Employee lawsuits typically are a result of negative evaluations or adverse employment actions. Much to the employers’ dismay, the employees usually win such cases thanks in part to the employers’ very own performance evaluation procedures. Using subjective performance standards, failing to effectively address performance problems, and not warning employees about the consequences of unsatisfactory performance are the three most common reasons why courts rule in favor of the plaintiff. While employers do have the right to insist on quality and productivity from every employee, they must also make legally defensible decisions when it’s time to reprimand or terminate an employee.
Good documentation of evaluations and disciplinary action is critically important, as it provides evidence to help verify whether an employee has received prior notice concerning a particular rule or deviation from acceptable job performance. It also provides a record of whether an employee has previously been disciplined and, if so, the appropriate form of discipline for subsequent misconduct. In addition, it creates a vehicle for examining precedents when one employee engages in the same or similar conduct that has resulted in discipline of other employees.
When designing a performance appraisal process, managers must be certain that the program objectively appraises employees based on job-related function, adequately documents and supports appraisals, and allows for a unified and consistent appraisal process for all company employees. Any deviation from these objectives could result in costly legal battles.
Managers and supervisors can take several concrete steps to ensure consistency, objectivity, accuracy, and fairness throughout the performance appraisal process. Use the following guidelines to manage employees within legal limits, without paralysis.
1. Communicate expectations: Managers must consistently communicate standards or expectations to employees and clearly identify each aspect of the required performance. If an employee fails to meet expectations, address the deficiency immediately and specify where the employee’s performance requires improvement. When employees don’t know their assessment criteria, they can win a legal battle by simply stating, “I didn’t know what was expected of me.” Be sure to specify objectively measurable performance, such as quality, quantity, and timeliness of work, as well as important soft skills, such as teamwork, initiative, judgment, integrity, and leadership.
2. Perform candid appraisals: Rather than let a fear of lawsuits affect your ability to conduct performance ratings, address performance issues consistently for all employees on a timely basis. Be accurate and objective in your performance ratings, and remember to always rate poor performance as well as good performance. When you fail to point out poor performance, the problem continues, as employees cannot correct problems they are unaware of. Additionally, failure to document poor performance can create a legal liability for the employer should a wrongful termination case ensue. Consistently addressing issues of concern with employees defends against the “I didn’t know I wasn’t meeting performance expectations” claim.
3. Maintain objectivity at all times: Focus the performance evaluations on objective job-related criteria. Examples of objective criteria that courts have upheld include quantity, quality, or timeliness of work and specifically articulated expectations for interpersonal skills, teamwork, exercise of judgment, and displays of initiative. You can establish objective expectations even with subjective standards when you articulate what you consider acceptable behavior. For example, you may say, “You will exercise better judgment if you come to me early and let me know you can’t meet a deadline so that I can help you prioritize your workload.”
4. Stick to job-based criteria: Always relate the appraisal to the employee’s particular job. If an item on the evaluation form is not relevant to an employee, indicate “not applicable” in the appropriate space. Also be sure to consider the full rating period. Avoid the tendency to let recent performance events cloud what may have happened months earlier. Finally, compare the employee's performance to a norm or performance standard rather than the performance of other employees.
5. Record and memorialize: Put all evaluations in writing and document any verbal feedback made during the meeting. Keep the language in written proposals simple and as easy to understand as possible.
6. Be specific: Review appraisals to ensure that both high and low ratings have sufficient documentation and anecdotal information that details what the employee did or did not do to earn the rating. Avoid vague or descriptive personal criteria that others could misinterpret.
7. Address performance problems promptly: Discuss and/or deal with performance problems at the time they occur. If the employee's performance is unsatisfactory, immediately counsel the employee on deficiencies and suggest concrete ways to improve performance. The courts may question your motive in a poor performance discharge if the incident prompting the discharge occurred substantially prior to the time of the discharge.
8. Specify the consequences of non-performance: Clearly specify a final warning on the performance appraisal if the employee’s performance is so poor that a demotion, change in assignment, or discharge may occur. This will help defend against the single most common legal deficiency in the performance management process: the employee’s truthful claim that “I didn’t know this adverse action would occur if I didn’t improve or correct my performance.” Employees routinely win lawsuits with such a claim because supervisors often don’t like to give negative feedback due to concerns about defensive confrontations, a desire not to hurt a likeable employee’s feelings, or worst of all, the fear of drawing a lawsuit that alleges discrimination or harassment.
9. Maintain consistency: Be consistent with performance appraisals and any corresponding pay adjustments. Document poor performance if it is a basis to delay or deny a pay adjustment just as you would document good performance to substantiate a pay raise. Inconsistency will reflect poorly in any subsequent legal proceeding, especially when the employee claims that he or she was singled out for negative action. Consistency further enhances your ability to defend against discrimination claims, as it demonstrates that the needs of the particular job consistently required adherence to concrete, well-articulated performance expectations, and that all similarly situated employees are held to the same standards.
10. Plan your documentation: Contrary to popular belief, poor documentation techniques actually increase your chances of liability in a lawsuit. Avoid making any notes on appraisal forms that the courts could view as discriminatory or that reflect a “mixed motive.” Avoid contrived statements such as “the chemistry isn’t right.” Also, minimize your use of labels, such as “self starter,” unless you tie it to a measurable performance standard, in this case “initiative.” When in doubt, have a jury who doesn't know you or the employee review the appraisal. Can they misinterpret it? Above all else, never backdate appraisals and never attempt to document something that did not occur. Always document events as they occur to assure your memory is fresh and your examples are relevant.
When you know, understand, and implement the criteria for lawful performance management, you enable your company to operate at peak efficiency while you stay within specific legal parameters. The more proactive steps you take to reduce your chances of a wrongful termination lawsuit, the more successful and lawful your company becomes.
Eyres is an experienced attorney with over 18 years defending businesses in the courtroom. She is a full-time professional speaker and author. She can be reached at 800-548-6468 or Patricia@PreventLitigation.com.
Publication date: 03/24/2003