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PERFORMANCE MANAGEMENT & DISCIPLINE

The first step to ensuring your performance management and discipline systems are handled appropriately, is to be sure you have policies and procedures in an employee handbook that are tailored to your specific business needs and circumstances.  You want these polices to be clear and simply stated so that employees can understand and abide by them.  All employee handbook provisions should keep in mind the three R’s: the handbook provisions should be reasonable, realistic and relevant.

Once you have those key policies and procedures in place, make sure you have processes in place for performance reviews and when and how they will be performed, performance improvement plans (PIP) and how they will be initiated and tracked and procedures for your company's performance management processes.



 

employee handbooks (Premium content)

Perhaps one of the most critical pieces to the hiring and onboarding process, as well as the life cycle of an employee's career with your company, is your company's employee handbook Our premium services include a legally prepared, state-specific employee handbook.  Simply click on "Employee Handbook" below and we will walk you through this critical process.

 

performance reviews 

Whether you are dealing with the new hire, the loyal long-term employee, or have been asked to give a performance review, knowing when and how to step in and manage poor performance, discipline, or terminate an employee, and conduct performance reviews will be key to maintaining a productive and capable workforce. 

There is no federal law requiring employers to conduct employee performance reviews, but many employers conduct reviews at least annually. Performance reviews can benefit employers and employees by improving:

  • Work performance, including by increasing:

    • efficiency; and

    • productivity.

  • Workplace fairness and objectivity.

  • Employee attitudes, including by helping employees feel engaged in:

    • their work; and

    • the overall organization.

Poorly executed performance reviews, however, can increase litigation risks by providing evidence employees can use in discrimination, retaliation and other employment-related lawsuits against employers.

This Note provides practical guidance for employers that choose to conduct performance reviews by addressing:

  • How performance reviews can benefit employers and employees.

  • How performance reviews can be used in employment litigation.

  • Practical tips for maximizing the benefits and minimizing the risks of conducting performancereviews, including common pitfalls to avoid.

 

Benefits of Effective Performance Reviews

Well designed and executed performance reviews can be an effective tool to manage and evaluate the skills and productivity of an employer's workforce and to provide feedback to employees. Both employers and employees can benefit from these evaluations.

 

Benefits to Employers

Performance reviews that accurately and objectively assess an employee's job duties and performance provide valuable information to the employer about:

  • The employee being evaluated.

  • Employees reporting to a particular supervisor or in a particular job category.

  • The overall organization.

 

Assessing Individual Work Performance

Through performance reviews, an employer can learn about a particular employee's:

  • Actual performance, such as whether the employee met identified targets.

  • Strengths.

  • Weaknesses or underperforming areas, including whether an employee:

    • lacks required skills; or

    • needs specific training or experience.

  • Attitude, including whether the employee positively or negatively impacts employee morale.

  • Professional goals.

  • Job satisfaction.

A performance review also can help an employer make a decision or support an employer's decision to take action, such as:

  • Promote an employee.

  • Increase an employee's base compensation.

  • Pay incentive compensation to an employee, such as a bonus.

  • Place an employee on a performance improvement plan.

  • Take adverse action against the employee, such as:

    • discipline;

    • demotion; or

    • termination of employment

 

Avoid Common Pitfalls of Poorly Conducted Reviews

There are three key potential pitfalls employers should avoid when conducting performance reviews. If not avoided, any potential benefits the employer may gain by conducting performance reviews may be lost. In addition, poorly conducted reviews can be used by employees in employment-related litigation.

Avoid Subjectivity

Performance reviews should be based on objective, not subjective, criteria. For example, sales representatives should be evaluated based on achieving specified targets (such as $1 million in new sales revenue in each quarter) instead of asking the reviewer to indicate whether the sales representative is generally effective or ineffective.

Performance reviews based on subjective criteria can increase the employer's litigation risk and exposure to liability. For example, a supervisor's unlawful or unconscious bias can permeate a subjective review more easily than an objective review. In addition, a subjective performance reviewcan play into an employee's belief that the reviewing supervisor is:

  • Treating him unfairly.

  • Singling him out.

  • Discriminating against him.

