It is one of the hardest parts of the HR job: terminations. Having a disruptive employee working can have a negative impact of the productivity and efficiency of others. The manner in which a termination is handled can impact the morale of the entire workplace and must be handled carefully, while being respectful of the out-going employee’s experience.
Today, Terry Cook, our Senior Vice President of Employer Services, and Tom Jones, our very own attorney specializing in labor and employment matters, join Pete Wright to share what you need to know about handling terminations well.
Pete Wright: Welcome to Human Solutions: Simplifying HR for People who Love HR from AIM HR Solutions on Trustory FM. I’m Pete Wright and this week we’re talking about one of the hardest parts of an HR professional’s job. No, no not holiday party planning. We’re talking about termination. We all know it has to be done. Having a disruptive employee at work can have a negative impact on the productivity and efficiency of others, but the manner in which a termination is handled can impact the morale of the entire workplace. Today, Terry Cook our senior vice president of employer services and Tom Jones, our very own attorney specializing in labor and employment matters, join me to talk about the things you need to know about handling terminations carefully. Handling terminations, this is the saddest part of the HR professionals job. Terry, Tom, thank you for joining me today. Welcome back. Could you tell us a story of a termination gone wrong?
Terry Cook: Sure. I think every HR person has a lot of stories of HR issues and especially terminations. Two come to mind for different reasons. I’ll share both of them quickly with you Pete. One would be a supervisor that had an employee that they were frustrated with, but they just forgot to tell human resources about. They didn’t let the HR person know there was a problem. They simply brought the employee up to my office in this example and said, "Terry, here you go, fire John." John’s standing right there. And I’m looking at the supervisor saying, "Yes, John, could you excuse us just for a moment?" And then the supervisor came in and said, "What’s the matter?" And I said, "Okay, first of all, we could go with several directions with this, but one would be that I don’t have anything in John’s file. I didn’t know he was coming up to my office to be terminated and we really need to prepare ourselves before doing this." So I won’t go into the long story of how everything happened from there, but it was definitely a termination gone wrong in the sense that it actually would embarrass the company because I was taken aback by the situation, the employee had no idea.
Pete Wright: Just hearing your story made me swallow my tongue a little bit. That’s a horrible, horrible place to be.
Terry Cook: It’s a horrible situation. The employee had no idea. He didn’t even know he’d been in trouble before. So to be brought into my office to be told he was fired without any warning. Definitely would be a story of a termination gone bad that we had to fix. But the second one I think can be more serious and probably many might relate to this, is when you have an employee that might have a violent tendency. Bringing them into HR office, the HR person should be prepared if they know this employee might be violent to make sure that there is always somebody there to back them up, somebody there for help and always a way to get out of the room, if there’s an issue. Unfortunately there can be violence in the workplace. All of us have read about it. That was an experience that I actually had once, where there was an employee, thankfully I thought ahead and knew that this person could potentially be violent. And I had somebody in the office that was able to assist in addition to that, because he had shown some tendencies in the past. We actually had the police, the local police around as well. I think, you’re looking at a lot of different directions. The two examples I gave you are completely different, but terminations can go bad in many different ways.
Pete Wright: Well, we need to turn our attention to what is going on right now in Massachusetts. And Tom, you were going to share the story of the lawsuit that happened just very recently about the final paycheck.
Tom Jones: Yep. Thanks Pete. One thing to keep in mind is that in Massachusetts there’s explicit law which says that, in general if there’s a termination of employment, one of two rules applies. If the employee is terminated that day, they must receive their final paycheck, any and all money owed to them, which includes accrued but unused vacation time on that very day. The other is that if they voluntarily resign, you can pay them on the next pay period, next pay cycle. A case came up recently in which an employee was terminated from employment, she’d been convicted of theft. Actually had been terminated from employment, but did not receive her final three weeks of vacation pay until three weeks later. She was terminated on an X date, three weeks later, she gets her final paycheck, including the vacation pay. That violates the law because she should have been paid that money on the very day she was let go. But now a year later, she sues in what’s called a private right of action, which Massachusetts allows employees who have not received their full pay to do. And if you win the court case, you receive trouble damages. Her $9,000 of unpaid vacation time, which she sued for a year later, even though the company had paid her, the employer had paid her three weeks late. She sued for this and the court, The Supreme Court of Massachusetts came back saying that she’s entitled to triple damages for her unpaid vacation, even though it was paid to her, it was paid late in violation of the law, as well as triple the accrued interest. What should have been $9,000 ended up being over 30, plus attorney’s fees, of being well over $30,000 was payment by the employer. And the court said, "It’s black and white. The law says you must pay within this timeframe. You don’t do it, you suffer the consequences." This literally happened in the last week or two, a lot of employers are now just digesting this court case in Massachusetts. There is a strategy though we think would help, which is that if you want to let an employee go for termination, not voluntary but termination, but you don’t have the money ready because a lot of companies may have to go with an out of town payroll service or something like that, would be to give the person one or two more days on the payroll and say, "Okay, with a Tuesday or Wednesday, we’re going to terminate you as of Friday." And that way you can get the money to the person by Friday. And yeah, you’ve paid two more days wages for no work, but it’s a lot cheaper than triple damages.
