When Can I Terminate an Employee at my Practice?

Your practice needs to terminate an employee. Whats a lawful or unlawful reason for firing them? And what documentation do you need to maintain?

Employer writing termination for employee.

“I’m an at-will employer. Why can’t I just fire someone when I want to?”

Practice owners often pose this question to their healthcare employment attorney when asking for the green light to fire an employee.

Many states presume that employment relationships are “at-will.” At-will employment means employees are free to resign from their employment at any time, for any reason or no reason. At-will employment also offers the same discretion to employers – you can terminate the employee at any time, for any reason or no reason, so long as the reason is not unlawful.

However: terminating employees is risky and costly. If done incorrectly, the termination can create legal liability for the practice. Let’s explore what a medical practice should consider before letting an employee go.

When Is Termination Unlawful?

The caveat, “so long as the reason is not unlawful” is essential to assess before moving forward with terminating an employee. As a matter of fact, this should always be the first phase of your analysis when considering whether to terminate an employee.

The following list provides a few examples of when firing employees is UNLAWFUL:

  • Firing an employee based on legally protected characteristics such as race, color, religion, sex, national origin, ancestry, and other protected characteristics.[1] (Note: Some states and local governments have expanded these protected characteristics. It is important to become familiar with all applicable protected characteristics.)
  • Firing an employee based on age;[2]
  • Firing an employee based on mental or physical disability or impairment;[3]
  • Firing an employee for taking a legally entitled leave of absence;
  • Firing as a means of retaliating against an employee who reports the employer for violating the law; or
  • Firing an employee for reasons that violate public policy.

Since it is unlawful to fire an employee for the reasons listed above, it is important for employers to ensure that prior to termination, the disciplinary actions giving rise to the termination were not based on these same unlawful reasons. If the employee’s disciplinary history was based on any of these, the termination will most certainly be found to be based on these unlawful reasons as well.

Lawful Reasons to Terminate an Employee at Your Practice

Now, what reasons are lawful? Just about any reason not listed above is considered lawful. Here are a few examples of lawful reasons employers may fire an employee:

  • Negligence or carelessness in performing job duties;
  • Failure to follow standard operating procedures;
  • Loss of professional license or not in good standing with professional licensing board;
  • Theft, misappropriation, or unauthorized use of property, documents, funds or records belonging to the employer, client, or employee;
  • Violating HIPAA or other medical privacy laws;
  • Failure to follow all safety rules and guidelines;
  • Obtaining unauthorized confidential information pertaining to clients or employees;
  • Changing or falsifying patient records, company/practice records, personnel or pay records, including time sheets without authorization;
  • Any rude, discourteous, or unprofessional behavior with patients, clients, management and other employees; or
  • Use or possession of alcohol or illegal use or possession of drugs on the practice’s premises or while conducting company business.

The above list is not all-inclusive. There are many more circumstances that employers may designate as terminable offenses – especially in healthcare. Essentially, an employer has a legitimate business reason to fire an employee whenever the employee’s conduct jeopardizes the employer’s services and products, work environment, or reputation. If there is a legitimate business reason, it is unlikely that the reason for termination is unlawful.

Your Employee Handbook Should Contain a Detailed Corrective Action Process

If you believe that you’re terminating an employee for lawful reasons, is that the end of the inquiry? Not quite. After evaluating the lawfulness of the grounds for termination, it’s crucial to review your own policies to ensure you’re not breaking your own rules.

Every medical practice owner should maintain established policies and procedures to govern the practice as a workplace. Documented policies – most often an employee handbook—communicate behavior and performance expectations to employees, as well as the consequences of failing to meet those expectations. When you begin disciplining an employee, always refer to your employee handbook first. Be sure to follow your own corrective action and progressive discipline plans, meaning that the consequences become more significant as the misconduct goes unremedied by the employee. When you document the employee’s shortcomings, be sure to do so in accordance with your handbook—and point out the aspects of your policies that the employee has failed to meet, ensuring that you’re both on the same page.

Following your own policies provides consistency between employees and situations. This is important if you’re ever accused of terminating an employee for an unlawful reason, as you’ll be able to demonstrate your ongoing adherence to the same procedures, regardless of the employees’ protected status.

