You fire an employee for breaking a company rule. This common event may not seem risky, but a recent verdict shows that how you handle a termination can often get you in more trouble than the firing itself. In fact, Wal-Mart is now facing a whopping $20 million verdict partly because of how it discharged four store clerks caught eating candy in violation of the company’s pilferage policy. We’ll look at what the employer did wrong and how to avoid the same kinds of expensive mistakes.
Clerks Rely On Unwritten Policy
The case was filed by four store clerks caught on videotape eating candy and nuts from packages damaged in shipment. The workers did not deny consuming the snacks. But they claimed there was an unwritten store policy allowing employees to eat food from damaged packages, which were frequently left in employee lounges. Damaged food products cannot be sold, and manufacturers usually don’t want them back, the employees said.
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Firings Used To Train Other Workers
The clerks also claimed the retailer humiliated them before and after the firing. They said they were verbally abused during meetings in which they were accused of misconduct, and then publicly disgraced by being marched past customers and co-workers and escorted out the front door of the store. After they were fired, the workers claimed the terminations were discussed with store staff and the videotape of them eating the snacks was shown to other workers as an example of what they shouldn’t do.
A jury awarded each of the four employees $5 million in compensatory and punitive damages. One worker was also given an additional $20,000 in lost wages. Wal-Mart has denied wrongdoing and plans to appeal the verdict.
How To Do It Right
Although the amount of the verdict might still be reduced or overturned on appeal, the jury’s sympathetic award shows how important it can be to handle terminations consistently and to treat all workers in a manner that minimizes embarrassment. Here’s how to avoid mistakes:
- Give warnings and be consistent. If you start cracking down without warning on some company policies and regulations that aren’t usually enforced, you could wind up with problems. In this case, the workers claimed that 90% of employees, including managers, had also consumed food from damaged containers. If you want to begin strictly enforcing a policy that you tacitly allowed to be violated in the past, it’s best to first distribute a memo to workers giving them advance notice of your intention. And although it wasn’t made an issue in the Wal-Mart case, singling out a few workers for punishment risks a discrimination charge if the employees are members of a protected group. Therefore, be sure to enforce all of your rules consistently.
- Be discreet. Failing to handle terminations discreetly and treat workers with respect can create assorted legal problems, including defamation and emotional distress claims. Plus, an employee who feels humiliated or mistreated is much more likely to want to file a lawsuit in the first place. Notify workers of your termination decision in private and keep the reasons for your action confidential. It’s a good idea, however, to always have one witness present when you fire a worker in case a dispute arises over exactly what was said.
- Don’t discuss former employees. You can expose yourself to liability if you make statements about a terminated worker that are perceived as defamatory. In this case, Wal-Mart got itself in trouble by allegedly continuing to criticize the fired employees in training sessions and company meetings. If you want to use an employee’s misconduct as an example to other workers of what not to do, be sure to camouflage the person’s identity.