Problem employee? Tips to protect your company against discrimination claims. (Part 1)

Matthew S. Veech

May 9, 2017

Unless an employee has an employment contract, all employees in Texas are “at-will.” This means the employee can resign at anytime, with or without notice, and for any reason. Similarly, employers have the right to terminate an employee’s employment at anytime, with or without notice, and for any reason or no reason at all.

There is a very important exception to that general rule; employers cannot terminate an employee for an unlawful reason. Broadly stated, this means that an employer may not terminate an employee for a reason related to that employee’s position within a “protected class.” Texas and federal law set forth numerous protected classes—race, gender, age, disability, national origin, veteran status, workers’ compensation, etc.

We are consistently asked by our clients “how do we protect ourselves when disciplining, counseling or terminating an employee?” In this two-part legal alert, we will provide some general guidelines in handling these difficult situations with employees to best avoid a claim of discrimination based on an adverse employment action being taken against an employee in a protected class.

In Part 1, we will discuss the importance of employers regularly reviewing the performance of employees and documentation of those reviews; and in Part 2 we will discuss best practices for disciplining, counseling and terminating employees.

Part 1: Reviewing/documenting employee performance

One of the most important practices an employer can institute to protect themselves is to document employee performance and disciplinary issues. Employers should make sure they are reviewing their employees at least annually. This means the employer should develop a review schedule and stick to it. Before conducting the review, the employer should develop the criteria that will be reviewed and set the measurable data points. This makes what is innately a very subjective process more objective. The review process should involve the key stakeholders, the employee’s supervisors and human resources. While it is always easier to deliver good news, the employer should avoid overstating the positives during the review.

By the same measure, the employer should not avoid the tough subjects. When communicating the tough subjects, employers should be direct but constructive. In areas where the employer expects to see improvement, expectations regarding conduct and timing should be set by the employer.

Finally, the employer must document the review. Too often, we hear about the underperforming employee that needs to be terminated, but then that employee has either never received a review or his or her review tells a different story and only emphasizes the positives. This creates a challenge in terminating an employee. While Texas employees are generally “at-will” employees who can be terminated for any non-discriminatory reason, if an employee, who is a member of a protected class has either received no performance reviews or only positive performance reviews, they may use that as evidence of a discriminatory reason for the termination (even where one absolutely does not exist).

It is imperative that employees receive regular reviews and that the review documentation discusses negatives and areas for improvement. This also includes setting a performance improvement plan with specific goals and expectations for improvement by the employee, a written time frame for improved performance, and the repercussions for failure to meet the performance improvement plan within the specified time frame.

Read more in Part 2 – common mistakes by employers in disciplining and counseling employees that can potentially lead to claims of discrimination at the time of termination.