By Jack Gooding, Chapter 13 Standing Trustee for the Eastern and Western Districts of Arkansas

Terminating an employee produces conflicting emotions. I know it is the right thing to do for the operation, while at the same time; I have a personal relationship with my employees. I understand the huge impact losing their job will have on their family. I am also mindful of the significant investment the Trusteeship has made in time, effort and money associated with developing a team member. The US Department of Labor estimates the average cost of a bad hiring decision can equal 30% or more of the individual’s first-year earnings.

If I come to the conclusion that termination is necessary, I try to follow two rules.

1. Never let the firing be a surprise to the employee.
2. The employee’s personnel file must stand on its own in supporting the decision to terminate the employee.

GENERAL LAW OF EMPLOYMENT

Employment law is generally left to each state to regulate and enforce, however, there are numerous federal statutes and the United States Constitution, which prohibit discrimination based upon race, sex, religion, national origin, physical disabilities or age. Generally, if the employee is not a member of a union, has not entered into a contract with the employer, and there is no allegation of discrimination, the courts look to the laws of the state of said employment.

The purpose of this paper is not to give an exhaustive discussion of employment laws. There is neither the time, nor space to cover topics, such as: discrimination, harassment, retaliation, managing social media, miscalculation by the employer of back pay, inaccurate time keeping and whistle blowers.

Both of the states where I am licensed to practice law, follow the law of “at-will employment”, which give an employee an opportunity to quit at any time, and gives an employer the right to terminate at any time, without cause. I still find it reassuring to have my personnel files, Employment Manual and office procedures reviewed by local council, from time to time, especially prior to terminating an employee.

If you have an Employment Manual, which sets forth a stated procedure for discipline or termination, the employee is entitled to expect that procedure to be followed. A regular review of the Employment Manual, by the employer and outside counsel is absolutely critical.

Rule # 1. Never let the firing be a surprise.

CLEARLY COMMUNICATE TO THE EMPLOYEE THEIR PERFORMANCE IS UNACCEPTABLE

How do I alert an employee to his or her performance deficiencies?

1. Annual Evaluations

Evaluations are a two edged sword. They can be a valuable tool, but only if you are willing to be honest and potentially hurt some feelings.

The evaluation process, if used correctly, can put the employee on notice of underperforming areas, and encourage him or her to raise expectations and reach for a higher standard.

Whatever evaluation form or process you utilize, it must accurately measure the employee’s performance. The process must directly communicate those results to the employee, giving them a clear understanding of how their performance is perceived by the Trustee. The evaluation form we currently use includes a question the evaluator is required to answer. Is this employee promotable and if not, why?

The evaluation process, if used incorrectly, can give the employee a false sense of security, leaving an employee with a belief that their performance is acceptable and that no change is necessary or forthcoming.

Short form evaluations, which merely give a grade of pass/ fail, give employees no indication of how well or poorly their performance is actually rated by management. An evaluation should provide the employee with specific examples of good and poor performance examples.

If an EEOC complaint is filed and an inquiry started, one of the first documents to be requested by the examiner will be all prior evaluations. The examiner is looking to determine whether, in prior evaluations, the employee was notified of prior poor performance or if the employee received a token “acceptable” or “superior“ rating.

2. Quantitative Data

If a decision to terminate an employee must be made, I always want to see data supporting the decision. I want valuable data that is not discriminating, biased or influenced by personalities. I want data that clearly measures the employee’s performance. Quantitative data could consist of attendance records, emails to and from the employee, personnel evaluations, written complaints, and/or job performance markers.

For Trustees: Chapter 13 Trustee Rick Fink’s office created a wonderful software concept for tracking, notifying and measuring errors, building on a software system created by Bill Guelker. Their concept allows Trustees, within the BSS/TNG system, to create an error collection process, based on established “mistakes”. The tool is further supplemented by programmable “error tickles” giving immediate feedback to the employee of a possible error. The feedback gives the employee an opportunity to recognize, and immediately correct the error prior to audit or causing disbursement havoc. More importantly, it, offers the employee the opportunity to change his or her procedures and avoid making the same mistake in the future.

This software gives immediate benefit of feedback to the employee, supervisor and employer of the frequency and type of errors being “caught”. When compiled in a report, using the crystal reports, it also gives valuable data to compare and track employee performances. The Error Notification system gives the employee accurate and impartial feedback, and provides management with a valuable tool for measuring accuracy and productivity, without prejudice or bias.

I like the John E. Jones quote Rick used in a recent presentation:

What gets measured gets done.

What gets measured and fed back, gets done well.

What gets rewarded gets repeated.

