BEST PRACTICES: FIRING MINIMIZING RISK AND AVOIDING LITIGATION - - PowerPoint PPT Presentation

39 Offices in 19 Countries

BEST PRACTICES: FIRING – MINIMIZING RISK AND AVOIDING LITIGATION

June 25, 2013

Presented by: Tara A. Aschenbrand

tara.aschenbrand@squiresanders.com

Laura Lawless Robertson

laura.robertson@squiresanders.com

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Agenda

• Steps Before Termination – Single

Employee

• Termination Checklist – Single

Employee

• Termination Considerations – Multiple

Employees

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Principal Types of Involuntary Employee Terminations

• Reduction-in-Force
• Performance-Based
• Company Decision

Restructuring

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Steps Before Termination – Single Employee

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Why does this matter?

• Statistics:

2009: 93,277 Total Charges 2010: 99,922 Total Charges 2011: 99,947 Total Charges 2012: 99,412 Total Charges

− Retaliation = 38.1% − Race = 33.7% − Disability = 26.5% (increasing post-ADAAA)

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Termination Checklist

• Justification
• Discrimination-retaliation
• Reverse discrimination
• Defensible reasons
• Policies or work rules
• Oral statements
• Progressive discipline
• Public policy

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Justification

• Have I identified the reasons for the discharge?
• Are they lawful, non-discriminatory reasons?
• Are they documented?

Employee records Job description Document warnings Witness statements

• Has documentation been provided to employee?
• Have I contacted appropriate management?
• Type of Employee

At-will employee? Contract employee? Implied contract?

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Maintaining Proper Documentation

• When there is a problem, take action and discuss it with

the employee as soon as possible

• Document date, time, and nature of every warning, even
• ral warnings
• Written warnings may (usually should) include that further

violations may lead to “discipline up to and including termination”

• Progressive discipline

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Maintaining Proper Documentation

• Evaluate employees honestly, fairly, and accurately
• Avoid overly subjective terms
• A performance evaluation should not be a surprise to the

employee:

Problems with inflated past performance reviews

• Meet with the employee, review the evaluation, have the

employee sign the evaluation, and allow employee to provide comments

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Discrimination/Retaliation – Is Employee Protected Based On:

• Race?
• Sex?
• Religion?
• Ethnic group?
• National Origin?
• Ancestry?
• Union organizing or
• ther concerted activity?
• Disability?
• Marital status?
• Pregnancy or childbirth?
• Age (40 or over)?
• Safety complaints?
• Filing a workers’ comp

claim?

• Sex harassment claims?
• Taking FMLA leave
• Jury Duty?
• Prior discrimination

claim?

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Retaliation

• General trend toward broader protection against retaliation

in employment context

• Retaliation charges exceeded race charges filed with

EEOC for first time in 2010, trend continues

• Burlington Northern v. White (U.S. Supreme Court 2006):

− “[Title VII’s] anti-retaliation provision does not confine the actions and harms it forbids to those that are related to employment or

• ccur at the workplace. We also conclude that the provision covers

those (and only those) employer actions that would have been materially adverse to a reasonable employee or job applicant … [T]hat means that the employer’s actions must be harmful to the point that they could well dissuade a reasonable worker from making or supporting a charge of discrimination.” − Crawford v. Metropolitan Gov’t of Nashville (U.S. Supreme Court 2009): Title VII’s anti-retaliation prohibition protects employees who are witnesses questioned in an internal harassment investigation

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Reverse Discrimination

• Can the employee credibly claim

REVERSE discrimination?

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Defensible Reasons

• Have “similarly situated” employees been

terminated for similar conduct or pattern of conduct?

• If employee is treated differently, are the

reasons demonstrably legitimate from a business standpoint?

• Is the timing sufficiently separated from a

protected event to remove the risk of taint?

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Policies or Work Rules

• Are there published policies or work rules

that apply?

• Are we following the terms?

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Progressive Discipline

• Did employee get notice of what was

wrong?

• Did we give employee a chance to fix the

problem?

• Did we warn employee what will happen

if problem not fixed?

• Did we set a deadline?

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Public Policy

• Whistleblower?
• Statutory prohibition?
• Other policy claim?

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Termination Red Flags

• Criticism started after the employee

“complained” about something

• Termination is inconsistent with performance

evaluations

• The termination is a surprise
• No documentation, or very little

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Conclusions of Risk Assessment

• Whether to offer severance
• Managing security and safety issues

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Termination Checklist – Single Employee

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Best Practices

• The “Value of Getting the Story Straight”: Get direct

answers from those who are in the “know”

− Cat’s Paw Theory

• Create a termination format to be used for:

− Talking points − Action to be taken − Responding to EEOC/DOL/OSHA − Preparing interrogatories/discovery responses for lawsuits

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Best Practices

• Door A or Door B Approach

Provides an opportunity for employee to have a “voice” in what action will be taken Offering an alternative position/demotion may be more palatable to the individual rather than having no job at all (especially in this economy) If feasible, allowing the employee to “elect” his/her own

• ption (and having a signature to prove it) may assist

the Company should the need arise to defend claim later.

