Pay Malcontents to Take Their Misery Elsewhere

03/07/07

The Case
“So you caught Ben deliberately falsifying a time sheet?” asked Jan, the CEO.

“Well, not exactly,” said Hal, a supervisor. “He says he made a mistake he forgot that he took Tuesday afternoon off. Other people do the same thing and I let them slide. The difference is that I believe them, but not Ben. Every week it’s something an unplanned absence, mouthing off, horseplay. I’d love to get rid of him.”

“Why can’t you?” asked Jan.

“One reason is he’s always pointing out safety violations. Half the time he’s right, but even when he’s not, he uses the event to badmouth the company to others.”

“And remind me again,” Jan broke in. “Didn’t he once imply that if you ever fired him he’d claim it was retaliation for pointing out safety violations?”

“He’s done that more than once,” said Hal. “All his bad behavior—it’s like he’s daring me to fire him. And Tom told me something interesting a couple of weeks ago Tom asked him point blank why he acted the way he does. And Ben apparently said, ‘Maybe they’ll pay me to go away.’"

“Wow,” said Jan. “He sounds like a real manipulator. Are we close to being able to fire him for good cause…”

Hal lowered his eyes. “I, uh, should have done a better job of disciplining. I’ve been on him for the past two months, but I didn’t put much in writing before then.”

Jan cringed but said, “Maybe we can make his wish—and ours—come true.”

“How?” asked Hal.

“A severance agreement. Let me talk to our lawyer, then I’ll get back to you.”

The Analysis
This is a classic situation that plagues many employers an underperforming, chronic complainer has engaged in what is most likely protected activity, making terminating him complicated.

The employee has complained about safety violations, at least some of which were valid. In states that have “whistleblower” laws, people who complain about such issues as safety violations ordinarily cannot be terminated for complaining. They could also be protected from retaliation under OSHA and other federal laws. If this employer terminates Ben, it should be prepared to prove to a jury that the termination was for reasons other than the complaints.

Realistically, if it discharges Ben, the employer will probably have an uphill battle proving that its reasons were non-retaliatory, since Ben’s supervisor has done a poor job of documenting Ben’s performance shortcomings.

While this employer may appear to have painted itself into a corner, it has options. Termination is one of them, but it’s high risk. Although it gets a malcontent out of the workforce right away, the risks probably outweigh the benefits in this case.

Start Documenting
The lowest-risk option would be for Ben’s supervisor to begin documenting Ben’s misconduct and counseling him. This will show that the employer isn’t out to get Ben, but has made an effort to rehabilitate him. It also allows the company to lay the groundwork for terminating him. If Ben is ultimately discharged, the paper trail will help substantiate that the employer’s actions were legitimate.

Even then, the employer will not be immune from a lawsuit, but it will at least be in a more defensible situation. The downside to this option is that it prolongs an already miserable situation.

The Separation Alternative
There is an alternative: a separation agreement. It carries an element of risk, but sometimes it can help an employer achieve its objectives without getting sued.

In this case, it sounds like Ben wants to quit but is savvy enough to know he wants some money to “go away.” The employer also would like to see Ben gone, but doesn’t want to get sued. So it becomes a matter of whether both parties can agree on how the employee will leave. A separation agreement, where the employee releases all rights against the company in exchange for specific benefits, can work. However, if the employer takes this path, it must be very careful about how it suggests this option to the employee. In this case, it is especially tricky, since any mention of a discharge could, in a worst-case scenario, result in a whistleblower retaliation claim or other charges.

What I have sometimes suggested to employers in similar situations is to meet with the employee, discuss his performance with him, and note his apparent disillusionment with the job. From this, the discussion may lead into something like, “We know you’re not happy here, and maybe it would be the best thing for all of us to shake hands and walk away. However, since you’ve been with the company for several years, we wouldn’t expect you to leave empty handed. We would provide you with some severance to make your transition to another job less difficult. But as a condition of the severance, you would be required to sign a release of claims against the company.” If the employee seems amenable to this solution, the employer should have a separation agreement already prepared. Aside from some risk of a retaliation claim, this strategy carries another element of risk. The employee may conclude that the employer is afraid to fire him outright or that the employer is afraid he “has something” on them. The employee may conclude that he has the advantage and may refuse to resign or demand an unreasonable amount of money to go away.

Another negative: Offering a severance in this kind of situation is something of a reward for bad behavior, which many employers find unpalatable. However, keep in mind that nudging a problem person out the door while getting them to release any claims against you is a beautiful thing. It may be worth a little discomfort it if it accomplishes your objective.

And the incentives you offer an employee to release claims against you don’t necessarily have to be monetary, but they must have value. Nonmonetary incentives can include offering to continue to pay the employee’s health insurance for a period of time beyond what the employee is otherwise entitled to, providing a letter of reference, or not requiring the employee to return company property such as a personal computer. Often, money and some combination of other incentives present an attractive-enough package to the departing employee that he will agree to sign a release.

Draft It Properly
The next trick is to make sure the separation agreement is properly drafted. The last thing you want is to hand over a sum of money and then get sued anyway because the agreement has a flaw that makes it unenforceable. Special, very specific rules exist, for example, regarding what language must be used in a separation agreement if an employee age forty or older is being asked to release age-discrimination claims. In addition, some states have laws that specify what claims an employee, cannot legally release, even if the agreement is legal in all other respects.

To avoid a flawed agreement, use a competent attorney to draft it.