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How to handle letting an employee go when you're the fo…

Some months ago, Perch co-founder Phil DeGisi was hiring for a new position pivotal to his company’s growth. Without a head of people on staff, he fielded as many as 20 interviews himself before settling on a final candidate.

But when it became clear that the new hire wasn’t meeting expectations, DeGisi scheduled a meeting to review the person’s performance goals and talk about how they could reach those goals within the next 45 days.

“You want to see the person be successful,” says DeGisi. “If you’re going to give someone the opportunity to improve you have to believe they can.” In this case, things didn’t improve. After running the decision by outside counsel, DeGisi determined the best course of action was to let the employee go.

When you’re a small shop working without full-time HR support or formalized reporting structures, parting ways with a team member comes with a unique set of challenges. Business Insider spoke with industry experts about best practices around firing an employee on a small team, and how to avoid landmines while shaping your expanding workforce.

“Small businesses often don’t know what they don’t know,” says Moses Balian, the manager of HR consulting at JustWorks, a platform that helps employers manage payroll, benefits, and other administrative needs. For that reason, ideally “you should engage some degree of human resources support as soon as you start to run payroll,” he adds. This might mean working with a professional employment organization (PEO) like JustWorks, ADP, or TriNet, which can typically cost between $500 and $1,500 per employee per year, depending on the size of your business and the support resources you require.

Or, you might consider hiring a small business or startup consultant, who can institute things such as regular reviews and performance documentation to help you objectively evaluate employees’ contributions over time. Expert consultants can also help companies develop offer letters and contracts that clearly stipulate the terms of employment, a factor that smoothens the departure if eventually an employee is being shown the door.

If leaning on outside HR resources isn’t an option at the moment, it can be helpful to turn to your board or talk to investors or other experienced counsel who can help coach you through the situation.

Polly Rodriguez.

Courtesy of Polly Rodriguez

Polly Rodriguez, a co-founder at the sexual wellness startup Unbound Babes, has leaned on advisors to make hiring and firing decisions in the past. She recalls texting with one of them when an employee was tipped off to a termination scheduled to take place on a Monday morning. “She said: ‘You should never let a weekend go by if someone knows they’re being fired,'” Rodriguez recalls. The conversation was rescheduled for that Sunday.

Beyond advisors, Rodriguez also counts fellow founders among her cadre of consultants: “You’ve got to find people outside your office and team to vent to.”

“In 49 states and Washington, DC, employment is ‘at will,’ and you can terminate at any time with or without notice,” Balian says. Montana is the only outlier, where employers must demonstrate that they have “good cause” to fire an employee. (“Good cause” usually means that the decision is based on one or several incidences of poor performance or workplace etiquette — examples include a hostile or rude email to a client, sexual harassment, or grossly misquoting the budget for a client project.)

Moses Balian.

Courtesy of Moses Balian

It’s essential to understand the employment laws that apply to the state where you’re operating, no matter if you’re a company of five or 500. For example, says Balian, “A handful of states require [a company] to hand an employee paperwork before they leave.”

In an at-will environment, explains Wendi Lazar, a partner at employment law firm Outten and Golden in NYC, you can fire anyone for any reason, so long as that reason isn’t discriminatory.

So being able to demonstrate why an employee is being let go with clear, consistent documentation can help shield employers from allegations of discrimination. “It’s very important to be consistent when doling out performance reviews, metrics, and rewards,” says Lazar. “You can’t cherry pick who gets reviewed and what criteria for success that review captures.”

Phil DeGisi.

Phil DeGisi

On top of that, says Perch’s DeGisi: “If it’s a performance-related firing, it should never be a surprise to the person walking into the room. If it is, you have failed as a manager.” Regular reviews and check-ins serve as an opportunity to get on the same page. “No one should go six months and think they’re doing just fine and then get put on a performance improvement work plan for 30 days — that’s just not right,” he goes on. “That’s why it’s very important that people are getting feedback so they know either ‘yes I am delivering and doing well’ or ‘no, I am not.'”

Balian says that reviews should be done at least quarterly. And in the event that you do need to let someone go, the upshot is that you’ll have a paper trail that backs up the decision to pursue termination.

“No matter where you work, if you are an employee, you have statutory protections through federal, state, and local laws,” says Lazar. Protected classes — race, gender, sexual orientation, among other categories — are defined at both federal and state levels; they also may vary by local jurisdiction.

“You have to be very careful these days about what you say in terms of someone’s physical appearance, as well as the reasons they’re not performing,” Lazar says. It’s also important to be consistent. “If you treat 10 workers one way but you treat that one woman, or that one man, or that one pregnant worker, or that one older worker differently, that’s going to open you up to liability,” she adds.

A termination conversation is, in many ways, not a conversation at all: The subject matter is not up for debate, and you never want to leave yourself open to rebuttals.

That means avoiding phrases like, “You’re so great, I’m really sorry we have to let you go” or “I wish we didn’t have to do this.” Even when you feel that way, it muddies the reasons for termination. “The employee is left to wonder: If you wish you didn’t have to do this, then on what basis are you making the decision?” explains Balian.

Wendi Lazar.

Courtesy of Wendi Lazar

That question could potentially open the door to a wrongful discharge claim. Comments about “culture fit” or self-presentation are also a no-go zone, says Lazar.

The bottom line? Refrain from expressing regret or remorse and mentioning non-performance-related specifics. “It can sound cold, but the best practice is to stick to the facts,” says Balian. For example, you could start by saying: “The decision has been made to terminate your employment with the organization.”

At the same time, he says, “Employment law doesn’t leave a whole lot of room for empathy, but there is room for dignity, and you can always express gratitude.” When circumstances allow it, telling the person that their work and presence has been appreciated is absolutely fine, as is giving them flexibility about how they would like to leave or pack up their desk. “Make sure [you] maintain eye contact, maybe shake their hand — there’s a lot of room to re-emphasize the culture when it comes to termination. Offboarding is super important,” Balian adds.

One easy way to show your appreciation is to simply say: “Thank you for your service to the company” Balian explains: “After all, they gave the business their most valuable asset — their time!”


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