In Business Law, Corporations, Employment Law, LLC

Employment disputes carry significant costs. Employment litigation can last several years and cost the employer thousands of dollars. Beyond time and monetary expenditures, employment litigation serves as a distraction, leads to bad publicity, and drains morale. It can also inspire other employees to follow course in litigation after witnessing the exhaustion it places on the employer with the hopes of obtaining a quick settlement.

Unfortunately, there is no avoiding the fact that some employees do not work out whether because of performance, attitude, or decreased business. The bottom line is that employers need to be prepared to fire employees when it is the prudent move for their business. Although there is nothing an employer can do to stop an employment claim, there are best practices that can minimize the chances that the employer will be hit with a claim. This article highlights some of those best practices.

One thing before we start. In all likelihood, you do not want to be in a position to fire an employee. It isn’t fun or rewarding. It is gut wrenching. But as bad as it is for you, the employer, take a moment to consider the impact on the employee. This will be a significant life moment for them, and you should approach it with the appropriate sensitivity. Jay Shepherd writes about an employee’s “Retained Dignity” as being the most significant factor in minimizing employment litigation in his book, Firing at Will. His basic premise is that people do not sue people they like, so if an employer is respectful and allows the employee to retain as much dignity as possible, it reduces the chances that the employee will have vindictive feelings that may lead to a lawsuit. In sum, although it is often necessary to fire employees, you will minimize your litigation exposure if you do it like you should: respectfully, professionally, and privately.

Employment Relationship in South Carolina

South Carolina is an at-will state, meaning that an employer can terminate an employee for any reason or no reason, just not an illegal reason like discrimination. Conversely, an employee can quit for any or no reason. This means that when there is an at-will relationship, you can terminate an employee because of work performance or attendance or just because you want to, but you cannot terminate that employee because of the color of their skin or their gender.

The at-will doctrine is alive and well in South Carolina, but there are still some pitfalls that employers run into. The most prevalent mistake regarding at-will employment is when employers mistakenly create an implied contract with their employees through a poorly written employment handbook or other policy document. See Connor v. City of Forest Acres. It has been argued that a progressive discipline policy guarantees employment until the criteria have been met for termination under the policy. For example, a three strikes policy may give the employee a right to a second and third strike regardless of how egregious the initial disciplinary action may have been. The policy may also limit the types of conduct that are disciplinary. Neither limitation is useful in managing employees. Employees have successfully argued that this amounts to an implied contract. S.C. Code 41-1-110 specifically details the ridiculous requirements that must be met in an employee handbook to maintain at-will status. So even thought the at-will doctrine is alive and well in South Carolina, you must actively protect that status.

In fact, a poorly written handbook often does more harm than good. I am a strong believer in clear but brief policies. I despise fifty page employment manuals that never get read until a lawsuit is in motion and list half a page on the types of conduct that are subject to discipline. It is critical to establish your expectations of employees in an employment manual but I strongly recommend that careful consideration be taken when drafting these manuals. Employment manuals while very useful in expectation setting can prove detrimental to employers that copy and paste off the web or use an inexperienced employment lawyer. In the above progressive discipline policy, an employer may have altered the at-will status of their employee while also limited the types of infractions that the employee can be punished for. Employers can not only erode the at-will status of their employees but also obligate themselves to requirements not applicable in South Carolina. When an employee files a lawsuit against their employer, the first place both attorneys will turn is the employment manual, so draft and review with precision.

When to Terminate an Employee

Only the employer knows whether it is necessary to terminate an employee, but I have found that the adage, “Hire Slow, Fire Fast” very often proves true. Employers often procrastinate and cause further problems for the employee. In Firing at Will, Jay Shepherd lists the most common reasons to fire an employee: poor performance, disloyalty, and the “seven deadly workplace sins,” namely, workplace violence, dishonesty, theft, criminal activity, insubordination, sexual harassment, and discrimination.

This part deserves its own section not as much for legal advice but to license an employer with the confidence to fire an employee if it is best for the company. While this article focuses on all the negative things associated with terminating an employee, my ultimate goal is to equip you with knowledge so that you are best able to run your company. Because that’s your job, running a business. When it becomes clear that an employee’s performance or ethics do not align with those of your company (or the law), then it is time to let them go.

