Best Practices From an Employer Contract Law Perspective

by Michelle Bomberger | July 2, 2012

When looking at best practices in hiring and firing, we consider how to get those right people on board and how to end the relationship when things aren’t going well.   Both facets of this process are difficult but some key practices can make things much simpler.

1. Plan ahead.  Anticipate your hiring needs a year in advance.  Consider what your next hire looks like now, so that when you’re ready to bring them on board, you’ve already got much of the work done.  This front-end work includes a job description and key characteristics of the person as well as your interview and hiring process for the new positions.  For example, are you using testing as part of your hiring process?  In addition, you should consider what, if anything, is different about this hire from others you’ve hired.  Do you need additional policies, rules, or restrictions?  The policies applicable to a professional providing services directly to clients will differ somewhat from those necessary for an office administrator or a sales person.  Know what your needs are in advance of the hiring process.
2. Set clear expectations.  When bringing a new person on board, have clear expectations for their performance.  Some of these expectations are inherent in the job description and employee manual or handbook.  In addition to setting expectations for the job overall, consider having the employee create a 90 day plan to be sure that you are both aligned with the goals and expectations of the position.  You should also have a good idea of when to know the employee isn’t working out.  In some cases, this is a discussion with the employee upfront and in other cases not.   Having an objective set of metrics will do you a world of good when trying to make the emotional decision to let someone go.
3. Protecting the Business.  There are a number of key protections your business should implement at the time an employee is hired.  These include non-solicitation, confidentiality, and technology policies.   Non-solicitation provisions are often confused with non-compete provisions.  Non-solicitation provisions restrict an employee from soliciting an employee or client (or prospective client, vendor, contractor, etc.) of the company to leave the company or alter their relationship with the company.  These are generally enforceable because they protect a legitimate business interest and keep an ex-employee from “stealing” employees or clients when they go to work for a competitor.  The non-compete, on the other hand, tends to restrict the employee from working in his or her field, a concept which the courts have traditionally frowned upon.    Confidentiality is another critical protection for the business.  Much of what the employee has when he or she leaves is the knowledge about the processes and clients of the company.  Having a strong confidentiality agreement makes it more difficult for employees to disclose such information to a future employer.  Finally, technology policies have become critical to protecting a business’ intellectual property and assets.  Written rules as to how company technology can be used and how the company’s documents or other information can be shared will allow control over the dissemination of such information.   These provisions should apply not only during the term of employment but also for some period following the termination of employment.
4. Performance Reviews.  Monitoring employee performance is a necessity and implementing tools that allow you to do so is important.  However, the traditional performance review process doesn’t work for everyone.  When implementing a tool to evaluate an employee’s performance, consider your goals and the behaviors you want to reward.  What is the purpose of the performance review for your organization?  Remember that the review sets a certain expectation with the employee about their future with the company.  Even in an employment at-will state like Washington, documentation of glowing performance can play against you in a situation where you’ve had to let someone go.  This doesn’t mean you shouldn’t do them nor does it mean you should not give glowing reviews.  It means you must understand how they fit into your organization and structure them to help your company achieve certain goals.
5. Termination.  When taking on the ugly task of having to terminate an employee, it’s important to have your documentation in order.  In an at-will state, you may terminate an employee for no reason at all unless there’s an agreement between you and the employee stating otherwise.   Remember, this “agreement” does not need to be in writing.  If the employee can show that they were led to believe that their employment would continue for some period, they might prevail.  This is one reason why I am not a proponent of “probationary periods.”  A probationary period suggests employment for at least that time and possibly a continued employment beyond that time if the employee’s performance is acceptable.   Again, you don’t have to have a reason to terminate and you don’t have to tell the employee why he or she is being terminated.   Terminate employees in a face-to-face environment and in a factual manner.  Be prepared to ask for any technology or other property of the company that must be returned and to remind them of any obligations they have following termination.  These requirements should also be summarized in a letter notifying them of the termination of employment.   There’s no requirement to have a witness; however, it’s prudent to have someone available to support you if you believe the employee will be aggressive or violent.

Planning, awareness, and sensitivity all play into the best practices in employment.   Put in place documents that reflect your actual practices, so that you are confident that you’re covered when  employment situations eventually arise.