Chapter 27 - § 27.5 • DISCHARGING EMPLOYEES

• Jurisdiction: Colorado

§ 27.5 • DISCHARGING EMPLOYEES

Every employer must, at some point, discharge employees. Whether the reason for the discharge is a RIF, poor performance, or problems with attendance or some other workplace requirement, a discharge is far more likely to result in litigation than any other employer act.

Just as discharging employees is inevitable, for many employers so is a formal challenge to the discharge decision. That challenge may be a demand for unpaid wages, an unemployment compensation claim, an administrative charge of discrimination, or a lawsuit. While there is little an employer can do to insulate itself completely from any challenge to its discharge decisions, by taking eight precautionary steps an employer can limit dramatically both the number of challenges it faces and its potential exposure in the event of a claim: (1) following all written policies and contracts, (2) properly investigating apparent or alleged misconduct, (3) documenting the discharge decision, (4) avoiding retaliation and any appearance of retaliation, (5) meting out discipline in a consistent manner, (6) discharging the employee in a professional manner, (7) properly calculating and paying all compensation due upon discharge, and (8) disclosing the circumstances of the discharge only on a need-to-know basis.

§ 27.5.1—Discharging Employees Without Liability

Even though Colorado still subscribes to the employment-at-will rule,⁷⁹ from a risk management standpoint an employer should never discharge an employee unless it has a good reason for doing so, and can prove that reason in the event of a challenge. Moreover, because an employer only has one chance to discharge someone the right way, discharge decisions should never be hasty, but rather should be considered and deliberate. Rarely will an employer who follows these simple principles lose in the event of a challenge to the discharge.

Following All Written Policies and Contracts

The first and most fundamental rule for avoiding employment-related liabilities is to follow one's own policies. There is no worse trial exhibit for an employer to explain than a written policy or contract that was not strictly followed.

Consequently, before any employee is discharged, management should review the employee's personnel file to ensure compliance with offer letters, employment contracts, and all other employee-specific written commitments, and also should consult any policy or procedure manual to ensure that all substantive and procedural commitments have been honored. It is a mistake to assume that one can explain away on the basis of "special circumstances" a deviation from a written commitment.

Properly Investigating Apparent or Alleged Misconduct

As discussed at length above, a good investigation can be invaluable if an employer later is forced to defend a discharge decision, and a bad investigation can be a disaster. Employees, judges, and juries expect some modicum of due process, and that an unbiased investigator was selected to conduct the inquiry. There is absolutely no form of misconduct (save perhaps a videotaped incident of employee violence) that calls for an immediate discharge without the benefit of some reflection and poking around. Employers should take the time to examine the facts, and should try to get the accused employee's side of the story before making a discharge decision.

Documenting the Discharge Decision

Predischarge documentation rings true to most juries. As a practical matter, an employer who fails to document a discharge decision misses a crucial opportunity to create a potentially critical trial exhibit. Moreover, undocumented decisions often bespeak one of two things: (1) the employer did not care enough to take the five minutes required to document the decision; or (2) the stated reason was not the "real" reason for the discharge. Neither inference is helpful in front of a jury, the members of which typically view discharge as corporate capital punishment. Employers should take the time to explain in a memo or letter why they chose to impose that kind of sanction.

Avoiding Retaliation and Any Appearance of Retaliation

As previously discussed, retaliation claims may result where an employee's discharge closely followed a complaint about management or alleged misconduct by a co-worker, an accident or injury, or an employee's involvement in an investigation involving another employee. That problem is compounded by the fact that employees who know that they are on thin ice in their jobs sometimes make defensive allegations of misconduct by the company or a co-worker, in the hope of distracting the employer or manufacturing a retaliation claim.

While the potential liability posed by such situations is very real, unwinding a potential retaliation problem is relatively simple, if an employer takes the time to carve out of the situation facts or circumstances that might give rise to an inference of retaliation. When, for example, an employee who is close to discharge accuses her manager of sexual harassment, the employer should do three things: (1) investigate and resolve the harassment complaint; (2) remove the accused supervisor from the disciplinary decision involving the accuser, whatever the result of the investigation; and (3) proceed with any justified discipline against the accuser. Likewise, if an employee with a disability won't come to work, the employer generally may safely discharge the employee for absenteeism, even if he or she has filed a charge of discrimination, if the absenteeism is documented and the reason for the discharge is clear. See, e.g., Morgan v. Hilti, Inc., 108 F.3d 1319, 1325...