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Best Practices

• Exit Interviews

Have two people present Get the bad news now (if any) rather than later (work injuries, alleged discrimination, unpaid business reimbursements, potential complaints such as those known as “whistleblowing”)

− Stay consistent on reason for termination

For those who have restrictive covenants, remind them

• f their post-employment restrictions

− Consider severance agreement adding post-employment restrictions

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Practical Tips for Protecting the Workplace From Departing Employees

• Don’t be caught off guard: Put in place procedures for

handling employee departures

• Ensure former employee has no access to the employer’s

facilities or computers, including any type of remote computer access; no right to re-enter

• Ensure the prompt return of all company property and

proprietary information

Computer Fraud and Abuse Act, 18 U.S.C. § 1030

• Consider retaining security personnel to reduce the risk of

workplace violence

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Termination: Informing the Employee

• Be firm, honest, and brief

Inform employee that he/she is being terminated

• If appropriate, state the reason for termination

Be clear and concise Do not apologize

• Do not make any contrary statements

Pretext Avoid complimenting or counseling the employee

• Ensure compliance with applicable laws, such as

COBRA, disability, benefits

• Termination pay

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Restrictive Covenants

• Remind Employee of any post employment
• bligations:

Non-Competition: Prohibits a former employee from competing against employer for a specified period of time within a specified geographic area Non-Solicitation: Prohibits a former employee from soliciting an employer’s customers for a defined period of time Non-Recruitment/Anti-Piracy: Prohibits an employee from soliciting the employees of his or her former employer for a defined period of time Confidentiality and Non-Disclosure: Protects proprietary and confidential information, including trade secrets, pricing, customer information, etc.

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Enforcing Restrictive Covenants: Reasonableness? General Standard

A post-employment restriction is unreasonable if the restraint is greater than necessary to protect the employer’s legitimate, protectable interest or if that interest is outweighed by the hardship to the employee and the likely injury to the public.

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Enforcing Restrictive Covenants: Reasonableness?

• Scope of Activity Enjoined
• Geographic Restrictions
• Duration
• Blue Pencil Doctrine

Grammatically Severable Step-Down Provisions

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Post-Termination Risk Avoidance

• Only tell other employees that the individual is

no longer with the company

Defamation/Disparagement Invasion of Privacy

• Do not give reasons or explanations regarding

prior employees

• Job references

Retaliation blacklisting statutes

• Responding to unemployment claims

To dispute or not to dispute?

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Post-Termination Risk Avoidance

• Litigation hold notices

E-discovery Spoliation

− BP’s motion for monetary sanctions against Halliburton − Early dismissal for destruction of relevant documents (Peal v. Lee, 2010 Ill. App. LEXIS 760 (Ill. App. Ct. 1st Dist. July 30, 2010) − Default judgment (Gentex Corp v. Sutter, 2011 U.S. Dist. LEXIS 122831 (M.D. Pa. Oct. 24, 2011) − Jail time for civil contempt (Victor Stanley, Inc. v. Creative Pipe, 2010 U.S. Dist. LEXIS 93644 (D. Md. 2010)

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Termination Considerations – Multiple Employees

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Risk Assessment

• Reduction-in-Force

Clearly articulated process and selection criteria?

− Loss of business segment, cutting costs − Eliminating unnecessary/duplicative departments

Disparate Impact analysis: Employee challenges RIF selection (or other facially neutral policy or process) as having a disproportionate impact on employees of a particular protected class (e.g., race, gender, disability, age) when applied.

− Impact justified by business necessity? Reasonable factors other than age? − “Horse-trading”: Choosing alternate employees for RIF to prevent disproportionate statistical impact

Federal WARN Act, State Mini-WARN Acts

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Pre-RIF Actions

• Identify justification for

RIF

• Test that justification
• Develop a business

plan

• Evaluate alternatives
• Freeze hiring,

promotions, and salary increases

• Consider laying off

temporary workers

• Work sharing,

reduced work weeks

• Reduction in

authorized overtime

• Rely upon attrition

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Methods of Selection

• Length of Service
• Job Elimination
• Salary
• Closing Plant or Entire Department
• Project or Client Assignment
• Skill/Merit

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Workers’ Adjustment and Retraining Notification Act (WARN Act)

• Who is covered by WARN

The WARN Act applies to employers who have 100 or more employees

• 60 days’ advance notice of:

Plant closing: employment site shutdown affecting 50+ employees in 30-day period Mass Layoff: employment loss of 500 or more employees in 30-day period, of 50-499 employees (if they constitute 33% of employer’s active workforce)

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WARN Act

• Written notice to:

The chief elected officer of the exclusive representatives

• r bargaining agency of affected employees;

Unrepresented individual workers who may reasonably be expected to experience an employment loss; The State dislocated worker unit; The Chief elected official of the unit of local government in which the employment site is located.