3. Performance Improvement Program (PIPS)

As a last resort, we use a Performance Improvement Program to resolve persistent performance deficiencies and alert the employee, in writing, that their continued employment is in danger. In a confidential setting, we present to the employee a written report arranged in four sections to clearly identify and communicate:

a. Performance Deficiencies

Be specific and accurate. Issues may be: poor attendance, abusiveness to other employees, an inability to complete assigned tasks timely, occurrence of repeated errors and or an inability to perform the job duties as defined in the employee job description.

b. Expectations

Clearly identify and explain specific performance expectations and compare those expectations to the employee’s actual performance. Remember, ambiguity and vagueness can work against an employer upon termination. Specific references to the employee’s Job Description, Procedure Manual and the Employee Manual are helpful.

c. Plan of Action

Clearly document the specific actions, activities, steps and/or processes the employee must follow to reach the expected performance level. Include definitions of measuring criteria and timelines given to reach the acceptable performance levels. Set forth a defined, specific probationary period (often six (6) months). This is designed to give the employee time to correct performance deficiencies.

d. Description of Consequences

The sole purpose of this section is to eliminate any doubt in the mind of the employee of the seriousness of the situation. The PIP should provide that, if in the employer’s opinion, the employee’s performance has not improved to an acceptable, communicated and agreed upon level, the employee will be terminated. The Trustee, the Human Resource/Office manager and the employee should all three sign the plan. The employee should be provided a signed copy.

Rule #2. Make sure your personnel file is fully documented. It must be complete, organized and chronologically justify your action, prior to terminating an employee.

HOW DO I DEFEND MY FIRING?

You should always anticipate that a terminated employee may file an EEOC action or a civil suit. If that happens, the personnel file will be closely reviewed by opposing counsel and may even be Exhibit #1. Human Resources should properly maintain personnel files. Supervisors should be trained in how to properly document performance deficiencies. There is extensive information available on how to organize and maintain a proper personnel file and how to properly document employee performance deficiencies.

Prior to issuing a PIP, review and update the personnel file as needed. I am certainly not suggesting that you sanitize the file. However, I am suggesting your personnel file should support a PIP. If your personnel file for this employee does not support or reflect the current appraisal of that employee’s performance, consider updating the file immediately.

A typical Personnel file consists of several sections:

1. Employee resume, application and background check.
2. Employee personal contact information.
3. Payroll history and past promotions.
4. Training (participation in in-house office training, attendance at Staff Symposiums and other professional seminars.)
5. Commendations.
6. Performance deficiencies.
   1. Error notification summaries.
   2. Emails and other communications.
   3. Absentee summaries.
   4. All prior Evaluations (good and bad).
   5. Performance markers
   6. PIPs.

Review the file. Does the material in the file support your conclusion to terminate? Have there been events not documented?

TERMINATING

Be prepared for the firing event. Utilize a termination checklist. Generate the final paycheck, including paid accrued sick and or vacation leave. Have the necessary COBRA forms and benefit disclosures ready. (Alert your COBRA servicer to ensure the requisite disclosures and deadlines are complied with.) The checklist should include items to request from the employee, such as: keys, badges, stationery laptops and other employee owned equipment. Notify the IT department to immediately deactivate all passwords and network access. Alert any necessary third parties to the termination.

RESOURCES

What Gets Measured, Gets Done – Programmable Metrics Within the TNG13 Framework, BSS Seminar 2012, Richard Fink

In Search of Excellence by Thomas J. Peters and Robert H. Waterman, Jr.

Robert Half Management Resources

Society for Human Resource Management (SHRM) for numerous tools, metrics, reports and guidelines

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Jack W. Gooding was appointed a Standing Chapter 13 Trustee for the Eastern and Western Districts of Arkansas in 2008. He graduated from Southern Methodist University in 1976 with a B.B.A., majoring in accounting and received his law degree from Texas Tech University School of Law in 1983. He is licensed in the States of Texas (1983) and Arkansas (1989). He currently serves on the Finance Committee and the Mortgage Committee of the NACTT. Prior to his appointment as Chapter 13 Trustee, he practiced law in Texarkana, Texas, concentrating in representation of debtors, in Texas and Arkansas. He has served on the Bar Advisory Committee for the Eastern District of Arkansas since 2003. He is admitted before the United States District Courts for the Eastern and Western Districts of Arkansas, the Eastern District of Texas, the United States Court of Appeals for the Fifth Circuit, the United States Court of Appeals for the Eighth Circuit, and the Supreme Court of the United States of America. His community service includes: actively competes in U.S. Masters Swimming, a volunteer for the American Red Cross and local board member and regional finance chairman for the Boy Scouts of America.