The employee may look at the performance review as merely another example of his supervisor's bias rather than as an opportunity for both parties to review the employee's actual performance. If the employee's belief is justified, the supervisor giving a subjective performance review will likely assess the employee's performance differently than other employees. This can lead to legal and financial exposure, especially if the review impacts compensation or serves later as the basis for an adverse employment action against the employee.

Similarly, performance reviews based on subjective criteria allow individual supervisors to evaluate employees against different standards, making the reviews incomparable. For example, employees subject to a more rigorous review may appear as underperformers when compared to employees subject to a more lenient review, even though objective criteria may show that they are equivalent or better performers.

These subjective reviews can harm both the employer and the employee by:

  • Impacting employee morale.

  • Decreasing retention of highly qualified employees.

  • Increasing the risk of legal and financial exposure.

Avoid Ambiguity

Employee reviews should be clear and specific. Employees who receive performance reviews that are riddled with ambiguity or that contain blanket statements about an employee's performance are less likely to improve because the employer's expectations are unclear. In addition, judges and juries are less likely to believe an employee was terminated for poor performance when the:

  • Review was ambiguous.

  • Employee did not know the employer's expectations.

 

Avoid Inaccuracy

It is not unusual for a performance review to inaccurately reflect what the reviewer or supervisor actually considered to be the employee's level of performance. Common causes of inaccurate performance reviews include the reviewer's:

  • Desire not to hurt the employee's feelings.

  • Lack of time to complete the performance review.

  • Fear that a particularly unpredictable employee may react strongly to a negative review.

Although these reasons for inaccuracies are understandable, employers should not allow them to translate into inaccurate performance reviews. Like the other pitfalls, inaccurate reviews:

  • Fail to give the employee the specific information necessary to improve his performance.

  • Do not put the employee on notice that he needs to improve his performance.

  • Do not support a later decision to take an adverse action against the employee because of poor performance, such as:

    • demotion; or

    • termination of employment.

 

performance improvement plans

Once you have your policies created, even-handed, consistent application of the policies is necessary to avoid any potential discrimination claims.  Stick to your company’s written rules in deciding whether discipline is warranted.  Be prompt, specific, honest, fair, and discrete in regards to disciplining an employee.  Choose the level of discipline carefully.  Would an oral reprimand be enough, or does the situation warrant more extensive discipline?  Have you considered a performance improvement plan (PIP)?  Have you thought about the consequences of imposing no discipline at all?

 

investigations

You may need to conduct an investigation into the matters prior to deciding what the appropriate course of conduct or discipline is.  Our investigation checklist and forms can help provide the procedural steps to protect the company but also to provide fair and consistent treatment to your employees should incidents happen that violate your policies or procedures.

Internal workplace investigations are often necessary to discover, address, and prevent workplace problems. This Note outlines the key considerations and appropriate procedures for conducting internal workplace investigations. Specifically, it addresses:

  • Benefits of conducting internal workplace investigations.

  • Situations warranting an investigation.

  • Risks associated with conducting investigations.

  • Best practices for conducting effective investigations.

  • Post-investigation tasks and considerations.

This Note addresses workplace internal investigations under various federal laws. It does not cover any state or local law requirements.

 

Why Conduct Internal Workplace Investigations?

Employers regularly receive complaints of workplace misconduct by employees, including:

  • Discrimination.

  • Harassment (sexual and otherwise).

  • Health and safety violations.

  • Workplace violence or threats.

  • Workplace drug and alcohol use.

  • Violations of employer rules.

  • Theft or fraud.

  • Other criminal activity.

Internal investigations are an important tool for responding to complaints or incidents of suspected workplace misconduct because they assist employers in determining:

  • Whether allegations of misconduct have merit.

  • Who was involved in the misconduct.

  • Disciplinary or other measures that should be taken against the alleged perpetrators to prevent recurrence and limit employer liability.

  • Preventative steps to avoid future similar incidents.

The practice of conducting investigations can also help an employer:

  • Improve employee morale.

  • Increase productivity (when coupled with appropriate disciplinary action).

  • Reduce turnover rates.

  • End inappropriate conduct on a company-wide level.

Additionally, internal investigations can be crucial to an employer's ability to prepare a comprehensive defense against (or avoid altogether) potential regulatory, civil, or criminal litigation. For example, although employers may not be legally required to investigate claims of sexual or other forms of unlawful harassment, employers may waive an important defense if they fail to promptly investigate harassment allegations.

