Terminations and layoffs: They're NOT tomatoes and tomahtoes

Employee termination is not a task your practice should take lightly.

Employee Layoffs
Employee Layoffs

No matter how long you’ve been a manager, chances are you still hate terminations.

First of all, you’ve probably heard (or been through) horror stories: wrongful termination lawsuits have risen over 260% during the past 20 years, and the median employer settlement payout five years ago was $326,640. Not a sum most employers can afford to take lightly – in fact, not a sum small practice managers want to think about at all!

Then there’s the emotional aspect, and the fact that terminations can be a painful experience not only for the employee, but for you as a manager. Whether you feel relieved, nervous, guilty, angry, or all of the above, it’s not uncommon to look for a way to soften the blow and lessen the stress all around. After all, wouldn’t it be better to just skip the uncomfortable talk about poor performance or attitude problems, let the employee save face, and call it a layoff instead?

The short answer is no, and the slightly longer answer is absolutely not. While this sounds like an optimal and even kind answer, one aimed specifically at preventing anger and embarrassment, it is a terrible mistake any time the employee is being let go for the reasons of poor performance or unprofessional conduct. This little “layoff” mislabel may feel like just a generous gloss-over, but what it actually does is establish an inaccurate record that could, in theory, provide evidence of wrongdoing against you.

Employee Layoff MediumWhat a Layoff Really Means…and Why That Label Won’t Work for Terminations

The trouble is that the term “layoff” has a quite specific meaning. By definition, a layoff means your business must let go of one or more employees for a business reason or because of financial circumstances. Downsizing often prompts layoffs, as might any other reduction in budget or financial circumstances. The majority of layoffs involve more than one employee. And here’s the key difference: when you let employees go during a layoff, you are eliminating their position, not hiring anyone to replace them.

This makes a difference if your “laid-off” employee dreams up a suit against you. If you rehire for their old position, even three to six months later, you’ve given that former employee legal ground to argue that their layoff was a pretext for your desire to get rid of them. They may make a case that your real reason involved their race, age, pregnancy, religious views, sex, or a similar factor. After all, you re-filled the position so quickly that it obviously wasn’t a real layoff!

When considering the issue in this light, it’s easy to see how faux layoffs can get employers in trouble. After all, you may have had the most legitimate reasons in the world for letting this employee go in the first place – but if you called the termination a layoff and failed to document the actual, performance-related reasons, the court already sees you as a liar.

Don’t Lay the Groundwork for Lawsuits Against You

As in every other circumstance, honesty is the best policy when it comes to employee terminations. As an employer, you are giving up your most crucial legal advantage – the ability to invoke solid documentation in your own defense – when you fail to properly record your reasons for employee termination.

Instead, you want to show in writing that you had a solid, legitimate basis for all management decisions, and that you made all appropriate and reasonable attempts at progressive coaching. Your mother may believe that your word is your bond, but the court needs proof.

If you have documented your entire management process with a terminated employee – and didn’t call the termination a layoff – then your outlook is far brighter if the former employee’s lawyer ever calls. Now you can prove that Mary repeatedly didn’t come to work on time (here’s a list of seven separate instances and your coaching actions afterward) or that Gus was rude to patients (here’s a couple of his comments, and even notes about who witnessed them). This kind of termination leaves you in far safer territory.

About the Author

Paul Edwards is the CEO and Co-Founder of CEDR Solutions. Since 2006, CEDR has been the nation’s leading provider of individually customized dental office policy manuals and HR solutions, helping dentists successfully handle employee issues and safely navigate the complex and ever-changing employment law landscape. Have a tough termination looming on the horizon? If you’d like a little clarity or guidance, just give CEDR a call at 866-414-6056 or visit www.cedrsolutions.com. Our HR experts will help you solve one issue for free.

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