Common Mistake No. 3: Poor Drafting of Termination Letters

This post continues the discussion of common errors made by employers terminating employees which can be easily avoided.

As a general rule, an employer may terminate an employee for a good reason, a bad reason, or no reason, just not for an illegal reason. Moreover, in most (but not all) states, an employer is not required to provide an employee with the reason for the employee’s termination. Although there are different schools of thought on the subject in light of the broad latitude given to employers in most states, I typically recommend including the reason(s) for the employee’s termination in the termination letter. In my experience, the termination of an employee without providing a reason usually strikes an employee as fundamentally unfair and increases the likelihood of the employee seeking advice from an attorney (which, in turn, increases the likelihood of a lawsuit being filed by the terminated employee).

In drafting termination letters, the most common mistake that employers make is not including all of the reasons for the employee’s termination in the termination letter. This does not mean that the termination letter should be long and detailed. To the contrary, it should be short and use broad terms that encompass all of the reasons for the employee’s termination without including unnecessary detail. In order to understand the rationale behind this recommended approach, a brief discussion of the employee’s burden of proof in attempting to defeat an employer’s motion for summary judgment is required.

In the absence of “direct evidence” of discrimination (typically, in the form of an admission by the employer that it considered a protected trait when making the termination decision, which is rare), an employee seeking to avoid the entry of summary judgment in favor of the employer usually needs to show that the employer’s proffered reason for the termination decision is pretextual (i.e., false). Although there are many ways for a employee to carry its burden of proof on this issue, one of the most common ways is to submit evidence of shifting explanations for the termination decision provided by the employer to the employee. Thus, it is critical that the termination letter is consistent with all of the reasons on which the employer may seek to rely in its defense of a lawsuit.

For example, assume that a customer service representative is on a performance improvement plan based solely on his failure to achieve certain productivity targets (e.g., number of calls per hour). Further assume that the same employee has an argument with a customer during which the employee uses profanity. Although the altercation with the customer alone would not have been a terminable offense, the employer decides to terminate the employee due to both the altercation and the employee’s failure to achieve productive targets. However, the employer advises the employee in the termination letter that he was being terminated “due to an altercation with a customer.” The employee sues the employer for race discrimination and, in response to the employer’s motion for summary judgment, submits evidence of two white employees who were not terminated despite using profanity during an altercation with a customer. The employer responds that, unlike the plaintiff, the two white employees were not on a performance improvement plan at the time of the altercation, and the employer argues that it terminated the plaintiff because he had an altercation while on a performance improvement plan. The plaintiff counters that the only reason provided by the employer in the termination letter was the “altercation with a customer,” and the plaintiff contends that the termination letter supports his position that the employer’s proffered basis for distinguishing the discipline of the white employees (i.e., the fact that they were not on a performance improvement plan) is a pretext for race discrimination. The court denies the employer’s motion for summary judgment and allows the case to be decided by a jury.

In the above-described hypothetical, the employer should have drafted a short termination letter that encompassed all of the reasons for the termination. For example, the employer could have simply stated that the employee was terminated for “poor performance,” which is broad enough to include both the failure to achieve productivity standards and the altercation with the customer. The employer also could have been more specific, so long as it included all of the reasons for the decision (e.g., the employee was terminated for “failing to achieve productivity targets and using profanity during an altercation with a customer). Whichever route you choose, make sure that the language of the letter is consistent with all of the reasons on which you intend to rely if the termination results in litigation.

In closing, this article was intended to highlight a few common mistakes made by employers, but there is no substitute for discussing the legal implications of a proposed employment action with an employment law expert. It is well worth paying for one or two tenths of an hour of your counsel’s time to talk through a proposed termination decision before pulling the trigger.