Terminating Employment

May 12, 2021 by Siobhan Kelley

A pencil-drawn line is punctuated with a period.

In 2015, Jeanette Ortiz had been working for Chipotle for 14 years. She was general manager of a restaurant in the Fresno, California, area and was being considered for a promotion that would have increased her pay by $25,000. Ortiz’s hopes were crushed when she was fired.

Ortiz had prepared an envelope of $600 in cash for a routine armored car pickup. When the armored car didn’t show up, Ortiz texted her manager to let him know. But the cash disappeared. To her shock, Ortiz was accused of the theft. Instead of the promotion that Ortiz was expecting, she was shown the door. Ortiz’s manager insisted there was video footage showing Ortiz stealing the cash, but refused to show it to her.

Ortiz felt Chipotle’s reason for the termination was a sham. She had recently been injured at work. Furious at having been accused of theft by her former employer, and convinced that her injury and resulting time off were the real reason for the dismissal, she sued Chipotle for wrongful termination. Was she right?

While all employers must proceed with caution when deciding to end their relationship with an employee, managers at nonprofits often feel they are subject to additional scrutiny than a for-profit business. It’s a common expectation that nonprofits will have a moral component to their management, even if those decisions are not related to the nonprofit mission. A messy termination can harm the nonprofit’s reputation with its funders, clients, staff, and the community. It can also make it more difficult for the nonprofit to recruit and hire employees. But with some careful planning, this risk can be managed.

There are a few simple tips for lowering risk related to employee terminations.

Be honest about the reasons for the termination

Many nonprofit managers believe that if employers have an at-will relationship with their employees, employers don’t have to provide a reason for a dismissal. This is a mistake. Being at-will does not mean an employee can be dismissed for no reason at all. An employee who is being involuntarily dismissed from employment should always know why. If an employee is experiencing performance problems, they should have received clear and direct feedback about the deficits in their work and the consequences for failing to improve. If the reason for dismissal stems from the employee’s own misconduct, the employee should have had an opportunity to give their “side of the story.” If they haven’t, then a thorough investigation hasn’t been completed, which can lead to ugly surprises down the road.

Try to be more specific than not

Avoid generalizations about the employee’s conduct and work quality. You may have a very clear idea in your head about what it means for an employee to not be “a good fit.” But if you don’t get specific with the employee, it’s only natural that they will hear the reasons that fit best with their understanding of the situation. Really think about what such a vague statement means to an employee in the absence of any specific feedback. If you’re told you’re “not a good fit” and you look around and see you’re one of only a few employees who is over 50, it’s easy to see how “not a good fit” can turn into “too old.” Be specific and objective in your explanation. Tie the reasons for the dismissal to your nonprofits mission. It’s okay if the employee doesn’t agree with you—in fact, it’s unlikely they will. Sometimes acknowledging that you can agree to disagree about the specifics is the best outcome that can reasonably be expected. The employee may not accept the feedback about their performance or conduct, but if they feel they have been treated with respect, it’s much easier for them to accept it’s time for them to move on.

Be prepared and plan ahead

Don’t wait until you’re ready to let go of an employee to consider the logistics. Make sure you keep track of whether the employee has company property and consider how you’re going to collect it. Make sure you have the ability to shut off access to your nonprofit’s computer systems. Just as importantly, think about what personal property the employee has at the worksite and how that property can be returned to them.

Make sure you know what should be included in their final pay, and when it needs to be provided to the employee. In some states, employers must provide all final pay owed to the employee at the time of dismissal.

If your employees are members of a union, make sure that you’ve followed the collective bargaining agreement, and be aware that it may call for specific steps or an internal appeal process.

Regardless of the circumstances of the end of employment, treat the departing employee with respect. The vast majority of people who sue their former employee will tell you the same story—they were angry because they felt they were treated poorly. Handing an employee a box and having them pack up their belongings, then marching them past their colleagues to the front door is a great way to buy your organization a lawsuit.

Finally, take all threats of violence seriously. No one wants to believe that a former colleague would ever cause harm, but unfortunately it does happen. If you receive or hear of such a threat always take it seriously. Report the threats to law enforcement, take steps to increase physical security at the workplace, and consider obtaining a restraining order.

Lawsuits have unpredictable results

Let’s turn back to Jeanette Ortiz, the Chipotle manager accused of theft. Three years after she was fired, the case went to trial, and Chipotle was unable to produce the video it claimed showed Ortiz stealing the money. Chipotle failed to make a solid record of the reasons they claimed they let Ortiz go. Ortiz, for her part, had over a decade of glowing performance reviews and she pointed out the only thing that had changed in her employment relationship was her workplace injury.

The jury found for Ortiz, awarding her a whopping $8M for lost wages, emotional and mental distress, and damage to her reputation. Punitive damages could have magnified the award even further, but before that could be decided, Chipotle quickly settled with Ortiz for an undisclosed amount. Chipotle learned a bitter lesson about proceeding with caution when it comes to employee terminations. Don’t let your nonprofit be next.

NIA members with Directors & Officers insurance with Employment Practices Liability are eligible for unlimited free employment-related consultations with our Labor & Employment Risk Managers. If you’re not a member of NIA, get a quote.

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Tags: Risk Management, Member Resources

Siobhan Kelley

About the Author

Siobhan Kelley recently and enthusiastically returned to the Nonprofits Insurance Alliance as a Labor and Employment Risk Manager. She has cultivated an extensive practice in employment law advice and litigation, spanning the high-tech industry, nonprofits and the public sector. Siobhan is a graduate of Santa Clara University School of Law and UC San Diego. Siobhan also teaches Civil Procedure at Monterey College of Law. A lifelong Californian, Siobhan recently relocated to Colorado, where she is learning how to drive in the snow.