Best Practices for Terminating Employees to Avoid Wrongful Discharge

Mike DeVries
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Do you cringe at the thought of firing your employees? A great dental team is key to having a successful practice. But to achieve this goal, you may have to deal with the unpleasantness of terminating a few employees. Hiring the right team member can be a challenge, but firing an employee can be one of the riskiest situations an employer can face.

Use a Human Resource Professional 

In today’s litigious environment, doctors have to go the extra mile to protect themselves from disgruntled ex-team members. Having an employee handbook or personnel policy that outlines your expectations is helpful in avoiding a wrongful discharge lawsuit.

During your hiring process, make sure all of your employees understand they are working under the “employment at will” doctrine, meaning that employment is for an indefinite period of time and may be terminated at any time either by the employee or the employer. This should be outlined in a written document that each employee reads, understands, and signs before being hired.  

However, be aware that this “at will” doctrine has eroded over the years and can have some exceptions. Also, employment laws vary by state. Doctors should work closely with their labor law attorney when writing office manuals or applying general policies to their specific situation. 

Recently, I had a dental client share his newly created personnel policy manual with me. It was a canned document that he had purchased, and it included national labor laws that were not applicable to his business. By having them stated in his manual, he was voluntarily applying and subjecting his business to the stated regulations for his employees. For this reason, it’s always a good practice to pay for professional help with this area of your business.  

Today, depending upon the location of your dental practice, there are statutory restrictions that prohibit discharges based on race, color, religion, national origin, sex, age, disability, union activities, and other reasons. If you have an employee that falls within one of these special classes or you have any indication that an employee may perceive the firing as a wrongful discharge, seek advice from your attorney prior to terminating your employee. The attorney may recommend using a severance agreement that could reduce the risk of future litigation. 

Create a Paper Trail

The first step to properly terminating an employee is putting the employee on notice. This means establishing a paper trail that begins with a policy manual that sets the standard for what is expected in your office. It’s important to deliver written warnings to employees detailing the consequences of failing to meet job expectations. Copies of these warnings should be kept in the employee’s personnel file.

If your employee does not respond to warnings, attempt to explore alternatives to firing such as offering severance pay in exchange for a signed release. If possible, it’s best to part ways in an agreeable manner.

Sometimes if employees are made aware that they are not a good fit for the position, they will voluntarily quit. But even in this situation, a paper trail is important. Ask for the resignation in writing and formally acknowledge the receipt of the resignation letter. Use an exit interview questionnaire to gain additional information about the employment relationship. This is a good opportunity to learn more about how you might make the position better for the next person you hire.  

Also, it is important to have the departing employee sign an acknowledgement of corporate compliance responsibilities. As a dental office, you fall under Health Insurance Portability and Accountability Act (HIPAA), Occupational Safety and Health Administration (OSHA), and federal fraud and abuse regulations. Departing employees need to state that they are not aware of any non-compliance and that if they do recall something, they will notify you or your compliance officer.   

Finalizing the Departure 

To keep the process as painless as possible, hold the termination interview in a neutral area like a conference room or lunch room away from your office. When you break the news, do so within the first few minutes of the meeting and make the reason for the firing clear and objective. Let the employee know what to expect going forward in regards to any final benefits or future references. If possible, hold these meetings on the last day of your working week so the rest of your team has the weekend to process the situation.

Consider compiling a checklist for everything that needs to be done after terminating an employee. This list should include issuing final paychecks, collecting company property, deactivating passwords, updating your phone and e-mail systems, planning for the cancellation of employee benefits, assigning duties, and possibly reviewing your financial activities if the employee was directly involved. Following all of these steps will mitigate risks and reduce stress. 

Four Guiding Principles 

Most importantly, I urge you to keep Julian Treasure’s “HAIL Principles of Communication” in mind throughout the whole unpleasant process of terminating an employee. Treasure is an author and communications expert who suggests using these 4 principles as a cornerstone of your communications: 

  • Honesty: Be truthful and straightforward with your employees. Let them know when they are meeting or exceeding your expectations, but also let them know when they are falling short.
  • Authenticity: Be yourself with your employees. You don’t always have to be right, but you should always be real. Employees don’t enjoy working with people who are putting on a mask each day trying to be someone they are not. 
  • Integrity: Be your words with your employees. Do what you say you will do so that they know you are someone they can trust. If an employee isn’t able to work within the standards that have been set for your business, address the issue right away.
  • Love: Be a caring employer. If you don’t care, neither will your employees. In your praise and in your discipline, treat your employees as you would like to be treated.

Through these guiding communications principles and suggested steps, your employees will respect you, even when you are faced with the difficult task of terminating an employee.

Mr. DeVries is a Certified Financial Planner, an enrolled agent, and a Certified Healthcare Business Consultant focusing on helping healthcare professionals mind their own businesses. He is a partner in the CPA firm of VanderLugt, Mulder, DeVries, and Elders and a member of the National Society of Certified Business Consultants (NSCHBC). For more information or resources, visit mikeldevries.com. He can be reached at mike@vmde.com.

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