When in Doubt, Document
So if, after doing due diligence and following the above steps, the employee fails to perform up to standard and you determine that they have to be let go, “in the firing process, the key is documentation,” Berenson says. “If you can document the rationale for the firing, you’re usually going to be fine [legally] post-termination.” For this reason, you should have some sort of system in place to document employee performance.
The easiest way to ensure consistency in documentation is to institute a regular employee review system. Fleming reviews employees after their first 90 days, then again at 180 days, and once annually thereafter. His company conducts peer- and self-evaluations as well, to gather different points of view. “Everyone gets feedback on their strengths and weaknesses. Most will have four or five people review them, and we share [that feedback] anonymously,” he says. The main goal of these reviews is to improve performance, but they also serve as a performance record that can be referred back to later, if necessary.
Because of this, Pickell, who also conducts annual reviews, says that it’s important to tell employees what they are doing wrong, specifically, and to then document that. “A lot of managers have a tough time saying negative things about people,” he says. “But you can’t be rating an employee all sevens and eights and then expect to be able to fire them for underperforming.”
According to Berenson, repeated infractions should be formally written up and offered to the employee to sign. A meeting such as this also gives the employee a chance to offer an explanation on their own behalf, as well as to offer recommendations (which should also be documented) for solving the problem. “If they’re always late, use too many sick days, don’t follow directions or meet goals — that needs to be written up. If [the employee] refuses to sign, then check off that they refused to sign and file it away.”
The U.S. Equal Employment Opportunity Commission (EEOC), he points out, is one of few government agencies (like the Internal Revenue Service) where you’re guilty until proven innocent. “If someone complains that they were fired for an illegal reason, the EEOC presumes that’s valid and they will now ask you to provide your reasons for firing,” Berenson says. “It can be very burdensome and expensive, so the key is good documentation.”
Many companies have a “three strikes and you’re out” policy when it comes to employee infractions. If you have a similar policy in place, it is important that each “strike” be documented in the manner Berenson describes.
Don’t Go It Alone
In the unfortunate circumstance that an employee must be let go, it’s a good idea to have someone else — usually a co-owner, or a trusted key employee, in the case that there are no other owners — in the room as a witness when the termination takes place. “Don’t fire anyone behind closed doors,” Berenson says. “Often they become very angry, and afterward might file a claim against you, so it’s important to have a witness there.”
Do Unto Others …
Though it is by no means required by law, many remodelers pay severance to employees who are laid off for economic- or performance-related reasons — though not in instances when employees are fired for “cause,” such as theft, unethical behavior, or insubordination.
The rationale behind paying severance to terminated employees is simply a variant of the golden rule. “If someone quits, then I require them to give me two weeks notice. So I give them the same if I let them go,” says Fleming, who offers two weeks’ severance to all terminated employees. “It also sends a message to the rest of the employees that I’m going to take care of them. I’m not going to leave them hanging.”
This can be a particularly important message to deliver in a time when many remodelers are responding to the economic slowdown with layoffs.
Pickell offers one week of severance for every year of employment. Scott, though he doesn’t pay severance outright, will give employees at least two weeks’ notice if layoffs are unavoidable.
“Even if it might not happen, we’ll go to our teams and let them know it’s a possibility,” he says. “We’ll go to individuals at the bottom of the list and let them know individually, too. It’s the same as the two weeks notice that we would require of [them].”
Legal Advice
Employment practices laws vary from state to state and can be very nuanced and complex. It’s a good idea to establish a relationship with a legal professional who is well-versed in your state’s employment practices laws.
“I wouldn’t make a move on releasing people without talking to an HR lawyer,” says Pickell, who subscribes to an HR consulting service to help with employee-related questions. The service he uses, MRA ( www.mranet.org), allows him — for a small monthly fee — to simply place a phone call to get answers to human resources questions that possibly have legal consequences.
Fleming maintains a relationship with a local attorney who specializes in employment practices law. “Any time we have a problem or think we may need to terminate an employee,” he says, “we’ll call [the attorney] first and ask his advice.”
And that’s sound counsel for any remodeler interested in protecting his business.