Firing an employee is always difficult, especially when it involves a long-term employee. The last thing you need, after making that hard decision, is to be sued by the fired employee. In construction, a building built on no foundation or an improperly laid foundation is subject to collapse. The same is true for employment decisions-if you do not invest time and effort to prepare for employment decisions, those employment decisions may "collapse" and expose you and your company to significant liability.

Let's start by looking at an example: Ben Conner owns a small home construction company, Conner Construction, which he began almost thirty years ago. Johnny Jones, a fifty one year old black man, has been with Conner Construction from the very beginning.  Johnny has been a loyal and dedicated worker and is the supervisor of one of Conner Construction's crews. Over the last several years, however, Johnny has been having problems: he has been staying out too late with the boys too often, he has been in and out of alcohol rehabilitation centers without much success, he has been calling in sick or showing up late frequently, several weeks ago he fell on the jobsite and injured his back resulting in several visits to the workers' compensation doctor and now Ben Conner is receiving complaints from clients about the work Johnny supervises either because it's late or substandard. Ben is a nice guy, hates paperwork and avoids confrontation. As a result, Ben has never said anything to Johnny about his work problems, much less documented any of them. Other than Johnny's work performance, business has been great for Conner Construction.

Conner Construction just started a third full-time crew and hired from a competitor a young man with a great reputation, who happens to be white, to supervise the new crew. Ben had to pay him more than Johnny to lure him away from the competitor. Johnny found out and told Ben that he could make that salary "if he was a little younger and his skin was a little lighter." Several weeks later, when Ben arrives at Johnny's jobsite first thing in the morning, the crew is sitting around waiting on Johnny who is yet to arrive. Ben realizes that the job is now two weeks behind and finally decides that he must fire Johnny. What should Ben do?

Have you ever been in a position like Ben Conner?  If Ben fires Johnny, he could face a lawsuit from Johnny with the following potential claims, among others:

  • Race Discrimination under 42 U.S.C. § 1981 and Title VII of the Civil Rights Act of 1964, as amended (Johnny is black and a similarly situated white employee is paid more for the same work);
  • Age discrimination under the Age Discrimination in Employment Act (Johnny is over forty years old and his comparator who earns more than he does is under forty)
  • Disability Discrimination under the Americans with Disability Act (Johnny is potentially a recovering alcoholic)
  • Worker's Compensation Retaliatory Discharge (in some states an employer cannot fire an employee in retaliation for filing a worker's compensation claim)
  • Retaliation under 42 U.S.C § 1981, Title VII, and the Age Discrimination in Employment Act (Johnny was fired after he complained about a younger, white co-worker earning more than him)

Facing all these potential claims, should Ben reconsider his decision to terminate Johnny's employment and just learn to live with Johnny's substandard performance? The answer is-it depends.  It depends on what Ben did to lay the supporting foundation for his decision to fire Johnny.

Handbooks and Anti-Harassment Policies

The "cornerstone" of this foundation is an employee handbook or written policies concerning company procedures and standards of conduct. If an employer has written policies that are consistently and indiscriminately enforced, there can be no dispute as to what those policies are or what the company expects of its employees. These policies will often include "stepped" disciplinary procedures that will identify the discipline that will be taken for different types of misconduct.

If the company has, or elects to establish, a "stepped" disciplinary procedure, ensure that it provides an "out" so that the company can forgo a "step" and move directly to termination, if necessary. Beware of phrases such as an employee will be terminated "only for just cause" as the company may set itself up for litigation over what is "just cause." Also, make sure that the employee handbook does not create a contract of employment or alter the at-will status of the employee. A simple disclaimer at the front of the employee handbook that is acknowledged by the employee will ensure that the company handbook does not create a contract of employment.

The best written policy that any employer can have is an anti-harassment policy that is posted in a visible location and is distributed to and acknowledged in writing by every employee. A well-crafted anti-harassment policy may be a free "insurance policy" for an employer as it can insulate an employer from liability for unknown and unreported harassing conduct based on a protected status. An anti-harassment policy directed only toward sexual harassment is a mistake. Because an employer can be liable for harassment based on any protected status, such as race, religion, color, national origin, age, disability or veteran status, make sure that the anti-harassment policy includes all these protected statuses. An effective anti-harassment policy also identifies employee alternative avenues (outside the immediate chain of command) for seeking redress for the alleged harassment and expressly prohibits retaliation against an employee who makes a complaint of harassment in good faith.

Documentation:  Evaluations and Disciplinary Action

Proper documentation is essential to laying a good foundation for employment decisions. Employers must maintain good documentation for every employee concerning every aspect of the employment relationship-hiring, evaluations, discipline and termination. Thorough, honest documentation may deter potential plaintiffs and their lawyers. In the event litigation cannot be avoided, the documentation can be an invaluable resource in the defense of charges filed with the Equal Employment Opportunity Commission and lawsuits.

