Tag: unemployment

Fire Bad Employees

Should I Fire Bad Employees or Let Them Quit?

Gary Vaynerchuk is a wildly successful and popular investor, serial entrepreneur, CEO, author, and, well, personality. One of his recent business mantras gives experienced employment lawyers like me pause. Vaynerchuk, or “Gary Vee” as he’s widely known, argues that companies should fire bad employees rather than letting them quit on their own. But is that always the prudent course of action?

In Favor of Firing

As I understand it, Gary Vee emphasizes that employers need to send the right message by firing bad employees before they leave on their own. This shows that the company won’t tolerate inappropriate behavior.

Vaynerchuk consistently promotes a positive workplace atmosphere and collegiality as a hallmark of good business. That’s a hard position to attack. But those aren’t the only aspects of good businesses. They also must offer viable products/services and sell them to customers. Sometimes employees who produce in these areas don’t play well in the sandbox. Vaynerchuk advocates extracting workplace cancers even if they’re top rainmakers or otherwise seem to contribute disproportionately to the firm’s financial success. To him, these positives never justify being a jerk.

So, the argument continues, you have to fire the jerk before the jerk fires you. That’s how you maintain credibility, particularly in the mission to promote a positive and healthy work environment. If you let the jerks leave on their own terms, they win and you lose. They leave behind the impression that the company was willing to tolerate their misbehavior for financial gains. This begets more jerks rather than pleasant co-workers striving to achieve the company’s collective goals in a more or less friendly workplace.

Why You Might Let Them Quit

Many business owners find wisdom in Gary Vee’s “fire them before they fire you” advice. Indeed, it makes a lot of sense from a morale perspective. And workplace morale is a valuable asset.

Why do many employers think it’s a better idea to wait out a bad employee until they leave on their own? Some probably just hate confrontation or at least the unpleasant experience of firing someone. Vaynerchuk seems to empathize with that reality, encouraging employers to work to overcome their reluctance and take difficult actions as soon a necessary. “Hire fast, and fire fast” he preaches, while acknowledging the latter doesn’t come naturally to him either.

But there’s an even deeper counterargument to consider. It lies in employment law. Yes, leave it to lawyers to try to ruin a good thing.

Here are several legal risks employers try to avoid by not firing problematic workers:

Discrimination Claims

What could happen when you fire someone? Well, they could accept it and move on. Or they could become contentious and potentially litigious.

Most people don’t want to be sued. This goes for most business owners and managers as well. And there are just so many laws out there protecting employees these days, including extensive anti-discrimination statutes.

This can filter into the equation when you start to consider how to move on from an employee who isn’t working out. Especially if the employee in question differs from others similarly situated in one or more protected characteristics. Even if you know the employee has to go for legitimate reasons, you might pause to fire the oldest person in a department. Or the only female supervisor. Or someone in a racial minority.

Unemployment

Even when there’s no particular concern of a discrimination claim, some employers would rather an employee quit so they can’t obtain unemployment benefits. The unemployment laws vary by state, but there’s usually some additional cost to employers whose former employees receive unemployment. And employees who quit often aren’t eligible.

Employers can sometimes defeat worker unemployment claims by proving that the employee deserved to be fired. But that’s a risk that some companies would prefer to avoid. So they might prefer to let the employee walk away rather than show them the door.

Severance Pay

Some employees have employment contracts or are eligible for company policies that provide severance pay under certain conditions. Employees are usually more likely to be eligible if they have been let go involuntarily. Or they might receive more severance pay if they are fired (especially, if without “cause”) rather than quitting.

In the United States, at least, this usually depends only on specific company policies and contracts rather than external laws. But there can definitely be a significant financial impact in some cases.

Striking a Balance

The legal risks are real. Some employees might sue after you let them go. And even the prospect that they might can keep you awake at night. Let’s face it, even one employment discrimination suit can prove costly, both in time and potential liability.

But, remember, we’re talking about firing bad employees. Either they’ve treated others disrespectfully, performed poorly, or otherwise failed to live up your expectations. Regardless of race, age, gender, and other factors, you should have defensible grounds to let them go. If you’re not sure about that, then speak with your employment lawyer.

Still, I do worry that the Gary Vee philosophy isn’t problem-free. Some employers could overreact and fire someone too soon without considering all relevant factors.

Perhaps the most important consideration is how have you treated other employees who’ve underwhelmed you? Have you let some slide, but now want to swing a quick axe? Saying “Gary Vee told me to!” won’t necessarily work if you’re now firing an older employee after letting a younger get away with more in the past.

Keep in mind that allowing a bad employee to hang around too long can also lead to legal problems. Harassers may not stop harassing. Aggressive employees could become violent. Sloppy employees could become too sloppy or even dishonest. Sometimes you even have to balance your legal risks. Who’s more likely to sue and what will it cost? HR, like other aspects of your business, isn’t always easy, I’m afraid.

Final Thoughts

You should do what’s right for your business. That includes complying with legal obligations. But beyond that you have options. Generally, I agree, bad employees need to go. But one employer’s nightmare could still be another employer’s treasure . . . perhaps.

 

For more, read 5 Tips for Firing Problem Employees

New York Unemployment Benefits Severance Pay

Severance Pay Affects New York Unemployment Benefits

Since a 2014 reform to New York State’s Unemployment Insurance System, employees are generally not eligible to receive both severance pay and unemployment insurance at the same time. However, there are exceptions and nuances to this rule. As a result, employers sometimes have options that can affect their former employees’ receipt of New York unemployment benefits.

