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Protecting Your Business when Firing an Employee

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These best practices will protect you, your managers and your business from lawsuits when firing an employee.

Firing an employee is never a fun topic to think about, but taking the right steps can help your shop avoid a costly lawsuit, or other negative reactions from a terminated employee.

Doug Grills, owner of AutoStream Car Care Center in Baltimore, knows just how important this process is. After building his business to five locations with 30 employees, and over $5 million in annual revenue, he’s emphasized putting a procedure in place to protect his business in case he needs to terminate an employee.

The most important thing to keep in mind, Grills says, is that you need to focus on how you manage and discipline employees long before letting them go. By documenting previous indiscretions, and making sure you have all potential liabilities squared away before firing the employee, you can greatly reduce your chances of a fallout from your departed employee.

It’s never going to be easy terminating an employee, Kelly Ryan, owner of Ryan Law firm, says, and you have to effectively manage the process. Ryan has worked with many shop owners at his law firm, and has seen many of them make the same mistakes when it comes to handling and, if necessary, terminating their employees.

“Employee lawsuits are extremely costly,” Ryan says. “Many shop owners believe their focus should be on marketing, sales or getting cars in and out. They also need to focus on the employees—you can’t take shortcuts in that process.”

Here’s everything you as a shop owner need to keep in mind before, during, and after the termination to avoid any sort of litigation pressed against you.

 

Before the termination:

Clearly outline the employee’s roles.

Grills says reducing liability as an employer all starts from having a thorough handbook that details the employees’ roles, and their main responsibilities.

“You should have a policy and procedure manual that talks about your practices and your procedures, and you make sure that every employee reviews that when they’re first brought into the company,” Grills says. “Have them sign an acknowledgement that they’ve read and understand policies and procedures, then keep that in their employee file.”

Everything that’s encompassed in the employee handbook should capture anything that could be a pitfall if a fired employee later says they’re unclear about why he or she was fired. The employee should fully understand what his or her expectations are, Grills says.

If he or she is slipping, or falling short of any of these roles, Grills says you can work to train the employee, and give him or her constructive feedback long before reaching the point of termination.

 

Properly document everything.

One of the many things shop owners that Ryan has worked with forget to do is make sure they document pay properly. If you’re not paying an employee proper overtime for instance, then the termination will be wrongful because it will be in retaliation of his or her lawful right to receive wages.

Additionally, you should be sure the worker doesn't have any outstanding workers’ compensation claims. Firing an employee who has filed a claim, intends to file a claim, or has testified in a workers’ compensation hearing could be considered workers’ compensation discrimination.

Grills says you should have complete, detailed and up-to-date documentation of employees from the start of employment onward.

It’s also vital to maintain memos of verbal warnings, or any written warnings that you’ve had with an employee. Grills says to make sure you consistently outline the steps of progressive discipline you’ve attempted to take as you walk through that process, if you need to reference it later.

 

Fire them for legitimate reasons.

As a business owner, you cannot fire somebody for discriminatory reasons. It’s unlawful to fire employees because of their membership in almost any racial, religious or ethnic group, or because of age, disability or veteran status.

If your employee committed a crime, such as stealing, Ryan says you need to call the police. Ryan says that calling the police is the best way to protect yourself, and put this in the hands of law enforcement.

Grills says the firing should be solely based on performance issues.

 

During the termination:

Keep it short and sweet.

Most terminations should not take more than 45 seconds, Ryan says.

Many employers, he says, try to get too detailed with their reasons, and end up having longer discussions than necessary, which opens the door up to potential legal issues. The only times you have to justify the reason you’re firing someone, Kelly says, is if a lawsuit is filed.

“If you give them a reason, then you have to defend that reason,” Ryan says.

Giving these reasons opens the door up for litigation. So, Ryan says, the best line to use when firing an employee is, “it’s no longer in our best interest to continue the employment relationship.”

And you shouldn’t have to defend your reason to an employee if you’ve taken the necessary steps beforehand. At the point of firing, Grills stresses, the employee should already know they’re being fired, because you’ve taken the steps to warn them.

“It’s hopefully a clear-cut, brief conversation you’re having” Grills says. “If you’ve done all this communication up front, it’s usually pretty understood.”

 

Be polite and professional.

While you should keep your firing brief, Ryan says you need to be polite and professional, and not make a snap decision. If you fire someone in a rage, or if you’re angry, Ryan says he can almost guarantee you’ll get sued, or the employee will have some type of negative retaliation.

 

After the termination:

Take care of any keys, codes, etc.

At the termination meeting, the employer should ask the employee to turn over all company property they have in their possession. This may include key cards, keys, and other devices used for employee access to the shop’s premises.

Some of the most common things that Ryan says shop owners need to think about are changing passwords to telephones, voice mails, and any passwords for computers. If your shop provides tools to your employees, Ryan says you should have an inventory system to make sure they’re all safely returned.

 

Don’t discuss components of the termination with staff.

When you’re communicating with the rest of your team that you let an employee go, Grills says to make sure you don’t give too many details. You should simply let the staff know that you had to make a change due to business requirements.

“Most of the time, you find that employees that are still around have seen this employee’s issues, and understand why they’re being let go,” Grills says.

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