There are three basic rules for all documentation: (1) be honest; (2) be fair-follow your policies and rules; and (3) be consistent-treat all similarly-situated employees the same. Maintain documents concerning an employee from the very beginning of employment through the end of the employment relationship. Keep copies of documents submitted during the application process as misrepresentations in an application or resumè may provide the company with a defense to a later lawsuit or, at a minimum, limit recoverable damages. When the employment relationship has ended, make sure that the employee's personnel file is complete while the employee's work performance is easily recalled.


Conduct periodic evaluations. Evaluations benefit employees and employers.  However, if evaluations are considered a simple formality-a once a year event where the supervisor checks whether the employee "meets" or "exceeds" in every category-evaluations may do the employer more harm than good if a lawsuit is later filed.  Supervisors should be trained to conduct meaningful evaluations, and performance evaluations should be screened by upper management to ensure consistent and honest evaluations are given. Evaluations should identify all problems and address objective standards (e.g., attendance, missed deadlines, tardiness) with supporting documentation (e.g., timecards), when available. Also, include specific examples supporting "subjective" criticisms (e.g., "failure to delegate responsibilities on the Smith job resulted in project being two-weeks behind schedule").

Effective evaluations give suggestions for improvement and assess whether progress has been made. For example, ask an employee to provide a plan for improvement. If appropriate, set deadlines for the employee to enact the proposed changes, and review the plans with the employee. The employer may also suggest that the employee volunteer for a certain project or take certain classes to improve his performance. The employer should always follow up to see if the employee is showing signs of improvement or is following the plan for improvement.

Most importantly, resist the temptation in an evaluation to overlook problems. The reason is simple: Employees who later become plaintiffs will cite to their "stellar" performance evaluations as evidence that the reason provided by the employer for their termination was not a legitimate one, but was impermissibly based on the employee's protected status or protected conduct.

In addition to evaluations, an employer should document all performance problems in writing. Include the date and time of, and identity of any witnesses to, the misconduct. Identify the problem, outline a plan for improvement and specify the consequences for failure to make the mandated changes. A conscientious employer will always follow up in writing as to whether the suggested changes were made. If your policy provides for "stepped" discipline, comply with the policy and enforce it consistently. The importance of following up cannot be overstated. An employee who corrects problems can be retained without appearance of discrimination even if an employee with the same problem is terminated. If at all possible, have the employee sign the disciplinary action and evaluation.

Post-Termination Preventive Measures


Another way to avoid potential liability for terminating an employee is to fight the unemployment compensation battle. If an employer has terminated an employee who should be disqualified from receiving benefits under the applicable unemployment compensation laws, the employer should appeal any decision granting benefits. In addition to lowering the company's experience rating, a ruling adverse to the employee in an unemployment compensation hearing, i.e., a determination that the employee was terminated for violation of a work rule, may in some situations for certain claims defeat an employee's allegation that he was terminated for an impermissible reason.

What Does an Employer Do if He has not Laid a Proper Foundation?

In situations where the employer has not properly documented the basis for the termination and the employee is likely to sue, the employer has two options: He can postpone the employment decision or negotiate a severance package in exchange for the employee's resignation. As to the first option, generally, a poor performing employee will continue his poor work habits. An employer can begin documenting all of his employees' and simply wait until there is adequate documentation to support the decision to fire the subpar employee. Be careful, however, that your documentation does not appear to be "picking on" only one employee. Biased documentation concerning only one employee may support that employee's claim that he was singled out and retaliated against.

Alternatively, the employer could propose a severance package. A severance package should always include a release of all claims that the employee may have against the company and its employees. An employer may want to volunteer that he will provide the employee with a "neutral reference" as the employee may believe that this is of some value to him. However, from the employer's perspective, this is of no value as an employer should always provide a "neutral reference." Ensure that the release contains a confidentiality provision, where permissible, so as to not to encourage other employees from bringing similar claims.

A "goodbye forever" provision, wherein the employee agrees never to seek reemployment, is a good idea since it may prevent retaliation claims based on the employer's unwillingness to rehire the terminated employee. A release needs to be carefully worded and a lawyer should be consulted to ensure that the release contains the proper language. For instance, if an employee is over the age of forty, specific language must be included to release claims under the Age Discrimination in Employment Act.

Going back to our example at the start of this article, if Ben Conner properly documented Johnny's performance issues, maintained thorough evaluations of Johnny's work performance and documented the legitimate business reasons for hiring the white employee at a salary higher than Johnny's, then Ben will have little to fear in terminating Johnny's employment.  Just as a building needs a good foundation to support it, employment decisions, including important ones like the decision to terminate an employee, require a good foundation comprised of well-crafted employment policies, including an anti-harassment policy and proper documentation along with insightful evaluations.


Construction Business Owner, July 2006