Pete Wright: Okay. In that context, Terry, what are the considerations in terms of presenting somebody with the opportunity to be terminated in three days? You just talked about a termination gone wrong. I can imagine a situation where somebody’s not going to look on that favorably.
Terry Cook: They won’t look on it favorably. And with Tom’s example, of course you wouldn’t have the person stay with you for three more days, you would simply pay their pay and let them go that day and just let them know they’re being paid for three more days. That is definitely one way of doing it. It’s interesting, Pete, wait, I read about this and actually experienced it with somebody else I know. A company did direct deposit. They thought they were being smart and decided to terminate somebody on the day of their direct deposit. The employee found the direct deposit before they knew they were terminated. And so they happened to know me and called and said, "Why would my company give me my money? It’s not payday Terry."
Pete Wright: Oh my goodness. Terry, you come with just horrifying stories today.
Terry Cook: I know too many stories for you, Pete.
Pete Wright: Peak anxiety right now. That is just terrible because, and I assume is because a direct deposit happens overnight sometimes. It just triggers in the middle of the night or something, and-
Terry Cook: That’s right. Some banks put it in first thing in the morning. Some banks put it in during the day. This employer obviously didn’t think that this employee would happen to look at their bank statement prior to the conversation at one o’clock.
Pete Wright: If that is the one lesson that we get out of this episode, it’s, don’t play games with guessing your behavior of your employees.
Terry Cook: That’s right.
Pete Wright: Don’t guess. Oh my goodness.
Tom Jones: And everybody has a cell phone nowadays and a smartphone so they check their bank accounts.
Pete Wright: Yeah. Probably something buzzed. "Hey, you got a new deposit. Check it out."
Tom Jones: Exactly. So you have to assume that’s the case.
Terry Cook: I think that’s what happened. Yeah.
Pete Wright: Oh my goodness. Oh my goodness. Okay. Well that’s horrible. Let’s talk about the additional complications of dealing with remote employees. Are there different considerations that come into play when you’re dealing with someone who does not work in the same space as you do?
Terry Cook: Remote employees, it’s kind of going back to what Tom’s saying too, some degree. Because you’re not terminating this person in person, which means you don’t have a check to physically hand to that person with the Massachusetts law that says, if I terminate John, I have to give John that paycheck that day. If somebody’s on the phone, you would have to do one of a few things. One is, you could take a chance with a direct deposit example I gave you, which seems a little risky sometimes. The second is Tom’s example, where you pay somebody. You just say to them, "I’m sorry, John, but you will be terminating from the company. We won’t make your termination date until Friday and we will pay your wages through Friday. You’ll receive that check on Friday."
Pete Wright: Is it legitimate to remove access to company resources before the last day of their payroll?
Terry Cook: Yes. Definitely, you would do that. Oftentimes even when you were in person, if somebody was being terminated that had access to sensitive information, your IT person would know in advance. And even before that person walked into an office to be terminated, they would have their access removed to sensitive data.
Pete Wright: Well, Tom got me thinking because if you can make this case about a paycheck that was paid three weeks late, but was paid, there have to be some other loopholes that I’m not thinking of. And one of those was, could I make a case as an employee? "Hey, you’re telling me that I’m not terminated until Friday. I’m going to keep working from home until Friday because I’m still an employee."
Terry Cook: That’s right. And that, you’re right. Absolutely. And you would make sure that you’re clear, goes back to expectations, letting people know what’s expected. And you would say, "We’ll go ahead and pay you for the next few days. You won’t be working, but you’ll have access to your paycheck, not the company materials." And then the last piece that I was going to say is that, some people will engage a courier of some sort, whether it be a FedEx, a UPS, somebody that’s going to do an overnight delivery of a check where you determine the timeframe it gets delivered. In other words, you know you’re going to talk to John at 9:00 AM, you make sure that the overnight delivery of the paychecks arriving by three o’clock that day. So you give yourself a few hours in case somebody decided to be a little early in the delivery of the product.
Pete Wright: Now, both have brought up complications around systems that it make me at least ask the question because of all these payroll system complications, are there things that HR managers and business leaders need to be thinking about in terms of improving systems to be more flexible in regard to termination? It seems like all the examples that we’ve been talking about are, terminations are a jump ball. We don’t know what’s going to happen when. How can we be more ready, more proactively?