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• What goes in the notice:

The name and address of the affected employment site; A statement whether the proposed action is a plant closing or mass layoff; A statement whether the proposed action is temporary or permanent; The expected date when the individual employee will be separated; The job classification that may be affected; The expected date of the first separation and the anticipated schedule for making separations; The job titles of positions to be affected and the number of affected employees in each job classification; and The names of the union(s) representing the affected employees.

WARN Act

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WARN Act

• Exceptions

Temporary facilities and undertakings of limited duration. Strikes and lockouts. Natural disasters. Unforeseen business circumstances. Faltering business.

• Penalty for Compliance

Owing each affected employee backpay and benefits Owing each affected employee attorney’s fees and costs Owing the government $500 per day

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State Law Considerations

• State mini-WARN laws

California WARN (Cal-WARN)

− Expands WARN to cover business enterprises that do not employ enough workers to be subject to WARN − Expands WARN to RIF that involve smaller groups of employees

60 days’ notice

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Severance Agreements

• Background Of The Older Workers Benefit

Protection Act (“OWBPA”)

• Passed by Congress in 1990
• Amends Age Discrimination in Employment Act

(“ADEA”)

• ADEA prohibits employers from discharging

employees aged forty and over based on age

• ADEA prohibits discrimination against same group

based on age with respect to compensation, terms, conditions, or privileges of employment

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Waivers And Releases Of Claims Under The OWBPA

• OWBPA requires waivers or releases to be

“knowing and voluntary” meaning these elements must be met:

The waiver is part of a written agreement between employer and employee that is clear and understandable; The waiver specifically refers to claims arising under the ADEA; The employee is given something of value in addition to what he or she is already entitled to in exchange for agreeing to the ADEA waiver; The employee is advised in writing to consult an attorney prior to signing the waiver;

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“Knowing And Voluntary”

The employee does not waive the right to claims that may arise after the date the waiver is executed; The employee is given at least twenty-one days to consider the waiver (or forty-five days in the case of an exit incentive program or group layoff); and The employee is given seven days after signing the waiver to revoke it.

• “Knowing and voluntary” standard is strictly

construed

• Waivers should be drafted with the individual

employee’s level of comprehension and education in mind.

• Avoid “technical jargon” and “long, complex

sentences”

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Exit Incentive Programs And Other Employment Termination Programs

• OWBPA has additional requirements for exit

incentive programs and other employment termination programs

• Exit Incentive Program = voluntary programs

whereby two or more employees are offered additional consideration in exchange for their resignation and signing a release or waiver of claims

• Other Employment Termination Programs = a group
• f employees has been or will be terminated and

additional consideration is offered in exchange for signing a waiver of claims

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Exit Incentive Programs (Continued)

• Employees under either program must be given forty-five

days in which to consider the waiver or release

• In addition to other factors discussed above, release or

waiver must also disclose:

The decisional unit, i.e. a defined group from which employers decide who will and will not be offered additional consideration for signing a waiver; Any eligibility factors for program; Any applicable time limits; The job titles and ages of all employees eligible or selected for the program; and Ages of all individuals in the same “job classification” or “organizational unit” who are not eligible or were not selected for the program.

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Credit Information

• For those you who require CLE/CPD or HRCI credits please

note the following states have been approved, California, Florida, Ohio and Texas; as well as Arizona, New York, and New Jersey through state reciprocity laws. CPD and CPE have also been approved. If you require credit in a jurisdiction not pre- approved we can assist.

• Please write down the affirmation code. Tomorrow you will

receive an email with a link to an online affidavit. Open this link and complete the form. Don’t forget to include the affirmation code on the form. Once completed, PDF a copy of the signed form to Robin Hallagan at robin.hallagan@squiresanders.com

• Remember to complete the webinar survey immediately

following the end of this presentation. You are required to complete this evaluation before receiving a certificate of attendance.

39 Offices in 19 Countries

BEST PRACTICES: FIRING – MINIMIZING RISK AND AVOIDING LITIGATION

June 25, 2013

Presented by: Tara A. Aschenbrand

tara.aschenbrand@squiresanders.com

Laura Lawless Robertson

laura.robertson@squiresanders.com