Laying Off vs. Firing: Understanding the Legal Differences
A common mistake novice HR professionals make is believing they can lay off underperforming employees to avoid the hassle and discomfort of firing them outrightly, but in the majority of cases, the progressive discipline process is a necessary (yet effective) evil when it comes to dealing with performance issues.
The Legal Implications of Eliminating Positions
Few people relish confrontation; managers are not immune when it comes to a desire to avoid progressive discipline and termination. Taking these actions is never pleasant, and some try to lessen the sting by ending problem worker’s employment by casting their dismissal as a no-fault layoff instead. While this seems like an easier solution in theory, it is fraught with legal ramifications and can have a residual effect on your company’s processes and procedures. It is almost always better to proceed with a termination.
A layoff often implies that a position has been eliminated rather than a person. In order to defend yourself from a legal challenge, you’ll have to demonstrate through written records that the position in question is being eliminated due to a legitimate business need and the employee currently filling that position will, as a result, no longer have a job. If you’re eliminating a position because it’s easier than firing a problem employee, you’ll need to consider how that person’s work will get done in the future.
Even if there is a legitimate business reason to eliminate a position, you can’t just choose to let somebody go due to performance issues or because they happen to be the person filling that position at the time. Employers are required to determine who is the person in the affected department who is least qualified to take on the duties; ironically, that could end up being your best employee simply because they are your newest employee. At the very least, you’ll need to conduct a “peer group analysis” in order to determine the least qualified individual. This involves coming up with a list of all employees with similar titles and responsibilities; reviewing the scope of work needed after the position is eliminated; and determining (and documenting) which of the remaining employees is least qualified to perform those duties. This may or may not be your problem employee!
Keep in mind that once a position is eliminated, in the eyes of the law there is little reason to recreate that position in the future. Courts would likely side with the individual who was laid off, correctly ascertaining that they were in reality fired. How long you can go without adding an eliminated position back varies by state.
For all these reasons, not to mention morality and ethics, progressive discipline is really the way to go in these situations. Don’t try to take the easy way out if your only goal is avoiding confrontation; your company may pay a steep price in the long run.