How costly? Mimi Moore, a partner in the labor and employment practice with Bryan Cave LLP, says that each legal claim an employee brings against an employer in court could cost the company between $50,000 and $250,000 in legal fees and potential settlement payouts.
With the economic recovery faltering, companies are once again turning to layoffs to cut costs. In September, employers announced plans to lay off 115,730 workers, which made it the worst month for job cuts in two years, according to global outplacement firm Challenger, Gray & Christmas.
Companies that mismanage terminations may see more litigation, says Moore. She notes that in the current climate, when employees are terminated, they're more likely to consider filing a legal claim against their employer because they know how difficult finding a new job will be, and a potential legal settlement could ease their transition.
To mitigate legal risks, companies should avoid making the following mistakes when firing employees.
Common Mistakes Employers Make Leading to a Termination
Several of the mistakes employers make take place long before they say good-bye to an employee. Here are some of them:
1. They don't hire the right person for the job. Sometimes managers are so desperate to fill positions that they bring candidates on board who aren't the best fit for the jobs, says Heyman. That often sets up the individual for failure and leads to termination, she says.
2. They don't manage the employee's performance. A lot of managers think it's too hard to coach people or to have those difficult, direct conversations with employees about the behavior that needs to change, says Heyman. But failing to train an employee or set clear expectations with the employee about his or her performance can lead the employee to allege wrongful termination. "Most people want to know if they're doing something wrong that could possibly get them fired," she says. "They need an opportunity to correct it before you [the employer] take that action."
3. They don't explicitly state to employees the consequences of not improving their performance. Heyman says managers need to stop beating around the bush with employees during conversations about their performance. Managers need to be clear that whatever the employee is doing or not doing could result in job loss.
"We shouldn't leave employees to guess that they're at risk for termination, and a termination for a performance or behavioral issue should never be a surprise," she says. "Managers have a hard time saying these words, but they need to be clear about the severity of the situation because most employees operate under the assumption that everything is fine even though they know their boss would like them to work a little bit better or faster."