Terminating an employee is never a pleasant task. Nevertheless, terminations are a necessary part of managing a workforce. But before you act to discharge an employee, you need to take into account a host of issues, including legal considerations under federal and Nevada law. The attorneys in Ballard Spahr's Labor and Employment Group can help guide you through the minefield of employee terminations.

Nevada is an “at-will” employment state. This concept frequently is misconstrued to mean that an employer can terminate an employee at any time for any reason. While this basic interpretation of the at-will concept is generally accurate, there is an important caveat – that the reason for termination cannot be an illegal one. When it comes to at-will employment, this exception threatens to consume the rule because the list of illegal reasons for termination is growing.

Employees in at-will states have substantial legal protections that are exceptions to – or dilute –the at-will employment rule, and chief among them are federal, state, and local anti-discrimination laws that prohibit adverse action based on any legally protected classification, including adverse action in the nature of termination. Protected classes are so broadly defined that nearly everyone falls within at least one classification, including race, color, sex, age, national origin, disability, military service, and more.

The scope of legal protection becomes larger when one adds illegal retaliation and "interference with protected rights" to the list. For example, the Family and Medical Leave Act, the National Labor Relations Act, state voting laws, state jury and witness laws, and whistle-blowing laws, all contain some degree of protection against employee termination.

Also, nearly all at-will states – including Nevada – recognize a "public policy exception" to the at-will doctrine. In other words, employers cannot fire an employee for a reason that violates a state public policy. In Nevada, for instance, the courts have recognized the following as just a few of these public policy exceptions: reporting illegal behavior, refusing to violate the law, or filing a worker's compensation claim. It is illegal to terminate an employee on any of these bases.

As should be clear, there are many legally recognized exceptions to the general at-will rule that an employee can be fired for any reason or no reason. Acting rashly is a sure-fire way to increase the risk that an employer is going to face legal action. And even if you take all proper precautions, you might still be on the receiving end of a charge filed with an administrative agency or a lawsuit, although taking the right steps will help provide a strong defense.

To put your organization in the best defense posture should a legal challenge result from an employee termination, ask yourself the following 10 questions before firing an employee:

  1. Is the employee in a protected class or has the employee filed a complaint or charge? Analyze in advance if you might have exposure to claims of discrimination or a possible retaliation, interference, or whistleblower claim by an employee who has recently complained to the company or an outside agency.
  2. What is the employee's seniority? Unless the employee is being fired for a discrete act of misconduct, firing long-term employees, particularly those with strong performance records, can be more problematic. (See #5 and #6 for a discussion of documentation.)
  3. What specific reason(s) will be given for the termination and how do those reasons square with your handbook or written policies? Just because "at-will" employment technically allows for termination without cause, the reality is that you must have clearly articulated reasons for terminating before you act. Juries are hard pressed to believe that an employer fired someone for "no reason," and they fully expect the employer to articulate a justifiable basis for the termination. Are the reasons you plan to articulate consistent with your company's policies, practices and procedures?
  4. How strong is the evidence? Did you review all the evidence before making a final decision? Consider whether a neutral third party would agree that termination was justifiable, given the nature of the conduct or the seriousness of the performance problems.
  5. Is there documentation and, if so, how strong is it? The three keys to successful personnel management are document, document, document! You should have been documenting meetings, emails, significant events, performance and/or conduct issues, etc. If you don't have adequate documentation, think twice before acting.
  6. Are there performance evaluations and, if so, what do they say? Performance evaluations often are given special weight by any person, judge, jury or agency reviewing your action. And we all know that performance evaluations frequently are not given the care and attention they deserve, which can be problematic if they reflect a glowing performance leading up to the termination. If, for example you have an employee with years of evaluations stating they are performing satisfactorily or better, who has received a promotion or pay increase, you need to consider the impact of this history in connection with the basis for termination.
  7. Have there been similar situations in the past and, if so, how were they handled? It is critical to handle similar situations in a similar way. If there is an employee manual that sets forth disciplinary procedures, ensure they are followed. To give more favorable treatment to one person over another, without clearly articulable objective reasons for doing so, may create issues that need explanation or justification if litigation ensues.
  8. Have I drafted a termination memo that clearly sets forth the reasons for termination? Taking the time to prepare a termination memo setting forth the reasons for termination forces you to organize your thinking (i.e. "get your ducks in a row") before taking an adverse action. More importantly, this document will become a critical part, indeed, a critical exhibit, in your defense to any administrative charge (e.g., with the EEOC or NERC) or lawsuit. Finally, having and citing to a termination memo ensures that you have articulated clear and consistent reasons for the action. (Also see #5, above.)
  9. Have I considered reasonable alternatives to termination? It is often helpful to be able to assess if there are alternatives to termination (e.g., suspension, final warning, performance improvement plan, demotion, etc.) before firing the employee.
  10. Did I call my attorney BEFORE I took action? It's a lot less expensive to engage your lawyer in "preventive legal maintenance" than to have your lawyer defend you in a lawsuit where you may not have acted to protect the company.

Other considerations:

  1. Don't fire an employee when you're angry. Before you let an employee go, take a deep breath and ask yourself the 10 questions above.
  2. Do the termination face-to-face and accord the employee the respect and dignity you would want if being terminated. Avoid the blame game. Listen with respect to what the employee has to say and provide an opportunity for the employee to tell his or her side of the story. If you hear new information that, if accurate, might change your mind, you can postpone termination pending further investigation. Above all else, avoid derogatory comments or violations of privacy regarding an employee during termination.
  3. Be honest. You might be tempted to tell an employee that the company is downsizing or consolidating, or come up with some other story to make the employee feel better about himself or herself. Don't do it. Be honest and straightforward. (See #8, above.)
  4. Consider allowing the employee to resign in lieu of termination and offer a severance package, perhaps in exchange for a release. This really depends on the circumstances. Not all companies can, but if you can offer severance pay, additional education, job skills training or other benefits, the departure of the employee will have a less negative impact on the employee and the company.
  5. Change all computer passwords. Prevent access to company documents immediately upon termination. Do not let the terminated employee have access to the system again, even remotely.
  6. Discuss the employee's departure with the staff. Don't get into specifics, but let the staff know [employee's name] is no longer with the company.

The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of ZB, N.A.


This article is also posted on NevadaSmallBusiness.com.



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