Regardless of legal obligation, promptly responding to employees' concerns about their work environment is often the best way to avoid litigation, as employees who feel their employers have heard and addressed their complaints are typically less likely to seek redress in court.

Despite all of the benefits of internal investigations, however, ineffectively conducted investigations can both exacerbate the underlying problem being investigated and create independent grounds for liability. This Note describes best practices for conducting effective investigations and minimizing associated risks.

Types of Workplace Issues Warranting Investigations

The following is a brief examination of the various workplace problems typically giving rise to the need for an internal investigation.

Violation of Anti-Discrimination Statutes

Employers should always investigate suspected or reported instances of discrimination or harassment. Federal, state, and local anti-discrimination statutes typically prohibit harassment as well as discrimination. The primary federal employment anti-discrimination statutes are:

  • Title VII of the Civil Rights Act of 1964 (Title VII), 42 U.S.C. § 2000e.

  • Section 1981 of the Civil Rights Act of 1866 (Section 1981), 42 U.S.C. § 1981.

  • The Equal Pay Act of 1963 (EPA), 29 U.S.C. § 206(d).

  • The Age Discrimination in Employment Act of 1967 (ADEA), 29 U.S.C. §§ 621-634.

  • The Americans with Disabilities Act of 1990 (ADA), as amended by the Americans with Disabilities Act Amendments Act of 2008 (ADAAA), 42 U.S.C. §§ 12101-12213.

  • The Genetic Information Nondiscrimination Act of 2008 (GINA), 42 U.S.C. § 2000ff.

  • Uniformed Services Employment and Reemployment Rights Act (USERRA), 38 U.S.C. § 4311.

  • Immigration Reform and Control Act of 1986 (IRCA), Pub. L. No. 99-603, 100 Stat. 3359 (1986), as codified as amended in various sections of Title 8 of the United States Code.

 

 

FAQS

Q. What does it mean for an employee to be an at-will employee?

A. Employment at will means that an employee can be terminated at any time without any reason, explanation or warning as long as the termination is not due to discriminatory or retaliatory reasons.  Likewise, the employee is able to quit or leave their employment at any time, without notice, and for any reason.  Employees who are employed at will are not and should not be required to give two weeks' notice. 

Q. What disciplinary methods are available other than the traditional verbal warning, written warning, and termination?

A. There are many options a company has in deciding which form of discipline is going to be the most effective to correct employee performance and behavior.  While the above three are the most common, there could be situations where implementing any of the following would be effective:

·       Doing nothing

·       Verbal coaching (with no documentation to the employee)

·       Paid or unpaid suspension

·       Demotion/other reassignment

·       Withholding a raise or bonus

·       Requiring the employee to complete additional training

·       Requiring the employee to issue a verbal or written apology to the victim

Whichever method you choose, be sure that you are able to support it with documentation of the behavior that led to the discipline, the discipline that was meted out, and the follow-up required, if any. 

Q. Must we first give a verbal warning, then written warning before I terminate an employee?

A. No.  In fact, the attorneys at myHRcounsel would advise that you not have a delineated progressive discipline policy in your handbooks so that the company can maintain ultimate discretion to terminate an employee immediately, bypassing both a verbal and written warning, if the situation warrants immediate dismissal.

Q. How should I conduct a disciplinary meeting?

A. Employers should always strive to hold disciplinary meetings in person.  Email and other forms of written communication can often be misinterpreted and what could have been simply a coaching session to resolve a small performance issue mushrooms into a full-on employee meltdown when the email is misinterpreted and the employee feels he or she was treated unfairly.  Present the issue to the employee clearly and directly.  It often helps to have an idea of what you want to say, do not just wing it.  Give the employee the opportunity to explain, if necessary.  Then mete out the discipline accordingly.  Document carefully how the meeting went including a complete and accurate recording of the main discussion points.  myHRcounsel has a template that employers can use for conducting employee disciplinary meetings.  Ideally, this documentation should be completed the same day as the meeting so you remember the facts accurately.

