Posted on May 11th, 2021
Find below a complete transcript of this video.
What’s up fellow entrepreneurs is John Fagerholm again. And today I want to talk about a topic. That’s an oldie, but a goodie. And that topic is terminating employees.
I have other videos on this, but I thought I would revisit since I’m getting so many questions about it. So as always, I’m an attorney, but I’m not your attorney.
So please seek competent legal advice for your specific problem or legal question. Now I’m asked quite a bit about how to safely terminate employees and the short answer is that there’s not a safe way in California.
There are just better ways. So to begin with California is an at-will state. And unless there is a contract stating, otherwise employees are free to quit. Anytime they like, and employers are free to terminate at any time, as long as the termination is not for a protected reason.
Most of you already know the protective reasons, but the most common are race, sex, sexual orientation, religion, national origin, disability, age, citizenship status, there’s several others. But anyway, besides the protected classes, it’s also illegal to fire an employee and retaliation of a complaint or exercising a right that they have such as filing a workers’ comp claim.
So as long as it’s not for a protected reason, you can fire at willing in California, right? Well, yes, that’s right, but there’s still a lot of risk terminating employees in California, even if the firing is otherwise legal.
First anyone can Sue for anything. That’s just our system. Even if it’s a bogus lawsuit, you’re still required to defend yourself. Lawsuits are very expensive and the system is set up so that plaintiff’s attorneys are incentivized to represent clients on a contingency basis. Because in the event they win on even one claim.
The employer’s required to pay all of the legal fees of the employee. So besides paying for your defense, you could very well end up paying double the legal fees or more so based on that risk and that risk of large jury awards, most companies elect to settle claims even if they otherwise have legitimate defenses.
So, all right, now that we know that firing an employee is risky, how can the risk be minimized? The first step is to make sure that you’re complying with all of the labor laws. That seems obvious. It can be daunting to keep up with the ever-changing labor laws, but the department of labor is pretty good about making resources available online and easy to find.
So just look it up. If you can afford it. I also suggest that you hire either a dedicated HR person or use an outside HR company, because most entrepreneurs want to focus on building their business and not keeping up with labor laws.
The second thing you can do to mitigate potential liability after terminating an employee is to document everything.
This also sounds daunting, but most things do not need to be formal. They just shouldn’t be only oral. So anytime there’s a conversation about a work-related issue with an employee, there should be something written for the record.
For example if an employee is consistently late and you have a conversation with the employee about it, let them know that you’ll be writing them an email to make sure that your discussion was clear and then send them an email, reiterating the discussion for more egregious behavior.
It may make sense to document the behavior formally with counseling or a warning. Now let’s talk about some of the risks documenting number one, make sure that what you are documenting complies with the labor laws or all you’re doing is just making a wreck record of your violation.
Second, the employee you’re dealing with, and don’t be too quick to act without understanding how they may react to the write-up. I’ve seen several employees written up for obvious bad behavior, protect themselves by filing a workers’ comp claim or filing an official grievance.
So once they’ve filed for workers’ comp or filed a grievance, it’s almost impossible to fire this employee without also being subject to a retaliation claim. And remember, employees are protected from retaliation.
This alone creates a cause of action that will draw you into a lawsuit. All right. So what are the takeaways? Number one, follow all of the labor laws. Number two, document everything. Number three, be careful what you signal to employees because they could make it very difficult for you to terminate them.
Even if the employment is at will and the termination is otherwise legal by setting you up for retaliation claim.
So that’s all for this video and as always be productive.
