Excerpted from Indiana Employment Law Letter, written by attorneys at the law firm Baker & Daniels http://www.HRhero.com/inemp.shtml?HLe


It's a common refrain from HR personnel and business owners everywhere: "I feel like I can't fire anyone anymore without being sued." With the litigious nature of today's society and the fact that almost everyone is a member of some protected group, it's understandable that many employers feel as if employee discharges will inevitably lead to a lawsuit.

While there's no magic shield to protect you completely from employment-related lawsuits, there are steps you can take to help maximize your legal protection in employee discharge situations.

Following are five tips you should consider when you're handling a problem employee whose work performance could ultimately lead to a firing.

Tip #1: Identify the Problem

The first step in dealing with poorly performing employees is to identify the work deficiencies. Many times, employers have a hard time pointing to a specific problem with an employee. They just generally feel as though the employee is a poor performer.

It's legally difficult, however, to uphold your decision to discharge an employee based on the simple fact that he was "just no good." Rather, you must support your discipline and discharge decisions with objective evidence.

Consequently, you need to be vigilant in carefully documenting employees' workplace deficiencies and specifically note the time, nature, and degree of the problem. Precise, objective  documentation will form the foundation for later discipline, including a discharge.

Tip #2: Progressively Discipline Employee

Once you've determined that an employee isn't performing up to your expectations, you should begin progressively coaching the employee about her performance deficiencies - and your expectations for improvement. Here is the typical remedial scheme involved in progressive   discipline:

   - oral counseling;
   - written warning;
   - final written warning;
   - suspension (with or without pay); and
   - termination.

Obviously, the type of discipline given will often depend on the severity of the performance issue. Consequently, you shouldn't hesitate to issue more severe discipline if circumstances warrant - although you should treat similarly situated performance problems consistently to avoid any implication of discrimination.

When disciplining an employee, you should go over the specific instances in which he failed to perform satisfactorily and instruct him on how to improve his performance in the future.

 As with all personnel matters, discipline should be done in writing (even oral warnings), and the disciplined employee should sign the disciplinary form that discusses the coaching to negate any argument that he was unaware of the nature or severity of his disciplinary problems.

Tip #3: Consider Providing a Last-chance Agreement

We find that among the most persuasive evidence an employer can present to administrative agencies and juries is if it discharged the employee only after entering into a "last-chance agreement."  Last-chance agreements often take the form of a final written warning and inform the problem employee in no uncertain terms that any further violations of company policy, or the failure to improve work performance, will result in a discharge. Employers often tie a last-chance
agreement to a specific time limit, usually 30, 60, or 90 days.

When giving an employee a last-chance agreement, as with any other form of discipline, you should explain exactly what is expected of her with regard to improving her conduct or performance and have her sign the document.

Tip #4: Discharge

If the employee's performance doesn't improve despite repeated coaching and discipline, you're faced with the difficult decision of whether to discharge or retain him.

In making that decision, you should carefully review his job performance and determine whether it requires discharge when compared to how you've treated similar work performance issues in the past.

Remember, the consistent treatment of similarly situated employees is essential if the employee later sues your organization for some type of discrimination.

Consequently, if you haven't historically discharged employees who have experienced comparable discipline or work performance problems, you should think carefully about whether the discharge of this particular employee is prudent, especially if some lesser form of discipline may be appropriate.

If the employee has been on a last-chance agreement, it's important that you follow through with the terms of the agreement. In other words, if you informed the employee in the agreement that further disciplinary problems (or the failure to improve work performance) would lead to a   discharge and the employee's disciplinary issues or work performance didn't improve, discharge should be the result in most circumstances.   If an employer fails to follow though "with its end of
the bargain" in a last-chance agreement, it loses credibility in the eyes of not only the affected employee but other employees as well.

Specifically, they'll know that the employer's cautionary remarks about needing to maintain satisfactory performance are hollow and that no adverse action will result from a failure to improve.

Tip #5: Consider Separation Agreements

If you're concerned that an employee may ultimately sue your organization because of her workplace experiences and/or discharge, you may want to consider offering a severance package in exchange for a full release of claims.

Severance packages can take many forms - from your agreeing not to contest her unemployment compensation claim to offering her monetary remuneration. In any event, for her agreement to release all legal claims against your organization to be valid, you must offer her something of value that she wouldn't otherwise receive.

Because separation agreements are legal documents, you're encouraged to consult with counsel before preparing one for a soon-to-be discharged employee.

Bottom Line

While it seems as if it's nearly impossible to discharge an employee without a discrimination charge or lawsuit being the end result, you can take the five steps described above to protect your organization when you're disciplining and discharging problem employees.

Although no amount of preparation or planning can insulate an employer from liability with absolute certainty, these five steps can help position your company to successfully discipline and discharge an employee.

Finally, because employment-related litigation is so common, you shouldn't hesitate to contact your counsel when you're faced with a difficult employee counseling issue.