[You might also want to review this article on “Contesting New York Unemployment Claims”.]

New York Unemployment Benefits

In New York, employees must be completely unemployed and actively seeking work to be eligible for unemployment benefits. Most unemployed individuals with sufficient work history will be eligible for benefits. Employees who resigned or engaged in misconduct might not receive benefits.

Until several years ago, severance pay did not change employees’ New York unemployment benefits. Now, however, it often will.

What is Severance Pay?

New York’s unemployment insurance law defines severance pay as “payments made by an employer to an employee due to separation from employment.” Severance pay generally does not include payments regarding retirement, health insurance, accrued leave, or unemployment benefits.

The law recognizes that severance pay can be paid in several payments or one lump sum. And now the timing of the payment(s) matters for unemployment purposes.

Why Timing Matters

Whether severance pay affects unemployment benefits can depend on when the employer makes the payments.

If an employee receives severance pay within 30 days of his or her last day of employment, the severance may offset the unemployment benefits. In that scenario, the employee will not receive unemployment if the weekly severance payments (or pro rata portion of a lump-sum payment) are higher than the maximum weekly unemployment benefit rate. Once the severance payments have ended, the employee may be eligible to receive unemployment benefits (assuming they meet standard eligibility requirements).

On the other hand, if the employee does not begin receiving severance pay until more than 30 days have passed since their last day of employment, they can immediately collect unemployment. In this situation, the severance pay will not affect New York unemployment benefits at all.

(The “last day of employment” is the last day an employee was actually working or was on paid leave.)

Keep This in Mind

Eligibility to receive New York unemployment benefits is often an important issue for departing employees. Employers should carefully consider unemployment issues in developing severance packages.

When employers have options in structuring the severance payout, they should factor in the impact on unemployment benefits. The decisions involved can have meaningful financial implications for both the employer’s business and the former employee. The “right” choice will likely vary in different situations.

Contesting New York Unemployment

Contesting New York Unemployment Claims

Are departing employees eligible for unemployment? As usual, it depends. To claim unemployment insurance benefits in New York, employees usually must be totally unemployed, yet available for and seeking work. After that, the most important factors are whether the employee has worked long enough to qualify and the reason for separation from employment. Here, we’ll focus on that last question, as it’s the one employers most often use in contesting unemployment claims.

Before we go any further, here are related free webinars that might interest you:

Why Isn’t the Employee Working?

Unemployed individuals with sufficient recent work history will receive unemployment insurance benefits unless they became unemployed because of a disqualifying reason.

The primary disqualifying reasons for loss of employment are:

  • Voluntary resignation
  • Misconduct

Neither category is entirely straightforward under New York’s unemployment law.

Voluntary Resignation

Employees who quite a job entirely of their own accord usually will not receive unemployment benefits. However, there are some exceptions.

First, the departure must be truly voluntary. Employees who have no real choice but to “resign” may still receive unemployment. This could occur where the employer gives the employee the option to either resign or be terminated. It also includes situations where the employer was treating the employee unlawfully such that the employee understandably felt compelled to leave.

A second scenario is more surprising to employers. Suppose an employee resigns from Company A to work for Company B. If the employee then loses their job with Company B soon enough and for a non-disqualifying reason, then Company A may be credited with some portion of the employee’s resulting unemployment claim. Company A seldom can do anything to avoid or contest this result.

Misconduct

Many employees lose their jobs due to workplace misconduct. However, many of those employees will still receive unemployment benefits. Even when employers contest unemployment claims, proving disqualifying misconduct is difficult.

To win an unemployment claim based on misconduct, an employer must prove either extremely bad behavior or prior specific warning of the consequences for the behavior. In most cases, poor performance will not rise to the level of misconduct under the New York unemployment law.

Examples of misconduct that may justify a denial of unemployment benefits include theft, physical violence, falsifying documents, and workplace drug use. In addition, any misconduct that constitutes a felony should disqualify an employee.

Many other forms of misconduct that support termination of employment will not necessarily result in denial of benefits. These may include poor attendance, insubordination, carelessness, and violation of employer rules. However, any of these behaviors could constitute disqualifying misconduct under the right circumstances. Usually, this requires prior warning of the specific improper behavior and the future consequence of termination followed by more incidents.

Overall, the analysis of misconduct depends on the facts. But close calls usually get decided in the employee’s favor.

Minimizing Successful Unemployment Claims

Most New York employers of any size must accept some unemployment claims as part of doing business. Obviously, one way to avoid these claims would be never to let anyone go against their will. But that probably isn’t a good business model.

Employers who want to minimize the impact on their claims history can take precautions before discharging employees. This includes having clear discipline policies that spell out what forms of conduct are unacceptable. But that alone probably is not enough. Even if not written into policy, most employers will want to follow the concept of progressive discipline. This allows that extreme misconduct will cost employees their job in the first instance. However, employees will get a second chance for less consequential missteps. Any discipline notices should then include specific language about the consequences of further violations. When warranted, that would be termination of employment. With that prior warning in place, an employer’s chances of contesting the employee’s unemployment claim will increase.

For more about ending the employment relationship, check out these webinars: Don’t Fire Me on Friday and Conducting Your Next Reduction in Force.