Terminating Entry Level People May Cost You The Most

I recently heard from two different clients who were planning to terminate entry-level, relatively “inexpensive” people. I asked them what they meant, and each indicated that the employee’s annual salary was around $40,000. When I asked if they wanted my help structuring the exit of these two, they both considered that my services were reserved for executive level personnel.

Office Group Silhouette smBoth employers felt competent to terminate these individuals on their own. I asked each to explain the situation or circumstances surrounding the individuals and to share the basis for the decision to terminate. In both instances, the employees were female with one over 40 and the other younger than 40. One was African-American, and the other was Caucasian. One had been with her employer for two years and the other for five. Both were mediocre employees who had not done anything egregious; they were just underperformers.

In my opinion, each of these companies was steering into hostile waters. Each of these individuals was being terminated, and anytime there is a termination, there is a potential for a wrongful termination allegation. Individuals very rarely see their situation quite the same as management. With a bias that often exists against employers, and for employees within the state and federal governments, any termination should be handled very carefully. If the termination can be avoided, then it should be. The better alternative to a termination is a structured exit, which results in a voluntary resignation and a signed hold harmless waiver that, through use of an incentive, has led to some sort of reasonable severance settlement. In fact, there are plenty of things, monetary and nonmonetary, that could be negotiated and serve as the incentive to achieve the same end.

Any employee termination can be expensive. I once had a case involving a 45-year-old minority female who was paid $33,000 a year. She was hired and assigned to a Caucasian training/orientation person. After four weeks of orientation, the training/orientation person notified the owner of the business that the new person was “too stupid to hold this job.” The trainer went on to clarify that the new person was answering the same questions over and over again—she just wasn’t “getting it.” The owner of the business advised the trainer to keep trying because the cost of recruiting another person had to be considered. Another 30 days went by, and then the new person went to the owner and advised him that her trainer wasn’t helping, and most of the other people weren’t even talking to her. She closed by saying it must be that they didn’t like her because she’s Black. Now, the owner has a race-based discrimination case on his hands.

This kind of potential mess can easily cost the employer from $50,000 to $150,000. In reality, the incident had nothing to do with race. Could the new person have gone home and told her spouse or looked in the mirror and said to herself, “I’m over my head, or I don’t have the background, training or education to do this job?” Not likely. Typically, people are not able to admit that, to themselves or to others. Rather, they are likely to blame and deny. This person was articulate and confident and who knows how sympathetic a plaintiff she could have made in front of the state human rights commission, the EEOC or in the civil courts. I would share with all of you that any termination carries significant risks.

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