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Documentation, preparation essential at employee termination

By Pamela Wolf, J.D.

Documentation is the single most important thread running throughout the lifecycle of an employee from hiring through termination, according to Shareholder Bradley Kafka, leader of Polsinelli’s St. Louis labor and employment practice and vice chair of the firm’s national labor and employment practice. And when it comes to terminating an employee, documentation is essential.

Kafka and other Polsinelli attorneys were speaking at the final presentation in the firm’s Life Cycle of an Employee webinar series. This series final brought attendees full circle to the last stage of employment—termination. The overriding message was that whether due to resignation, reduction in force, poor performance, or another reason, employers must be proactive and plan for terminations.

Wolters Kluwer Employment Law Daily reached out to the webinar presenters to get their take on the most important takeaways for employers.

Documentation is key. Kafka stressed the importance of having documentation to support the legitimate, nondiscriminatory reason for the termination. “For example, with respect to reductions in force, documentation is key to developing the criteria that will be used to select employees,” Kafka explained. “Who is performing consistently with their job description? Who has the lowest performance ratings?”

Documentation is similarly crucial in a termination for poor performance. Without it, employers run the risk of losing on a claim that the stated reason for termination was pretext. “The documentation may show how the employee’s performance meets (or does not meet) the expectations set forth in the job description, whether there were prior disciplinary actions, and whether the employee is being treated consistently with other similarly situated employees,” Kafka said.

Risk management. Polsinelli Shareholder Judy Yi discussed the risk management process, where documentation continues to be essential. “It is important to have documentation to support a termination decision, including disciplinary documentation and company policies,” she said. “Additionally, it is vital to ensure consistent treatment. These are both major components in defending a discrimination claim.”

Yi pointed to additional risk management considerations, including whether the employee is a member of a protected classification such as age, race, or gender, and whether the employee has recently engaged in protected activity such as filing a discrimination complaint or for workers’ compensation benefits. She noted that specific types of terminations require additional considerations. “Reductions in force must be carefully scrutinized to make sure they do not disproportionately impact a protected classification,” Yi cautioned. “Employers must also review WARN Act (and state mini-WARN act) requirements to determine applicability and ensure compliance.”

Planning and logistics. Polsinelli Shareholder Lon Williams walked through some of the logistics of the termination meeting and the importance of careful planning. “Employers should plan the termination meeting in advance—consider who will attend, when to conduct the meeting, where to conduct the meeting, security concerns, and communications to remaining employees.” He stressed that what is said and how it is communicated goes a long way.

“If severance is offered, it is also important to make sure to have a properly drafted severance and release agreement,” Williams suggested. “Depending on the employee’s age and whether the termination is part of a reduction in force, it is important to ensure compliance with the Older Workers Benefit Protection Act.” Employers should in addition consider the implications of Section 409A of the Internal Revenue Code, which can impact the timing and method of payment of severance.

Protecting intellectual property. Once the decision to terminate an employee is made, employers must consider how they can protect their intellectual property, according to Polsinelli Shareholder Elizabeth Gross. “From reminders of post-termination obligations to litigation to enforce restrictive covenant and confidentiality agreements, employers must be prepared to take action to protect their valuable information,” she explained.

Employers should also consider the use of alternative dispute resolution (ADR) to manage post-employment claims, Gross suggested. Noting that ADR is an alternative to litigation in state and federal court and includes mediation and arbitration, she said that it can be a good option for employers. “It is important to consult with counsel regarding any ADR policies or agreements, as such policies and provisions must be carefully drafted,” Gross observed.

Preparation essential. Williams said that as in all in all other stages of the life cycle of an employee, preparation at the termination phase is key. To limit the risk of employment claims at termination, employers must, among other things:

  • Comply with company policies
  • Document the reasons for termination
  • Carefully evaluate the reason for termination to ensure it is legitimate and nondiscriminatory
  • Determine whether layoffs meet WARN and other requirements
  • Ensure severance and release agreements are properly drafted
  • Control post-termination communications by other employees
  • Take proactive steps to protect intellectual property.

The Life Cycle of an Employee: Termination was presented on October 8. The webinar may be viewed at this link.