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REALTOR® ASSOCIATION EXECUTIVE
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 Legal Update: Fire Without Fear By Laurie Janik Protect your association from employ-ment litigation and gain the confidence to make the termination decision. Terminating an employee is a serious matter and it’s never easy. Whether you’re dissatisfied with performance or need to trim the association’s budget, the financial and emotional impact on the employee, not to mention the impact on the association and the remaining staff, is enormous. And then there’s the poorly handled firing that can turn even the best intentions into a nightmare of litigation. Despite these concerns, you should not be fearful when you need to make changes in your staff. Here are some ways to minimize your association’s legal risk, while still treating the employee humanely. The Decision: Ask yourself, is this termination lawful? When you need to terminate an employee, first consider whether a written employment contract between the association and the employee exists. Contracts are common among top executive staff, but occasionally exist for others. If there is a contract, read it carefully and act in accordance with its terms. Ignoring contract terms can have expensive consequences. For example, when one association decided to fire its association executive on the spot, disregarding the six-month notice requirement in the employment contract, the resulting lawsuit was difficult to defend and ended in a settlement. In addition to minding the language in employment contracts, watch the wording in your employee handbooks. Some courts have construed employee handbooks to be employment contracts. NAR was once the defendant in such a case. Fortunately, the court held that the plain language in the front of NAR’s handbook, which clearly stated that it should not be construed as a contract, meant what it said. Have your attorney review your handbook to be sure the language is sufficient under your state’s laws and to ensure there is no other language that inadvertently creates an employment contract. The second issue to consider in the decision to terminate is whether the decision is based on un-lawful discrimination. Courts have generally said that un-less there is a written employment agreement, an employee can be fired for any reason or no reason, so long as there is no unlawful or discriminatory basis for termination. Examples of unlawful terminations in-clude firing an employee for work absences due to jury duty or because he filed a worker’s compensation claim. Examples of discriminatory termination include firing an employee based on race, color, sex, religion, age, national origin, or disability. State and local laws often prohibit discrimination based on other protected classes as well, such as marital status and sexual orientation. If your decision to terminate is not based on discriminatory reasons, but the employee falls into a protected class, it’s possible that the employee will claim discrimination by the association. In such an instance, a good paper trail of warnings and other documentation that demonstrates the lawful reasons for termination will be invaluable. Once you’ve decided that termination is the right and lawful course of action, don’t delay. Letting inadequate performance or poor work habits go too long will only make the situation worse in terms of the impact on your association’s operations and the morale of staff. In addition, if you’ve been properly discussing performance problems with the employee for a while, and, of course, documenting those discussions, the employee may be feeling a great deal of stress. He or she may feel relieved to have an opportunity to move forward. The Planning A termination plan ensures that procedures are followed consistently. Have an association termination plan that allows the employee to leave with dignity and provides the association, its staff, and its property with adequate protections. Your termination plan should be consistent for all terminations. If it is not, you increase the risk that your association will be sued by the employee for discrimination. Your association’s termination procedure should detail the following considerations: Where and when. Choose a time and place for terminations that lessen the employee’s discomfort and minimize exposure to his or her former colleagues immediately after the termination. Termin-ations should never take place in an area visible to or routinely accessed by other employees. Witnesses. Having another person from your association’s management present at the termination may prevent the employee from later claiming that you said or did something discriminatory or otherwise inappropriate. Protections and precautions. Protect yourself, staff, and association property from an employee who becomes hostile or violent when terminated. Do not terminate the employee after-hours unless at least one other association manager is present and aware that you may need help. Consider alerting security personnel when a particularly troublesome termination is going to take place. Protect the association’s business interests by having the terminated person’s e-mail and computer access shut off immediately so he cannot destroy or take association files and information or misuse your association’s e-mail system. Take precautions to ensure that the employee returns all property that belongs to the association. Since there is no legal obligation to provide a terminated employee with severance pay (unless the employer’s policies create such an obligation) associations can condition severance on the return of all association property. However, associations cannot hold back wages owed or payment for unused vacation time that the employee has earned. With respect to COBRA (the government mandated access to temporary continuation of health coverage at group rates), the association must tell the employee of his or her rights to obtain coverage, but the association has no obligation to pay for the coverage. Again, the association could offer to pay for coverage under COBRA for a specified period of time and condition that benefit on the return of association property. Announcement to staff. The termination may cause remaining employees to be fearful for their own jobs, anxious about how the former employee’s workload will be handled, or just plain curious about what happened. Determine in advance how you will announce the termination. Keep it