This Wisdom of the Crowd, compiled from responses posted on the Health Law and Employment & Labor eGroups,* addresses the process of terminating an employee and the legal department's role in that process. The issues discussed include:
*(Permission was received from the ACC members quoted below prior to publishing their eGroup comments in this Wisdom of the Crowd resource.)
Does anyone have a tool that is used internally to make sure that various departments communicate timely and accurately with one another when an employee is separated from employment? For example, how is an employee's involuntary separation communicated among departments to be sure that employer-owned devices are returned, access to electronic data is removed, keys are obtained (or locks changed) and intellectual property is secured? Do you keep an inventory in each employee's personnel file that is reviewed at the time of separation? Any guidance and/or documents that you are willing to share would be helpful.
Wisdom of the Crowd
We have created a checklist that HR is responsible for and includes reminders to notify critical departments such as IT, Security, and Legal. For example, if Legal receives notice that a person is being separated we would review the employee's various agreements (IP, Confidentiality, Relocation Repayment, etc.) and prepare an appropriate letter that is sent to the employee. 1
HR is charged with quarterbacking separations, and coordinates IT, payroll, legal, facilities, etc. Here are a few thoughts on the process:
HR maintains company property inventory and is responsible for collecting the items at separation. HR may contact legal for a termination review. Once cleared, HR contacts payroll to get the final check and accrued but unpaid PTO payments initiated (required in California), which can require lead-time to do the calculations and maybe get signatures. HR would conduct the separation meeting with the individual's manager present. While that meeting is going on, IT is disabling all computer access and facilities is securing offices as necessary. The person may be escorted back to their work space to pack up their personal items and leave the premises, or that could be done for the separating individual as circumstances require. As the person is heading out the door, HR is messaging the appropriate company personnel that Jane Doe is no longer with the company (maybe in connection with some reminder about the importance of the company's visitor policy and the need to have your ID badge, etc.). A team meeting may be convened for the impacted department.
Finally, I've pasted a checklist related to reductions in force that may be helpful. I believe it's derived from a Continuing Education of the Bar publication.
Reduction in Force (RIF) Guidelines for Minimizing Litigation Risk
____Articulate the business need and identify the business goal to be accomplished.
____ Determine whether the RIF can be avoided or minimized by other cost-cutting measures such as salary or hiring freezes, voluntary attrition through early retirement plans, severance plans, enhanced benefit plans, or cutback in nonexempt hours.
____If a RIF is unavoidable, determine whether the RIF should be limited to only identified departments, organizations, or levels of managers, or be applied across the board.
____Once the affected units or levels have been determined, identify the positions that need to be eliminated or consolidated. In some situations, there may be only one incumbent. In other situations, there may be several incumbents and therefore, individuals must be identified from the targeted positions.
____Set the criteria for selection. If criteria are weighted, articulate the weighted formulas. While subjectivity is not per se unlawful, objective, weighted factors are the most defensible. If there is to be bumping between departments or different sites, determine the criteria for bumping.
____Rank multiple incumbents under the stated criteria. The lowest-ranked employees in the identified unit ordinarily should be the employees who are laid off, absent extraordinary circumstances.
____After a tentative list of layoff candidates has been generated, check the list for statistically significant adverse impact by protected category, such as race, sex, national origin, disability, and age (by 5 year brackets starting at the age of 40). This analysis should be performed across an individual's group as well as company-wide. Take a before and after snapshot, noting what percentage of the workforce is in each category before the layoff and after the proposed layoff. If the tentative layoff list appears to disparately impact a protected group, reanalyze the selection criteria to ensure that there is no subtle form of illegal discrimination.
____To ensure the selection is based solely on legitimate business reasons, review the tentative list for:
Workers' compensation claimants
People about to vest in, e.g., stock options, retirement plans, etc.
____Determine whether additional compensation should be provided in exchange for a release of claims.
____Once the final determination has been made, ascertain whether the RIF will trigger WARN, or state counterpart, notice requirements.
____Provide COBRA notice.
____Consider transition assistance such as outplacement.
____Provide managers with guidance on how to communicate to the workforce and how to manage the reduced workforce after the RIF has taken effect. 2
Can you please share your company's practice with regard to legal review of employment terminations? Specifically, does your legal department review all terminations; if only some terminations are reviewed by Legal, what criteria do you use to identify which are subject to legal review? Responses from any members willing to share their experience and recommendations would be greatly appreciated.
