during her tenure, the employee sued claiming that the cost of treating her MS caused premiums to increase and that she was dismissed to reduce the employer’s health care costs. As the employee’s case moved from administrative proceedings before the EEOC to the action in district court, the employee also attacked the employer’s “shifting and inconsistent justifications for her termination.” Initially, the employer stated that the employee was terminated based on the employee’s performance ratings and her altercations with customers. Later, her termination was the result of a “general organizational review” made for “business reasons.” Finally, the employer reverted to poor performance and added that substandard employees were being eliminated as part of a business strategy to cut costs and restore profitability. Fortunately for the employer, the appellate court affirmed the trial court’s finding of summary judgment in favor of the employer because there was no evidence supporting a claim that the cost of insuring plaintiff was a motivating factor in the termination decision. However, inconsistencies or shifting justifications for employment action often give employees a successful argument that the reasons given for termination were pretextual in nature.

Here are five simple and practical lessons from the Giles case:

  1. Behavior issues should always be documented, even if they only involve a verbal warning.
  2. Periodic reviews should clearly identify any deficiencies in employee performance.
  3. The basis of a termination decision should be clearly stated to the employee.
  4. Employee files should be clear and concise so even a change in management will not affect employment decisions.
  5. The basis of the termination decision should be consistent – shifting reasons may impact the outcome of litigation.

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….