5 Tips for Nonprofit Leaders to Avoid Claims of Wrongful Termination
No nonprofit leader relishes the unfortunate task of ending an employee's employment — be it for performance problems, misconduct or operational reasons. It is a difficult process, so much so that nonprofit leaders who excel in every other area may find themselves rushing through the process to avoid the difficulty. However, poorly handled and rushed terminations create serious risks, such as a wrongful termination claim.
A wrongful termination claim is when an employee claims their employment was motivated by an unlawful reason, such as their race, a recent pregnancy leave or a complaint about workplace safety. In addition to monetary damages, wrongful termination claims can cause significant reputational damage. Accordingly, nonprofit leaders considering a termination should consider these steps to reduce the risk of wrongful termination claims.
1. Do Not Act Impulsively
Very few situations require an immediate termination. Instead, you should approach the decision slowly and thoughtfully. Before acting, you should review the nonprofit's personnel policies to ensure you comply with any applicable policies, such as a progressive discipline policy. Also, review the employee's offer letter or employment contract to determine if there are any applicable contractual limitations, such as a requirement that the employee only be terminated for just cause.
2. Follow Applicable Policies and Contractual Requirements Precisely
Failing to follow applicable policies and contractual requirements precisely can be used against the nonprofit in a wrongful termination claim to undermine its credibility. A jury is unlikely to believe the nonprofit was acting for a lawful reason when it could not be bothered to follow its own policies. Following the nonprofit's policies is also the fair thing to do, and employees who feel fairly treated are less likely to bring wrongful termination claims.
3. Review the Employee's File and Know the Facts
You should also consult with human resources and review the employee's personnel file. Are there red flags that need to be addressed before proceeding with termination? Did the employee recently engage in protected conduct, such as asking for a disability accommodation or complaining about safety violations? Were those requests or complaints addressed and resolved? Knowing the answers to these kinds of questions can help you assess the level of risk of a wrongful termination claim.
After evaluating these risks, you will be in a better position to weigh those risks against countervailing considerations and decide whether to move forward with or table the decision, perhaps to engage in more performance counseling. This is a very fact-driven process that involves careful consideration and risk assessment.
4. Carefully Consider the Reason for Termination
To defend against a wrongful termination claim, an organization must articulate and document its legitimate business reason for the termination. For example, if you are ending an employee's employment for performance problems, you should first assess whether your nonprofit has thoroughly documented the performance issues.
If you instead find that the record is space, or worse, the employee has years of positive performance reviews, slow down. Take time to provide the employee with written constructive performance feedback and an opportunity to correct their performance. During that process, maintain a complete and accurate written record of all provided feedback and the employee's performance after receiving the feedback.
A related consideration is whether you should provide the employee with the reason for termination. With most at-will employees' situations, an employer is not obligated to, but it may help protect against a wrongful termination claim if the employer can articulate a nondiscriminatory legitimate business reason for the decision.
However, if you intend on giving the employee the reason, it should be the actual reason, even if it may be difficult for the employee to hear. Do not provide an ambiguous reason, such as saying they are "not a good fit." Using the phrase "not a good fit" will lead an employee to question their termination, especially because "fit" can be construed as a code word for unlawful reasons to terminate someone, such as their age, race or religion.
5. Consider Offering an Employee Severance in Exchange for Signing a Release
Depending on the circumstances, you may want to consider offering the employee a severance payment in exchange for signing a release. Doing so reflexively could send the wrong signal to the employee by suggesting that they have a claim, but if this is a particularly risky situation and you want to try as much as possible to foreclose potential claims, offering severance conditioned on signing a release in a separation agreement may be warranted. Before doing so, review applicable policies and contracts to see if severance is required, which could impact the nonprofit's ability to condition the severance payment on signing a release.
There have also been several recent legal developments arising out of the #MeToo movement impacting separation agreements. For example, California law now places limits on nondisclosure provisions in separation agreements, particularly concerning information about sexual harassment. Accordingly, you should consult with legal counsel before presenting an employee with a severance agreement.
Yesenia Z. Carrillo is an associate attorney with Liebert Cassidy Whitmore. She provides legal counsel to nonprofit organizations related to employment matters. She also serves as a board member for various nonprofits in Fresno and is a member of the board of trustees for a public school district.
Casey Williams is an attorney with Liebert Cassidy Whitmore, working solely with nonprofits on employment, governance, and business matters. Based in the San Francisco office, her practice is focused on helping mission-driven organizations achieve their goals while staying compliant and working through complex disputes.