Q. What if an employee raises an issue, such as a sexual harassment complaint, during the disciplinary meeting?

A. Take time to listen to the employee’s complaint and assess whether it may be justified or raised only in response to the disciplinary meeting.  If it is a serious enough accusation, it is possible you may need to delay imposing discipline until you can conduct a new investigation.  You do not want the discipline stemming from this meeting where the revelation occurred to be the basis for a retaliation lawsuit.  Conduct a thorough, unbiased investigation as you would any other complaint and follow up with the complaining employee once complete.  Even if the complaining employee’s claim is justified, you are still able to discipline the complaining employee for the behavior giving rise to the initial meeting, provided the discipline is not in retaliation for the complaint.

Q. Can I discipline and/or terminate an employee who has been on FMLA?

A. In certain situations, yes.  Remember that the FMLA does not provide employees with any greater rights to continued employment when there is a legitimate, non-discriminatory reason that is not related to taking FMLA leave for terminating the employee.  Some examples include:

·       If an employee would have been terminated regardless of FMLA leave because of poor performance.

·       If, prior to the leave, an employee fails to meet the goals of a performance improvement plan, then the employee may be terminated upon return from FMLA leave.

·       Infractions or poor performance that come to the employer’s attention during the leave.

·       Insubordination, fraud, or other prohibited conduct while out on leave.

·       Layoff during a reduction in workforce unrelated to FMLA leave.

 

Q. How can I make sure I don’t break the law when I discipline or terminate an employee?

A. This is always a concern management has when considering whether to discipline or terminate an employee, especially if that employee is a member of a protected class.  While there is no foolproof way to ensure your company never gets sued (people bring meritless lawsuits all the time), there are some things management should keep in mind to limit risk of lawsuits:

·       Ensure that discipline and termination decisions are not based on race, color, religion, sex (including pregnancy), sexual orientation, gender identity, national origin, disability, age, or genetic information.

·       Ensure that discipline and termination decisions are not based on an employee’s decision to report discrimination, participate in an investigation or lawsuit, or oppose discrimination.

·       Ensure that the decision to discipline or terminate an employee is consistent with your company policies or that you can justify treating the employee differently.

·       Document the reasons for terminating an employee, but make sure you would be okay with a jury reading what you wrote someday.

·       Explain the reason for the discipline/termination in a meeting.

·       Retain disciplinary records.

Q. Why should a company do regular performance reviews?

A. Defining an employee’s expectations and letting them know whether they are meeting, or not meeting them, is essential to fostering open communication with an employee.  When an employee knows that their performance is suffering, it allows him or her to make adjustments to improve performance.  If an employee does not know whether they are doing a good job or not, or if they feel they are doing better than they really are, this can lead to bad employee morale.  Further, if you know the employee’s performance is bad, don’t share that information with the employee, and then terminate the employee for poor performance, it can be difficult for the employee to grasp the true reason for the discharge.  This can then lead to lawsuits because when an employee has no reason to believe their performance was the issue and then is fired, he or she may start to think discriminatory or retaliatory motive may be the real reason for the decision. 

Q. Are companies required to give an employee a raise because he or she had a good performance review?

A. No, companies are not required to give an employee a raise solely based on a good performance review.  Ideally, your employee handbook should state that raises are not tied to performance reviews and that reviews are meant to provide information to employees concerning their success in accomplishing the responsibilities of their jobs.  Disconnecting performance reviews from raises is beneficial for many reasons, including:

·       Improved feedback process

·       Better two-way communication between an employee and his or her manager

·       Performance reviews when not connected to raises are less stressful and more productive

Q. How do I conduct an investigation when allegations of employee misconduct are raised?

A. If you run your company’s HR department or are on the management team that handles investigations, you know that when a complaint is raised, you must immediately investigate the claim.  The first step in any good investigation is to establish the goals of the investigation so that you can create a game plan.  Whether you interview the accused or the accuser first depends entirely on the situation involved.  Interview quickly, while details are still fresh.   Follow up with any witnesses that are named during the questioning so you get a full picture.  Ask the broad who, what, when, where and why questions to elicit as much information as possible.  Once all interviews are complete, you must weigh the credibility of your various witnesses to decide who was most credible.  Based on your decision about what happened, following up with discipline against the accused, or potentially discipline against the accuser if the complaint was made in bad faith, is crucial.  This is especially true in the case of sexual harassment claims.  Be sure that you document all stages of the investigation.  Be fair, be consistent, and do not bring in any prejudgment.  Always feel free to contact myHRcounsel attorneys for more in-depth planning surrounding conducting effective workplace investigations.

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