May 5, 2014

Terminations and Layoffs: They’re NOT Tomatoes and Tomahtoes!

New: We’ve added an audio-blog to this post! Check it out for a few quick facts about the differences between firing and laying off an employee.

CEDR has a feature article up at DentistryIQ.com. Learn why employee terminations and layoffs are two very different beasts – and why you can’t simply call a termination a layoff.

No matter how long you’ve been a manager, chances are you still hate terminations.

First of all, you’ve probably heard (or been through) horror stories: wrongful termination lawsuits have risen over 260% during the past 20 years, and the median employer settlement payout five years ago was $326,640. Not a sum most employers can afford to take lightly – in fact, not a sum small practice managers want to think about at all!

Then there’s the emotional aspect, and the fact that terminations can be a painful experience not only for the employee, but for you as a manager. Whether you feel relieved, nervous, guilty, angry, or all of the above, it’s not uncommon to look for a way to soften the blow and lessen the stress all around. After all, wouldn’t it be better to just skip the uncomfortable talk about poor performance or attitude problems, let the employee save face, and call it a layoff instead?

The short answer is no, and the slightly longer answer is absolutely not. While this sounds like an optimal and even kind answer, one aimed specifically at preventing anger and embarrassment, it is a terrible mistake any time the employee is being let go for the reasons of poor performance or unprofessional conduct. This little “layoff” mislabel may feel like just a generous gloss-over, but what it actually does is establish an inaccurate record that could, in theory, provide evidence of wrongdoing against you.

What a Layoff Really Means…and Why That Label Won’t Work for Terminations

The trouble is that the term “layoff” has a quite specific meaning. By definition, a layoff means your business must let go of one or more employees for a business reason or because of financial circumstances. Downsizing often prompts layoffs, as might any other reduction in budget or financial circumstances. The majority of layoffs involve more than one employee. And here’s the key difference: when you let employees go during a layoff, you are eliminating their position, not hiring anyone to replace them.

This makes a difference if your “laid-off” employee dreams up a suit against you. If you rehire for their old position, even three to six months later, you’ve given that former employee legal ground to argue that their layoff was a pretext for your desire to get rid of them. They may make a case that your real reason involved their race, age, pregnancy, religious views, sex, or a similar factor. After all, you re-filled the position so quickly that it obviously wasn’t a real layoff!

When considering the issue in this light, it’s easy to see how faux layoffs can get employers in trouble. After all, you may have had the most legitimate reasons in the world for letting this employee go in the first place – but if you called the termination a layoff and failed to document the actual, performance-related reasons, the court already sees you as a liar.

Friendly Disclaimer: This information is general in nature and is not intended to provide legal advice or replace individual guidance about a specific issue with an attorney or HR expert. The information on this page is general human resources guidance that is believed to be current as of the date of publication. Note that CEDR is not a law firm, and as the law is always changing, you should consult with a qualified attorney or HR expert who is familiar with all of the facts of your situation before making a decision about any human resources or employment law matter.

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Please note: CEDR Solutions specializes in providing expert HR support to owners and operators of independently owned medical and dental practices.