What’s New?

Reasons Not to Hide Performance Terminations as Layoffs

by Jennifer Shaw and Melissa Whitehead | | February 20, 2024

All employers have been there. You decide to terminate an employee because of their poor job performance, but there is a problem. Maybe the supervisor has never addressed the performance issues.  Or, the manager never documented their discussions with the employee. Perhaps you fear the employee is litigious because she boasts about settlements received from former employers. Whatever the reason (and there may be many), you are nervous to terminate.

So, you decide to “disguise” the termination as a reduction in force (“RIF”), and tell the employee that you are eliminating their job. Problem solved, right?  No. Definitely not. This approach can backfire in many costly ways.

For example, what if the organization’s financial situation improves quicker than expected, and you decide to refill the position?  The former employee sees the job posting and questions why you did not ask them to return.  Claiming they aren’t qualified, or had performance issues while working for you, isn’t going to fly at that point.  Although employers are not obligated to rehire employees who are laid off for business reasons, these circumstances may cause the former employee to believe you lied to them. The employee may then “make a movie” about the “real” reason for their termination, which is usually related to their membership in a protected class or recent protected activity. As a result, you may end up spending significant time and resources defending against a meritless wrongful termination claim. The burden will be on you to prove the legitimate, nondiscriminatory business reason for the termination – and to explain why you falsely cloaked the termination as a RIF.

As we have told many of you in the past, save the RIFs for when you are truly eliminating positions. If there is a performance issue, offer the employee an opportunity to improve with a performance improvement plan. Doing so will help set clear expectations and give the employee an opportunity to improve, or at least allow you to rest easier, knowing you have been fair to the employee and are prepared to defend against claims to the contrary.

If further performance management isn’t an option, at least prepare an internal memorandum or other documentation explaining the reasoning behind the termination decision (ideally, before you conduct the termination). You also can consider offering a separation package in exchange for a waiver of claims.

Does performance management still give you heartburn? You’re not alone! Join us on June 18, 2024, for “Performance Management with a Modern Spin,” a new webinar in which we will provide tools and best practices to drive positive performance and a healthy workplace culture. Click here for more information and to register.

Never Miss a Post
Please enter all required fields Click to hide
Correct invalid entries Click to hide

Shaw Law is Hiring!