Ask the Experts: The Risky Business of Termination

Ask the Experts

On Sep 6, 2022

In the latest installment of New Jersey Business Magazine’s Ask the Experts column, an HR professional working with the New Jersey Business & Industry Association responds to an executive’s inquiry on termination:

What are some best practices for conducting terminations?

Good, ongoing documentation is your best defense to any challenge, whether from the employee in the termination meeting, the state unemployment insurance department, the labor department, or opposing counsel in court. Be sure to document behavior and performance issues when they happen, conversations you have, disciplinary actions you take, and warnings to the employee about the consequences if they fail to improve. While there is no exact amount of documentation that will eliminate risk, more is generally better. We recommend that you have enough documentation to show a pattern, as well as your good faith effort to help the employee improve.

Terminations should come as quickly as possible following the performance or behavioral issue that was the “final straw.” Taking prompt action reduces the likelihood that the decision will appear arbitrary to a third party and limit the opportunity for the employee to do something that would make the termination appear retaliatory. For example, if you decide to terminate an employee for fudging their time card one too many times, but wait three weeks because it’s the busy season, in that three weeks the employee might request FMLA leave, make a harassment complaint about a manager, or disclose that they have a disability. Your motive for termination would then appear suspect, even if that is not your intention.

Does “at-will employment” mean we can terminate without risk?

No, termination always comes with some risk, even when the employment is at-will. While at-will employment allows either the employer or the employee to terminate the employment relationship at any time, with or without notice, and with or without cause, it does not permit you to terminate employment based on the employee exercising a legal right or belonging to a protected class (e.g., race, sex, religion, national origin).

There’s even some risk when the termination is for cause, because a terminated employee could claim that your reasoning is just for show, and that they were actually terminated for an illegal reason.

Does presenting a termination as a layoff reduce the risk of an unlawful termination claim? We have a new manager who’s not performing well that we want to let go.

No. In fact, it could create more risk. If the terminated manager saw that you were hiring again for the position you were supposedly eliminating, they’d likely start thinking of reasons you would lie to them about why they were terminated. Since poor performance would be a perfectly legal reason for a termination – and one which you could have shared – they will likely start thinking of potential illegal reasons for their termination. While an investigation or litigation might not go far, any time spent dealing with an angry former employee (if it could have been avoided by telling the truth) is time wasted.

In this case, we would recommend putting the manager on a performance improvement plan and documenting their progress (or lack thereof). If the employee’s performance doesn’t improve within the time frame set by the performance improvement plan, you’re on much safer ground to terminate their employment. 

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