And from a pragmatic aspect, many employers are now realizing that they need more formal ongoing documentation of an employee’s performance and clearly spelled out separation agreements to avoid potential lawsuits.

The Emotional Aspect

As contractors deal with new realities in a difficult job market, no matter how practical or realistic a situation might be, for many contractors it doesn’t ease the pain of letting someone go.

Consider the situation described by Fred Kobie, president and CEO of Kobie Kooling Inc., Fort Myers, Fla.

“During the economic downturn of 2008/2009 I was forced to lay off and terminate people for the first time in our family business history. Our family company had 35 employees. During the beginning of the problem, my wife and I borrowed against our home and desperately tried to fight off firing people. We always felt that providing a safe environment for our employees to earn a living and raise their families was the best part of being a small business person. We were very proud of having a real family environment.

“The day came when we could fight no more and we had to relieve eight of our people. At the same time I stopped taking a salary (I still take a stock share but not a salary). We cross-trained everyone to be able to swing our manpower needs to the seasonal needs. We removed two layers of management and became actively involved in the field again. My brother and I rolled up our sleeves to save our company. I cried the day I let people go, because I knew it wasn’t just a job to them.”

The changing nature of the economic climate has also caused a change in George “Butch” Welsch, Welsch Heating and Cooling, St. Louis. “I used to be terrible at layoffs. Now I’m taking a more callous attitude because I have to,” he said.

As a union shop company, he said Welsch Heating and Cooling employees and the unions themselves are well aware of what’s happening. “If there is a lack of work, they get it,” he said.

He also noted he hires employees with an “at will” understanding, which maintains that since an employee can leave an employer “at will” so too can employers “terminate at their discretion.”

Weakest Link

Toby Taylor, general manager of AirRite Air Conditioning Co., Fort Worth, Texas, said terminations often relate to “looking for the weakest link.” In such cases, Taylor, like others, sees the importance of documentation.

At the same time, the resulting workforce could change the dynamics on a job site. He cited an instance where a job typically had a lead technician and several installer/helpers. But because of a reconfiguration of the workforce due to downsizing, there could be the possibility of a couple of lead techs on a similar project. “You look at the manpower and see what it takes for a job,” he said.

He also said there are job sharing possibilities, when a technician may go to another contractor, then be hired back by the original contractor when works picks up in the summer for the first employer.

Termination Advice

Helping owners deal with ever-changing business realities is one reason the Heating, Air-conditioning, Refrigeration Distributors International recently asked Nancye Combs, president and CEO of HR Enterprise Inc., to become HARDI’s human resources and organizational management consultant. In this role, she consults with HARDI members on a variety of business issues, including employee terminations.

She noted that because contracting and wholesaling businesses have such a range of jobs and job descriptions it is important to stress to an employee being let go that the action is because “a position is being eliminated.” In this regard, she added, “You can’t take a counterman and put him in the office” because of differing job skills.

Even within a job classification, there are challenges, she said, as with the need to eliminate, for example, two of five counter positions. “Here things can be wide open for claims of discrimination.” That’s why, she said, there is a need for documentation of job performance over the years. And even beyond that is the need for a separation agreement that provides, for example, one week of pay for every year the employee worked at the company, an offer to continue health benefits for a certain period of time, pay for unused vacation time, money to assist the employee in preparing resumes, and letters of recommendation — all with the understanding that the terminated employee signs a binding statement that he or she will not take legal action against the employer.

Publication date: 6/18/2012