Process of Terminating the Employee

  1. Preparation

Preparing for the meeting is as important as the meeting itself. First, you need to sit down with the necessary parties and make the decision. The necessary parties are usually a manager or owner and an HR director. It may be an easy one or a tough one, but make the decision and commit to it. Odds are that if you are having a discussion on whether to terminate an employee, the decision has usually already been made.

Next you need to plan when the meeting will take place. The best option depends on what fits your employee’s schedule. You will want to ensure that the employee will be available but also limit the number of coworkers that will be around. There is no consensus on a perfect time or one that is better than another. Most employers opt to meet with the employee last thing before the employee leaves on a Friday. That is fine, but so is first thing Monday. This is a judgment call based on the specifics of your business.

You need to determine an appropriate place for the meeting. A public place is not appropriate. Anywhere that is private and not visible by others is likely fine. Your goal is to keep this from being a public spectacle.

I normally recommend that a third party be present any time there is a termination. This prevents any “he said, she said” scenarios that may later arise. If you have an HR representative, then that person should sit in on the meeting. If not, have an office manager or other person. This third party should act as a witness and try to limit input. You do not want the meeting turning into a two-on-one feel. Additionally, physical and violent reactions are real concerns in many circumstances. If there is any chance that the employee will react with a temper or rage, you must have a third person in the room. If the situation warrants, you can always call the Sheriff’s department to have a deputy nearby in the event the situation becomes uncontrollable. A one-on-one meeting is also fine as long as you completely trust the employee, but I would err on the side of having a third party in the room.

Prepare any final paychecks or other applicable documents, like severance packages or COBRA information, for the employee. Many employers present dismissal letters, but I do not believe that this is necessary. In fact, I think that this tends to inflame the employee after they leave when they have to reread the letter and reexpereience the emotions of this meeting. This is not what you want.

Contact your IT department (or other parties controlling computer access) to have the employee locked out of the computer at the time of the meeting. This will need to be as close to instantaneous as possible because you do not want to tip off the employee of the termination meeting.

Lastly, consider what you are going to say. More on that next.

  1. Termination Meeting

This meeting needs to be in person. No emails, phone calls, or voicemails.

During the meeting, be direct and brief. You need to communicate that the decision has already been made and that it is unfortunate. Do not allow any discussion about second chances or what ifs. Simply explain that because of [insert brief reason here], we have to let you go. Then present any documents you prepared before the meeting to the employee.

I typically recommend that the employee should leave immediately following the termination. Except in the most rare circumstances, it is not a good idea to allow an employee to linger or continue to work for the company. If you decide to give an employee notice of their termination, that employee is unlikely to be productive and more likely to convert company documents and secrets to a personal account.

Depending on the circumstance, you may consider having the employee escorted out. Of course, you do not want to humiliate the employee but if there is a chance for retaliation then you should err on the side of caution. If there is not a threat of a problem, then you may decide to allow good-byes and for the employee to gather personal items. You can always package and mail personal items later if that works better for your situation.

  1. After the Termination Meeting

Immediately following the termination, set up the employee’s email to forward to the appropriate person. Same goes for the employee’s phone number. It is also a good idea to avoid making a spectacle of the event by a grand announcement to the company. Inform those that need to know, and move on.

Lastly, with regard to future employee references, you should know that in South Carolina, employees have sued their former employer for defamation. S.C. Code 41-1-65. Due to this, many businesses choose to provide only information that confirms the employee’s dates of employment, job title, and sometimes salary information.

We develop a checklist for our clients to use to ensure that they follow a systematic process that minimizes their risk when terminating employees. I encourage employers and managers to seek counsel when terminating employees to answer question s and help avoid preventable problems in the process.

About the Author

Wesley Henderson is an employment attorney with Henderson & Henderson. His Charleston, SC law firm focuses on helping businesses navigate their legal hurdles to help them succeed in the marketplace. He has experience with a variety of personnel and employment law matters. Wesley can be reached by email or by phone at 843-212-3188.

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