Termination Justification: Say What You Mean And Mean What You Say

(Published April 1, 2009)

Reprinted from MANAGER'S LEGAL BULLETIN, a widely read employment law newsletter that communicates legal guidelines to managers through scenarios based on real-life cases. Click here to view a sample issue, get more information, or sign up for a risk-free subscription.

Telling an employee that he/she has been terminated ranks as one of the worst (if not the worst) responsibilities of any manager's job. No matter how difficult, though, you must be straightforward and honest when providing the reason behind your discharge decision.

Case #1: Say What You Mean

"I'd like to address some of my concerns with your performance," the new CEO, Paul Rogers, told Lydia Crowley. "I can't help but notice that you are resistant to the changes I've suggested."

"I can understand why you might think that," the 52-year-old employee admitted. "But you have to understand where I'm coming from. In the 20 years that I've worked here, we've done things one way. Then you come in like gangbusters and insist on shaking things up."

"The company hired me to make changes that will help the company recover from its financial crisis," Rogers reminded her.

Despite her promise to stop digging in her heels in response to his changes, Crowley circumvented several of the CEO's directives. When word got back to Rogers, he fired her. He was restructuring the department, and there was no place for her, he told her.

Crowley sued, claiming that age discrimination motivated her termination. As proof, she pointed out that the reason for her termination shifted over time. First, Rogers told her that her department was restructured. Then, in response to the charge she filed with the Equal Employment Opportunity Commission (EEOC), Rogers listed five specific reasons for firing her, including that she socialized too much and that she needed to be more responsive to clients' needs.

An appeals court found that although the CEO's reasons varied, they were not inconsistent; they explained why he was dissatisfied with Crowley's performance, and, thus, why he felt there was no place for her in the restructured department. Court: Pretext is not shown if the employer merely elaborates on the initial justification for termination.

Case #2: Mean What You Say

"Jim, I have some bad news," manager George Draper informed Jim Farrell. "You are being let go. The company's declining financial performance has necessitated a reduction-in-force."

"Is there anything I can do to change your mind?" the 62-year-old Farrell asked. He had planned on working in this job until he retired.

"If the company must reduce costs, I'm willing to work for less money," Farrell offered.

"That won't be necessary," Draper replied. "The decision is final."

Or so the manager thought. Farrell challenged the decision in court, charging the company with age discrimination.

A federal district court dismissed Farrell's claim, finding that the company's financial position provided a legitimate, non-discriminatory basis to discharge him. But an appeals court disagreed. Although it acknowledged that cost-cutting measures can be a legitimate basis for terminating a worker, it concluded that cost-cutting was not the real reason for Draper's decision. Evidence that company officials made jokes about the employee's age, hired a 26-year-old to replace him, and discharged him despite his offer to work for less money convinced the appeals court that a reasonable jury could find that age discrimination was the true reason for his termination. Case goes on.

Action Tips

Before you fire an employee, check that the decision would withstand a judge's scrutiny.

• Base the decision on legitimate business reasons. In Case #1, Rogers based his discharge decision on his dissatisfaction with Crowley's performance, and the court had no reason to second-guess him. In Case #2, reducing costs can be a legitimate reason for terminating a worker, but the court found that the evidence didn't back up Draper's reason.
  
  
• Remain consistent with your explanations for an employee's termination. Providing inconsistent reasons for a discharge decision can be evidence of discrimination. Variations may demonstrate that the explanation is not credible. While the court in Case #1 provided some leeway to offer more detailed reasons for a termination, you must be careful that the reasons aren't inconsistent or incompatible with each other. What may be a variation in specificity to one court, may be an illegal inconsistency to another.
  
  
• Don't try to spare the employee's feelings at the expense of your company's legal defense. In both cases, the crux of the employers' reasoning for firing the employees was changes necessitated by the company's financial position. Some managers mistakenly believe that an employee won't take their termination as hard if they can depersonalize it and blame an external cause, such as the economy. This tactic can backfire if you later reveal more specific reasons for choosing the employee.