How To Fire Someone And Not Get Sued

by Aug 27, 2019Leadership

And be ready if it does happen

Let’s start with a confession. I have to admit that I fibbed a bit: chances are you will get sued if you fire someone eventually. But there are things you can do to avoid lawsuits and be ready if one does happen.

Almost 50% of the cases in the US court system are related to employment law at the moment, so your odds aren’t good. It’s almost as if there’s a group of lawyers and employees who make a hobby or a side gig out of this. Their whole gambit is that by bringing a lawsuit, the company will settle out of court–which is often the case. Lawyers have become really smart about coming up with lawsuit amounts that are at or just below what it would cost a company to go to trial.

I remember the first time I got sued after firing someone. I was offended. But when we researched the employee’s history, we realized that this same employee had been fired by her three prior employers. And each time, she sued the company after the fact. I wish I had known that before I hired her, but you can’t ask that in an interview.

The good news was that I had done everything by the book when I fired that employee–which is what you need to do if you want to minimize your exposure to a possible lawsuit of your own. If you want to try and avoid being sued, consider the following steps:

Treat the person with respect. 

I have written before about the one question you need to ask before you fire someone–do they know they are in trouble? If your employee is surprised when they’re fired, you’re not treating them with respect and integrity. You need to let people know where they stand–even if it requires you to deliver some tough love or radical candor. If you lay that kind of groundwork combined with data about a person’s performance, it’s much harder for someone to deny that they deserve to be terminated. The person still won’t like it–no one likes to be fired, after all–but at least they know why.

Write It Down 

When you are headed down the termination path, or even when you just start – you need to document. That means regular reviews and notes to yourself after every performance coaching session. One of the things I usually did when I was at the written warning stage was to make the employee sign to acknowledge they received the document. They usually wouldn’t agree and I didn’t ask for that, but there needed to be a trail that indicates you did things correctly. Does this sound like you are building a case? Well, you are. And you will be happy you did if you ever end up with a lawsuit.

Pay a reasonable severance. 

Severance for someone we fired for non-performance seems crazy, but it is one of the best ways to avoid an expensive and time-consuming lawsuit. When it comes to thinking about what you should be willing to pay someone you’re firing, consider the amount of time it would take for that person to find an equivalent job. If it’s an hourly employee who works at a moderate level, it might take them a month or two to land a new job. That’s now your baseline. A more senior person, however, might take six months to a year. But yet again, you have an obligation to provide them with a severance to make up at least most of that gap.

Have a Prover in the Termination Meeting. 

When it comes time to terminate the employee, make it a short and sweet in-person meeting. This is not the time to explain why it’s happening. But you should hand them a set of detailed documentation that lays out what’s going to happen with their termination–including how you will pay out their severance. You should also have a third person attend the meeting as well, someone like your HR person, to observe the meeting and make sure the employee can’t dispute what you covered in the meeting.

Get a Liability Release

The most important part of the documentation is what’s called the “release.” This is where you ask the employee to release the company from any liability or threat of a lawsuit in exchange for receiving their severance. They also must agree not to disparage the company. Some people might ask for some time before they sign it so that their lawyer might review it. That’s ok, but you shouldn’t wait any longer than a week or so and offer no severance until they sign. That’s why it’s also important to pay out the severance over a period of time instead of a lump sum all at once. That way if someone violates the terms of their release, you can withhold severance payments in response.

The point of all this documentation is that some lawyers may decide not to take the case against your company if you have laid out the generous terms of your severance. It becomes like a barrier. That’s why you might not be able to prevent every lawsuit from a terminated employee, you’ll greatly reduce your exposure.

So, while no one ever likes to fire anyone, or be fired, it’s going to happen. When it does, make sure you have best prepared yourself and your organization to handle the aftermath.