short, simple, and true. For example, “As of this morning, our education director, Jim Smith, is no longer employed by the association. Any members calling to inquire about education programs should be directed to Susie Jones at extension 1234.” Tell remaining employees how to respond to telephone calls for or other inquiries about the terminated employee. To avoid defamation claims, ask your association’s attorney to review your announcement in advance. There should be no oral statements or discussions about the termination that contradict or go beyond the official announcement. Severance and other benefits. Be prepared to explain your association’s severance package and any other benefits to which the terminated employee is entitled, such as COBRA elections, final salary and vacation payments, and retirement plan options. Provide the employee with all information in writing at the time of termination because just-terminated employees may be so distressed that they cannot focus or retain details. Releases from the employee. Consult your attorney about having the employee sign releases, such as a waiver of the employee’s right to sue the association for discrimination in exchange for a severance package. Practice your delivery of the news and think through how you will respond to anything the employee may say or do. Termination is a major event in the employee’s life and has the potential to bring legal liability to the association. You should not just “wing it.” Termination Day Be firm, calm, and allow employees to leave with dignity. Even a termination based on the most clear-cut decisions will be difficult for the employee and for you. You will want to handle it firmly, calmly, and humanely. Here are a few do’s and don’ts that will help you achieve these goals: Don’t publicly humiliate the employee. Always allow fired employees to leave with dignity. Do this because it is the right way to treat people and because employees who have been fired tend to press charges if they feel they were embarrassed, persecuted, or otherwise treated unfairly during the termination process. Don’t apologize. You may feel sorry for the employee, especially when you see his reaction to your bad news. Nevertheless, you should not apologize because you have not done anything wrong and you certainly don’t want to create the impression that you have. Don’t lie about the reason for termination. Always tell the truth about why you are firing an employee the first time you say it. If the termination is for performance reasons, don’t try to soften the blow by creating a less personal or critical reason for the firing. You do not want to explain to a jury why you told the employee one thing and are now asking them to believe that something else was the “real reason.” Don’t argue. Employees sometimes try to provoke the person terminating them. Don’t get embroiled in arguments over the decision or what “really happened” in a particular situation. Arguing will increase the likelihood your association will land in court. Don’t take sides. Never indicate that you disagree with the decision to terminate by saying things like: • “I don’t agree with the decision . . . but the powers-that-be want you gone.” • “I tried to stop them from doing this to you.” • “If this were my call, I wouldn’t do it.” Don’t discriminate. Even if your reasons for termination are well documented, don’t say anything that smacks of discrimination, such as: • “We know that a lot of people your age have difficulty with computers,” or • “People like you often have a tough time fitting in.” Do explain your decision. Do this because the employee is entitled to know the reason for the termination, and because knowing why will decrease the likelihood that the employee will draw the conclusion that it is because he or she is older, or Hispanic, or female, or Jewish. The reason should not be a surprise to the employee, unless the termination is due to an unannounced reduction in force. Do stand firm. Employees may ask you to re-consider the decision to terminate. In such in-stances, stand by your decision firmly because you know that this decision was made after serious thought and adequate warnings. Appear calm and compassionate but firm, and be honest but guarded. Do count on your words being used against you in court. Terminating an employee can be uncomfortable and as a result, you may say things you don’t mean. Discriminatory, threatening, or disparaging remarks may very well cost your association dearly. Do take notes. Take brief notes during the meeting and write up more detailed notes afterwards. Your firing meeting notes should cover: 1. What the employee was told 2. What the employee said 3. Whether the employee agreed with you about his or her poor performance (if the termination is performance-related) 4. Whether the employee disputed the reason you provided for the termination (a clue you may be hearing from his or her lawyer) 5. The names of all individuals present, and, if possible, the signatures of any other association employees present indicating agreement with your summary of the meeting. Terminating an employee is not easy for anyone involved and brings with it the potential costs of defending a lawsuit or an expensive settlement. And no one likes to be the cause of someone else’s grief. Yet sometimes the right business decision is to let someone go. When that’s the case, make sure that your decision is based on lawful reasons and your plan is well thought out. Add to that a good measure of compassion that preserves the employee’s dignity. This is the right way to do a tough thing. The information contained in this article should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law. TIPS FOR THE STAFF OF ONE Even if you’re not likely to be in a position to fire an employee, you should en-sure that your board of directors and elected leaders are well versed in the fair and legal termination guidelines detailed in this article. Also, any single-person staffer can use the humane firing tips in this article if they or their leadership has elected to release a volunteer from committee service. Laurie Janik is the general counsel for the National Association of Realtors®. She can be reached at ljanik@realtors.org or 800/874-6500.counsel for the National Association of Realtors®. She can be reached at ljanik@realtors.org or 800/874-6500. Contact NAR’s legal dept. at 800/874-6500. Winter 2004 Click here to Send feedback on this article. |
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