In employment-related lawsuits, relevant policies and procedures quickly become a central focus of the litigation. It’s thus critical that your employee handbooks are periodically reviewed by your practice attorney to ensure that your procedures comply with changes to federal, state, and local laws. (Learn more about Jackson LLP’s general counsel services here.)

Progressive Discipline Matters

 “Have you taken any disciplinary action with this employee before this incident?”

Even in an at-will employment relationship, employers should adopt a progressive discipline process. This process makes the employee aware of the problem and gives him or her ample opportunity to correct it before he or she is terminated.

Remember that firing an employee is costly for your practice. Recruitment and training are time-consuming, and new employees introduce new risks. Whenever possible, give the employee a chance to remedy his or her shortcomings. Progressive discipline also demonstrates that the employer has an unbiased and consistent procedure for addressing performance and behavior problems. This helps illustrate that employment decisions were not made for unlawful reasons.

That said, some conduct is so egregious that the practice should terminate an employee immediately. This may be appropriate if the behavior includes:

  • Fighting, violence, or threat of violence in the workplace;
  • Unauthorized use of or access to confidential patient information;
  • Sexual harassment or harassment/discrimination based on protected characteristics; or
  • Performing professional responsibilities under the influence of drugs or alcohol.

These behaviors fall within the realm of what the average reasonable person would find highly offensive or substantially contrary to socially acceptable behavior.

Document, Document, Document!!!

Employers should meticulously document an employee’s performance deficiencies and disciplinary actions taken. This is true for two main practical and legal reasons.

The legal reason to document everything:

If the employee files a claim or lawsuit, you will need to produce evidence to prove that their termination was lawful. The more documentation you have, the easier it’ll be to defend your decision. While some of your evidence may be your notes of verbal conversations, this will require the adjudicator to weigh your credibility against your former employee’s. It’s best not to take chances and to instead create a paper trail. Your documentation should paint a clear picture of the employee’s poor performance or misconduct, illustrating your legitimate reason for the termination.

The practical reason to document everything:

To ensure that the employee fully absorbs the seriousness of the corrective action plan you’ve imposed and your concerns about their performance, your conversations should be reduced to writing. Your practice’s disciplinary action form should clearly describe the incident (date, time, witnesses, and specific details), the type of warning issued to the employee (verbal, written, or suspension), and remedial expectations for the employee.

The employee should also be notified in writing as to what will happen if the problems persist. By documenting your performance concerns in this way, you will be able to demonstrate your unbiased process for evaluating workplace conduct. It also serves as evidence that you gave your employee ample opportunity to remedy the situation, and that the employee was informed both verbally and in writing, which minimizes chances of misunderstandings.

Your Quick Termination Checklist

As a quick reference, before terminating employees, ask yourself the following questions:

  1. Do you have a lawful reason for terminating this employee?
  2. Do you have a policy that addresses this circumstance?
    1. If yes, does the policy require you to take a lesser form of disciplinary action prior to termination?
  3. Have you disciplined this employee in the past?
    1. If yes, was it documented?
  4. Is the next stage in your progressive disciplinary process termination?

If you answer “YES” to all the questions above, then you have been diligent in establishing standardized procedures and following them in evaluating this employee. Before making a termination decision, it is often advisable to ask your healthcare practice’s attorney to review your documentation and ensure that your policies have been accurately followed. You can also confidentially share any concerns you might have with your attorney. These issues can sometimes sow confusion when an employee on a progressive discipline plan announces a pregnancy or claims safe harbor under your practice’s substance abuse policy (“Tell us about it, seek treatment, and we won’t penalize you.”). The employer must tread carefully to ensure that an employee’s rights are respected while protecting the practice’s integrity and workforce needs.

Note: Employers with unionized employees should refer to the collective bargaining agreement to determine if there are negotiated protocols before taking any disciplinary or termination action. And remember – blog posts are never a substitute for personalized legal advice, and they shouldn’t be relied upon in making decisions about your practice.

Still have questions? Reach out to Jackson LLP’s healthcare business attorneys to implement your medical practice’s employment policies. Book a complimentary phone consultation using the button below. 

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[1] Title VII of the Civil Rights Act of 1964

[2] Age Discrimination in Employment Act

[3] Americans with Disabilities Act

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