Tom Jones: Well, I think one of the things you can do with your managerial team is to pick up on the point Terry made earlier, which is to make sure that you’re documenting on an ongoing basis. So that, when someone’s being let go from work, they really shouldn’t be surprised. They should have been walked closer and closer to the edge and told, "Okay, you run the risk of this." If you catch someone stealing or a violent act, that’s different, but for the average employee they’ve been given warnings, they’ve been informed that there’s jobs at risk, that the company will take action. And those things need to be documented on a regular basis so that they can look in the file. Exactly like Terry used in her example, you can look in the file and say, "Ah, this is the fourth warning." That’s right. We understand now this leads to termination. And so we’re comfortable with that because that way, when the outside attorney representing the company calls you up and says, "What’s in the file?" You can refer back to these things and say, ‘Our normal standard practice in our handbook is to do it this way. We did it that way. We’re home free." But a lot of times supervisors are either sometimes under the gun because they have deadlines to meet and they forget. Other times they just don’t bother doing it. They said, "Well, I told the employee, I’m sure he or she listened to me." And there’s no written record of it. And then you’re stuck because there’s no… The rule in employment are, if it’s nothing in writing, if it’s not in writing, it doesn’t exist. And so, trying to get people to testify months later or years later, that what was said that day? Who said it? Who did this? It’s a fools errand, you’ll never get it done. So training your managerial staff is really crucial to make sure they understand it. As you said earlier, Pete in the intro, nobody likes to be terminating people, it’s just unfortunate event, but it’s going to happen. So the company needs to be prepared for that.
Terry Cook: And to actually add on what Tom’s saying, it’s also about the process overall. Making sure your supervisors and managers know these laws, these rules about a final paycheck, they understand the expectations of the company. So the company says, "This is how you handle it. When you know you’re going to make a termination of any kind, we have to go through human resources." We have to make sure all our Is are dotted, our Ts are crossed with all of our documentation that Tom was referring to, but also make it clear to them that there are rules around a final paycheck so that you can’t just get angry with an employee today, terminate them today and then let human resources know tomorrow.
Tom Jones: But one of the things we often hear on the hotline that says a mistake is when you’re going to let an employee go, the employee may owe the company money through a vacation advance or tuition reimbursement program. And they didn’t complete it or they didn’t stay long enough to fulfill the terms of the deal. Or some other thing like uniforms or other company equipment. And oftentimes a company will say, "Oh, we’ll just take it from the final paycheck to reimburse us." That’s really risky in Massachusetts, unless you have a written record to show, that you can document exactly what the value is of that. For example, if I advance you a week of vacation time, that’s easy. I know that’s worth a thousand dollars because I pay you that much a week, but if it’s something like uniforms or some other intangible or less measurable event or item, it becomes illegal to do that or impossible to do that without a court statement, a court order supporting you. Companies want things in writing like advancement vacation time, tuition that’s been advanced to somebody. Some of the things like that because there was a court case years ago, which a company was trying to do this with the employee’s wages. And the court said, "No, you can’t do it without some written proof as to the value of that item. You can’t deduct that from somebody’s final pay." And moreover the final week of work, they have to at least get the minimum wage for every hour they worked. So if I fired somebody on a Friday and they worked 40 hours already, they had to get at least 40 hours times 1425 in Massachusetts, before you take any money from them. And then there might be child support. There might be other things coming out of that paycheck too, that are untouchable in terms of the company recouping money. So it’s a simple mistake companies make sometimes.
Pete Wright: And since you brought it up, I want to pivot to remote. When you have an employee who may have perhaps a significant amount of company assets in the form of a computer or monitor, or let’s say my microphone and headphones, for example, those kinds of things. How do you manage accounting and recovery? And do you ever let the employees buy those things out? Can that be something that you can account for properly in a termination?
Terry Cook: You always have to have a record of what you give to an employee. When you’re they’re hired, if you give them certain equipment, you have a record of that, letting them know your expectations upon termination. But one thing you brought up Pete that made me think about it, is when you talked about an employee buying things from you or what you do. Sometimes a company will say, "I gave Tom a brand new laptop valued at $2,000, 10 years ago. I want that $2,000 back." Clearly Tom’s 10 year old laptop isn’t worth $2,000 today. Tom’s laptop is probably almost worth giving to him at that point for 10 years old. And the how quick technology advances. But again, it’s just one of those things that employers have to remember that, if you are going to try to put a value on something that doesn’t get returned to you, that you’re putting a realistic value on that.
Tom Jones: There’s a regulation in Massachusetts that says, you can’t charge employees for uniforms, specifically. So the summer dress, the summer shirts I gave you to wear, the person may disappear at the end of the summer with those shirts and-
Pete Wright: And you can’t do anything about it?
Tom Jones: Yeah. Not really. You can’t charge people value of their uniform or it says you can, but then you have to reimbursement for the value of it. So in fact, you can’t.
Pete Wright: Enjoy your summer uniform in perpetuity, everybody. I hope love that embroidery.
Tom Jones: [inaudible 00:17:25] there’s advertising for the future.
Pete Wright: That’s right. Advertising and sweat, nobody wants those back, it’s okay. Thank you, Tom and Terry, for joining me for this delightful, heart stopping conversation about a very challenging part of the HR process. I sure appreciate your wisdom as always. And thank you everybody for listening and downloading to this show. As always, you can find links and notes about the show at aimhrsolutions.com. You can listen to the show right there on the website or subscribe to the show in Apple Podcasts or Spotify or anywhere else fine podcasts are served. Until next week, I’m Pete Wright and we’ll catch you right there on Human Solutions: Simplifying HR for People who Love HR.