'Tis not the season to fire
No matter how positive a year-end staff cut might seem for the bottom line, consider these factors before lowering the axe.
The year’s end is fast approaching, and the pressure is on for employers to hit financial forecasts, particularly this year when many businesses have been negatively affected by the pandemic. Employee performance is also under the microscope, and it’s tempting to clean house and start the new year on the right track. Cutting low-producing staff might seem like a great solution, but think twice before terminating employees during the holiday season—even if you think they have to go.
Keep in mind employees are already stressed about covering holiday expenses, and the likelihood of finding another job before the new year is low. Holiday parties and family Zoom calls add fuel to the fire when a terminated employee is asked: “How’s work going?” Given the added seasonal pressures, employees are more likely to feel unfairly treated when fired around the holidays and become more passionate about contacting a lawyer.
Failure to fire
We often hear about employers who have already identified a nonperforming employee but procrastinated and delayed firing the individual. When the year-end temptation to cut staff hits, the employer feels compelled to move forward with the problem individual. With the holidays approaching, employees may overlook prior warnings and see things differently.
Employers, generally, should not delay terminations (what we call “failure to fire”) but rather approach the situation with some advanced planning as outlined below. When you have identified a problem or non-performing employee earlier in the year and made the decision to fire, do so right away rather than hold off until year’s end. The worst-case scenario is for an employer to delay a firing only to have the employee engage in some sort of protected activity that, as a practical matter, makes the separation much more complicated. The fired employee is more likely to see the action as a cause for firing and more inclined to contact a lawyer, who will look beyond the complaint for grounds to sue, including discrimination or wrongful termination.
How to handle a year-end termination
If you must fire someone in the last month or so of the year, consider offering an enticing severance package in exchange for a signed release of claims. Paying an employee’s average weekly wages as well as health insurance through the end of the year can go a long way toward diffusing any anger or fear. Consult an employment lawyer before offering the package and drafting the release.
If you do decide to fire an employee in December but delay the actual firing until January because you don’t want to be a Scrooge, document the termination reason and the date you made the firing decision, as well as the cause for the delay. This will help show justified intent in January, should the employee engage in some type of protected activity before the termination date. Having this documentation may change the plaintiff attorney’s perspective.
The employee mindset
Employees who suspect they are subject to a year-end termination may follow different courses of action. One is to do everything they can to stay employed. Unfortunately, even the perception of being treated unfairly during the holiday season can make employees more likely to lash out. That could mean seeking legal advice and documenting what they feel is incorrect or illegal behavior.
If an employee is fired, his or her legal counsel will look beyond wrongful termination to find other issues like wage and hour violations. The attorney also will advise the employee not to accept any severance package or sign a release of claims until counsel reviews it. The employee’s attorney is working to ensure the deal is a sufficient resolution to a particular situation. Understanding this will hopefully help the employer act accordingly.
COVID-19 and health insurance
The novel coronavirus pandemic and its economic effects have exacerbated employees’ stresses and fears, especially during this holiday season. Unemployment is higher than in years past, and the fear of contracting COVID without health insurance looms. As a result, a fired employee is even more likely in 2020 to feel like the termination was unfair and reach out to an employment attorney.
Health insurance coverage is more important now as part of any severance package than it was before the pandemic. Offering to cover health insurance for several months can go a long way toward appeasing a terminated employee. Insurance coverage often gives employers a lot of bang for their severance buck, as the cost of providing the benefit is usually less than paying wages for an extended period of time.
2020′s holiday worry
As 2020 draws to a close, we expect the season’s worst issue won’t be dealing with intoxicated employees at the office holiday party. With stress from the coronavirus pandemic, on top of normal holiday tensions, we instead see untidy terminations as this year end’s riskiest conduct and a timely topic for discussion.
Todd Stanton of Stanton Law advises small and medium-sized employers on employment law issues.