Layoff Logistics

September 1, 2009

Times are tough, and layoffs may be unavoidable. If you must do it, here’s how to do it right - while protecting your practice from litigation.


Your receptionist is accused of misconduct. The newest member of your team just isn’t pulling her weight. Or perhaps the economic downturn has made it necessary to reduce your ranks.

Whatever your reason for dismissing a staffer, experts say it’s important to do your homework before doing the deed - lest you expose your practice to a litany of legal landmines. All the more important today, given the weakened job market, says Terri Damen, human resources manager for the Bone and Joint Clinic in Wausau, Wis., who oversees 107 employees. “The threat of lawsuits is higher during recessions because people are more frustrated and financially stressed,” she says. “When they can’t find another job they start looking for other ways [to pay their bills], so they may be more likely to claim they were wrongfully discharged.”

At the same time, office managers and administrators should be aware that employees have become increasingly savvy about twisting the law to their advantage. James M. Penny Jr., an employment attorney and chair of the labor department for Philadelphia-based Obermayer Rebmann Maxwell & Hippel, says he’s seen a spike in the number of manufactured retaliation claims, in which employees say they were fired for filing a discrimination or harassment complaint against a supervisor. “What happens is the employee sees the writing on the wall,” says Penny. “They know they’re having problems at work and are going to be fired, so they’ll file a bogus complaint that someone is sexually or racially harassing them. That way, when the employer does take action and fires them, they’ve got a complaint on the record and can claim that that’s the real reason for the termination.”

These days, most employers are well aware of federal and state laws prohibiting discrimination based on race, religion, gender, age, disability, and sexual orientation. They’re also generally aware they can’t fire someone for doing something expressly permitted by law, like serving on jury duty or claiming worker’s compensation. But that doesn’t render them any less likely to end up in court. Even frivolous lawsuits, Penny notes, can cost your practice big bucks in legal fees.

Put it in writing

For most wrongful-termination claims, documentation is your best defense. “If you’re planning to take action against an employee because their performance is unsatisfactory or they have a history of disciplinary issues, for example, be sure you’ve got a good paper trail,” says Penny.

It’s smart to complete written annual reviews for each employee, which both highlights their contributions to the practice and suggests ways to improve their performance. Such records offset future claims that those workers were never told their performance was lacking. You should also draft an employee handbook - if you haven’t done so already - which spells out codes of conduct and disciplinary procedures. “Any practice that doesn’t have an employee handbook is really asking for trouble because it becomes a matter of interpretation,” says Andy Nelson, administrator for Salinas Valley PrimeCare Medical Group, a 20-provider primary- and urgent-care practice with 70 employees in Salinas, Calif.

His disciplinary process? It depends on the offense. For minor infractions, like absenteeism, tardiness, and poor performance, it’s three strikes, you’re out. The first incident earns the employee a documented verbal warning and an explanation on how the employee could have handled the situation better. “The second time it occurs, we issue a written warning, which we ask the employee to sign. If they don’t sign it, we document what they said and why they refused,” says Nelson. “The third time you’re out. It’s objective.”

More serious offenses, like coming to work under the influence of drugs or alcohol or harassing a patient, are grounds for immediate dismissal.

Whatever your discipline procedure, be sure to keep it consistent. Playing favorites will only get you into trouble. If you reprimand one staffer for coming in late, but let another one slide because she goes the extra mile, you’re opening yourself up to liability.

Equally important is professional tact. Verbal reprimands should never be delivered in front of employees’ coworkers. This only embarrasses them and makes them more likely to look for opportunities to sue. Rather, take that employee aside and discuss the issue privately in a manager’s office. Just be sure to bring a witness. “If it’s a one-on-one meeting between a male doctor and a female employee, for example, all of a sudden you can have a case where that employee claims they were sexually harassed,” says Penny. “There are people out there who are completely unscrupulous. They make up stories. For the protection of the practice, you should always have someone there.”

Nelson says he goes so far as to have another female supervisor present when reprimanding or terminating a female employee, so there’s no way to accuse anyone of foul play.

Protect your staff and records

Before firing anyone, it’s a good idea to consult an attorney to be sure you’ve taken all appropriate steps to protect your practice - especially if there’s any question as to whether they might have grounds to sue. You must also make every effort to protect your staff and patients. You never know when a disgruntled employee might take his frustration out on your office.

If relevant, notify your landlord; ask for the return of any office-owned equipment, including cell phones, keys, pagers, and laptops; and deactivate any security codes and computer passwords to which that employee had access - particularly those related to patient records.

“Anytime we let someone go and it’s a same-day situation, we first have final paychecks and accrued benefits ready and then we escort them to my office,” says Nelson. “We change the alarm codes and computer code immediately and get their keys before they walk out the door.”

If the employee is leaving on good terms, of course, those steps may not be necessary. “But if they’ve been difficult employees, we very much lead them around and they are never left alone,” says Nelson. “We have a responsibility to protect our patient data and other staff members.”

Reference checks

Once that employee is out the door, you’ll have to decide how your practice will handle future reference checks from other employers. Many practices have a no-comment policy, choosing only to verify basic information such as dates of employment, job title, and salary. Any additional comments, they fear, might open them up to liability, giving their former employee an opportunity to sue for defamation of character or the new employer room to sue for harm done by the “bad apple” employee.


That’s the safest route, of course, but it also leaves your better employees out in the cold, those who deserve your assistance in helping them land their next job. The choice is up to you. For his part, Nelson says he’ll give glowing references to former employees who left in good graces, but he limits his comments to basic fact checking for those who left on bad terms. The lack of commentary, he says, speaks volumes.

Remember, though, that just because an employee was not a fit for your organization, does not mean she won’t flourish in another. If you choose to provide a reference on a past underperformer, make an effort to be fair - and consider whether they were experiencing personal problems during their tenure or might do better given a different office culture or job responsibility.

Tread with care

When it comes to letting your employees go, take the time to weigh your decision carefully, document your steps along the way, and always put the safety of your practice, employees, and patients first. “I view termination as industrial capital punishment,” says Penny. “You’re taking someone’s job away and it’s serious. It’s not something to be done on a whim. Increasingly, the law has given employees rights and ways to fight back, so it’s important to have good reason and assess the risks of any termination decision.”

Shelly K. Schwartz, a freelance writer in Maplewood, N.J., has covered personal finance, technology, and healthcare for 12 years. Her work has appeared on CNNMoney.com, Bankrate.com, and Healthy Family magazine. She can be reached via physicianspractice@cmpmedica.com.

This article originally appeared in the September 2009 issue of Physicians Practice.