Wisdom of the Crowd
I get involved in RIFs, and when the business leader or HR feels nervous about an individual termination, they consult me. Right now, neither of the two situations are memorialized in a policy, although we are moving toward implementation of RIF Guidelines, which would require HR to involve Legal when there is a RIF of X number of employees or more. 3
I too am the only L&E (among other things) lawyer at my company. We have about 3000 employees and due to the nature of our business have fairly high turnover. I have found it impractical to review all employee terminations. I have told HR that they must have people capable of making good decisions and who are willing to be accountable for them. I tell them that we will inevitably have EEO lawsuits and such, and that my goal is not to have zero, because if you do that is probably a sign that you are retaining some bad employees or paying too many severances, etc. I tell them my goal is to have zero with merit. I do assist in some complicated terminations, RIFS, and the like, as well as provide training to the HR managers. 4
I am the L&E attorney for my company. We have approximately 3600 employees with fairly low turnover. I review all involuntary terminations. It's fairly manageable and given that I usually have follow up questions that need to be resolved or clarified before the termination, all involved believe that it's a worthwhile process. I always tell folks there's rarely any good that can come out of rushing to such a significant decision and usually some benefit to taking time to thoroughly vet it. 5
My company owned numerous subsidiaries in manufacturing businesses. The subsidiaries all had their own HR staff consisting of facility/local HR managers and the subsidiary also had a VP or Director of HR at the subsidiary's headquarters. Legal advice was provided though the parent company of the subsidiaries. Some of the subsidiaries had about 3,000 employees, and some had fewer or more than 3,000. Our process was based on the employee's classification or potential legal exposure.
Most of the issues concerning rule violations and attendance problems stemmed from the hourly employees. My experience has been that routine employment terminations for hourly employees were handled by the facility/local HR manager and/or the VP/Director. Attendance problems were a major reason for terminations. Violations of attendance policies that did not involve job-protected leave issues, medical conditions, disabilities, or documentation issues were generally handled by local HR only; the VP or Director was not involved with routine attendance violations. Clear violations of rules of misconduct (threats, fighting, failing a drug test) were handled by local HR and the VP/Director together.
Other situations concerning hourly employees may be elevated to the legal department, as examples: the possible termination appears to differ from consequences set forth in a policy; the possible termination appears to involve disparate treatment between protected classes of employees when multiple employees are involved; there is a question about the sufficiency of an investigation or evidence; or the misconduct may not neatly fit a particular rule.
Almost all salaried employee involuntary terminations were elevated to the legal department for advice; these matters usually involved performance problems and sufficiency of documentation, job protected leave, or purported single job eliminations.
Potential Legal Exposure
Generally, all terminations that create a high risk of legal exposure were elevated to the legal department for all employees, both hourly and salaried. Some examples are inability to accommodate a medical condition; exhaustion of leave; non-cooperation with leave policies; purported single job elimination of an employee in a protected class; terminations stemming from misconduct for discrimination, retaliation, and harassment; terminations of employees who have made prior complaints, etc.
We had a call-the-legal-department-any-time procedure, if HR had a question about any termination.
Much of how your company decides what is the best process for it may depend on the size, sophistication, and experience of the HR staff and volume of terminations. Also, if your company has had past lawsuits and charges resulting from particular types of terminations, the issues underlying those terminations should be elevated to your legal department so proper documentation and strategy can be developed to avoid additional lawsuits and charges. 6
Our legal department gives legal advice to the HR department on all terminations (we do a legal review of terminations prior to execution). Does anyone have a termination review checklist that they use when reviewing termination decisions that they would be willing to share?
Wisdom of the Crowd
Below is a checklist I recently prepared for my company. I work in a small shop and the list is prepared with that audience in mind. I hope you find it helpful or at least a good start.
Thoroughly investigate and review the facts. If action is required after a major incident, walk away from the situation for a brief cool-down period before making any important decisions. If suspension of the employee is necessary to allow time for the investigation, then consider that alternative.
Allow time for all parties to review the details of the situation.
Obtain statements from witnesses, if applicable.
Talk with the employee to get his or her perspective.
Obtain and review all related current and prior documentation.
Outline the facts of the most recent situation.
Examine the employee's previous discipline history.
Examine records of employees with similar infractions and compare the discipline imposed then with the disciplinary action considered now.
Determine if the employee is in a protected class. If so, determine if there has been disparate treatment (intentional) or treatment that has resulted in disparate impact (not intentional, but nevertheless discriminatory) for this employee.
Review the facts of the investigation with an objective third person.
Pinpoint the basis for the possible discharge.
Determine if the discharge violates any federal or state laws.
Discuss your decision with an HR professional, employment attorney, corporate counsel or final decision maker.
Determine the best time and place and carry out the discharge calmly, in a direct but compassionate manner. Consider including a witness in the meeting, if appropriate.
Document what was said and what was done at the termination meeting. 7
1 Anonymous (Health Law, 2013).
2 Gavin G. Galimi, Executive Vice President, General Counsel, and Chief Compliance Officer, March Vision Care, Inc. (Health Law, Jan. 24, 2013).
3 Anonymous (Employment & Labor, 2012).
4 Anonymous (Employment & Labor, 2012).
5 Anonymous (Employment & Labor, 2012).
6 Anonymous (Employment & Labor, 2012).
7 Margaret Denton, General Counsel, Rita's Water Ice (Employment & Labor, Feb. 25, 2010) (now Associate General Counsel, Drexel University College of Medicine at time of publication).