Disciplining and/or firing an employee is one of the most dreaded tasks for CEOs and small business owners.  Sometimes the trauma of termination can be just as bad for the boss as it is for the employee.  But in this litigious society, bosses need to take extra care when disciplining or firing an employee to be sure they stay on the right side of the law.

Here are some tips on how to discipline or fire employees the right way:

Establish clear rules.  The best way to establish clear rules is to be sure you have an employee handbook that explains the rules and the penalty for breaking them.  You also need to be sure the rules are reasonable.

Uniformly enforce the rules.  Company rules should be impartially and uniformly enforced, no matter who has committed the infraction.  Of course, there may be extenuating circumstances that need to be taken into consideration, but if you play favorites in rule enforcement, you create an environment of mistrust and open yourself up to litigation.

Establish a warning system.  You want to devise a warning or probationary system and make sure your employees understand the consequences of each rule infraction.  Warnings should be made in private, to avoid embarrassment.  Record each warning in the offending employee’s personnel file, and follow through.

Document everything.  As mentioned above, any time an employee receives disciplinary action, that action should be detailed in his or her personnel file.  Expectations for corrective behavior should be discussed with the employee and noted in the file.  Poor performance should also be documented.  Make sure any grounds for termination are very clear; there has been an increase in recent years of terminated employees filing suit against employers and written evidence is the only material used by labor boards and the courts to determine fault.

Conduct performance reviews.  Even the smallest companies need to have a performance review policy.  These reviews set company expectations for performance and measure how an employee is – or is not – meeting expectation levels.  Reviews should be conducted every six months, and the results should be placed in the employee’s personnel file.

We can help you understand the federal and state labor laws that apply to your company.  If you’re a small or mid-size business owner, contact a Family Business Lawyer™ today to schedule your comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit.  Normally, this session is $1,250, but if you mention this article and we still have room on our calendar this month, we will waive that fee.