This one tip can save your business thousands, if not hundreds of thousands, of dollars.
The most important question when an employee has been fired is, of course, why? The employee wants (and deserves) to know the reason. Certain third parties also want to know the answer, too – you know, people like unemployment claim handlers, EEOC investigators, myriad other agencies, union reps, employee attorneys, judges and juries.
So how does your business communicate the answer to that question? Orally? Via HR? The employee's supervisor? Or worse, a vendor?
If your business is missing this one simple "must have" document for every fired employee, you're sitting on a ticking time bomb. And what is that document?
The dismissal letter.
It may go by several other names: termination memo, separation proposal, discharge summary, or dismissal approval, just to name a few. Several decades ago, some folks even referred to this ominous document as “the dossier.” Regardless what you call it, here's what your dismissal letter should contain, in no special order:
- All the reasons for dismissal;
- If the employee violated specific rules or policies, identify those rules or policies and (this is key) also identify when they were covered with the employee;
- Any previous warnings or discipline the employee received, relating not only to the reason for dismissal, but for any reason;
- Period of service the employee worked in your company or business;
- Effective date of the dismissal; and,
- Signature of the decision maker.
If you have all this information in a stand-alone document, then you've created "the script" that any person acting on behalf of your business can rely upon when answering that inevitable question why this employee was fired. You've also created the single source document that any external person can review and fully understand why the termination occurred. Best of all, employers (and their attorneys) can use this document as "Employer's Exhibit 1" in virtually any legal proceeding where the validity of the termination is in dispute.
OK, before you naysayers start poking holes, let's explore deeper why you want a dismissal letter with all the recommended information listed above. The benefits of "the script" will become obvious.
First, remember HR’s Prime Directive: "If it ain't documented, it didn't happen." Pulling this supporting information together requires a bit of careful study and preparation, which allows for a closer look at not only this particular employee's issues, but also the business's practices in general. That look may confirm good practices or uncover deficient ones. And you’ve already done the legwork, up front, collecting the necessary supporting information for a termination in case you are asked to provide it later in a legal proceeding. You don’t need to attach every single bit of supporting paperwork to the dismissal letter, but it’s now readily available whenever you need it. Sweet.
In addition, requiring someone to take the time to critically review performance documentation, policy coverage, and other papers necessary to support a termination reveals any flaws now (before the termination decision) and makes more sense than trying to reconstruct the termination years later in a deposition when you're under oath after hours of painful interrogation. And if you do face a deposition, you’ve got a comprehensive go-to document right in front of you! Employer attorneys love that.
Second, having this go-to document as a virtual script will discourage your managers (or consultants) from providing different reasons for termination later. And changing explanations for termination are the quickest way to create a factual dispute over the issue of pretext, which can win you a trip to the witness seat in front of a jury. See, for example, the Cicero case discussing shifting justifications for adverse employment actions.
Third, having a decision maker personally sign the dismissal letter requires that individual to consider collectively the employee’s entire work history, any prior discipline and performance reviews, and the specific conduct that raises the specter of termination. That contextual review gives the decision maker the appropriate facts to make a fully-reasoned choice. And you know, there’s something special in the quality of a review and subsequent decision when that an individual has to actually sign a document reflecting the decision. Decisions confirmed in a signed document tend to carry more gravitas than those based on a simple head nod or an oral “OK.”
For those of you who automate the review and approval process for terminations, yeah, you can use digital signatures. (By the way, we do still have faxes and scanners to transmit signed documents....) But in the end, I prefer to see an actual John Hancock on a piece of paper that explains a termination to a third party. So does a judge or jury.
Note: I am not a fan of having the employee’s complete chain of command sign off on the dismissal document for a couple reasons. With each signatory, you increase the number of potential witnesses in later legal proceedings; and you also inject potential “Cat’s Paw” issues into litigation, which can sometimes preclude summary judgment. For example, see the Staub and Chambers cases. On the other hand, you might consider adding an extra signature line with “reviewed” or “concurred” on your document, which would allow someone besides the decision maker (perhaps HR, who tend to be more sophisticated witnesses) to testify in certain forums about the circumstances behind a dismissal.
Fourth, having all the reasons in writing before dismissal commits management to the reasons for dismissal. It gets everyone on the same page. It locks down your position. And that’s a good thing. Some might argue that putting everything in writing before dismissal removes flexibility later if the reasons for dismissal start looking weak. But if that’s the case and the stated reasons begin to unravel, maybe you shouldn’t have fired the employee in the first place, right?
The final reasons for using a comprehensive dismissal letter are an amalgam of all the above. A stand-alone, factual explanation why you fired an employee suggests that someone took considerable time and effort to make a reasoned decision – even putting it in writing. It exudes fairness and due process. Compare that with the one-line letter you sometimes see, “Your employment is hereby terminated effective [insert date] for performance.”
Which document would you prefer to use to represent your company’s actions? Which document do you think is more persuasive? Which document do you think might dissuade a fired employee or his attorney from pursuing legal action against your business?
So, the next time you’re asked to weigh in on an employee dismissal in your organization, think how you’d like that decision to be viewed externally. Is your documentation for dismissal complete? Does it tell the whole story? Does that story pass the smell test and appear justified to a casual reader who doesn’t know anything about the employee or your company? Or is it just a one-liner begging for further explanation?
If you’ve created “the script,” congratulations! Be sure anyone needing to explain an employee’s termination knows to stick to that script, too. You’ll be glad you did. And that ounce of prevention can save you a pound of aggravation later, as well as potentially thousands of dollars in litigation and other costs.
Chris Bourgeacq is an experienced labor & employment attorney and a seasoned “script writer.” You can contact him at firstname.lastname@example.org or visit his website at cbqlaw.com.