Insureon Blog

Small-Business Owners: What Happens When You Hire the Wrong Person?

24. June 2014 08:51

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Have you ever hired a promising new employee only to realize that they make a disappointing addition to your team? Perhaps their work ethic is lacking or they aren’t as qualified for the job as the hiring process made it seem. And sometimes, new workers simply don’t fit in to your work culture. You can only get to know a person so much during an interview, after all.

So what happens when the new hire starts to disrupt your work environment? This choice might not be as easy as it seems. There are lots of factors to consider, such as whether or not your actions could financially or legally impact your business. For example, you must always consider whether your dealings with employees could possibly read as discriminatory – either to the new hire or current employees.

(For a refresher on workplace discrimination and harassment, see “Employee Rights: What Small-Business Owners Need to Know.”)

Below we take a closer look at your options when dealing with a disappointing new hire and discuss some tips for avoiding employment practices lawsuits.

Step 1: Discuss the Issue with the Employee

Whenever an issue arises with an employee – whether it’s poor performance or the fact that she’s been making racially inappropriate comments to her colleagues – employers should, first and foremost, always discuss the issue with the employee. Here’s why:

Of course, employers still have to be careful about how they conduct employee performance reviews, especially if the employee in question is a member of a protected class. Here are a few tips to help you avoid legal trouble:

Hopefully, a little chat is all you need. But what happens when the issue remains unresolved?

Step 2: Decide to Train / Relocate Your Employee

As a small-business owner, you must consider how your employment decisions affect your bottom line. One the one hand, firing and hiring a new employee can cost a lot of time and money. That’s why, if your employee still shows promise, you may decide to relocate the employee to a different position or to set her up with a mentor or more robust training. Here are a few things to consider:

But sometimes, the employee is simply a rotten egg. No amount of training or repositioning will do. That’s when it’s time to move on to the next step.

Step 3: Decide to Terminate Your New Employee

It’s just not working out, and you’ve decided to cut your new hire loose. When you fire “at-will” employees, most states to not require you to provide reasoning. Your arrangement is such that either party, at any time, can terminate the relationship.

The risk here is that the fired employee may suspect their dismissal was based on discriminatory grounds. And if your employee files a wrongful termination lawsuit against your business, you will have to justify your reasoning.

Luckily, you probably have all the evidence you need from your initial interview. And the other employment records you keep will only bolster your venture’s history of fair and equal business practices. For more tips on firing best practices, check out “The Small Business Guide to Avoiding Discrimination Charges when Firing Employees.”

Unfortunately, employment lawsuits do arise, even when employers take steps to avoid them. That’s why Employment Practices Liability Insurance was designed to help you shoulder the legal expenses. You can learn more about these lawsuits by reading “How Do Lawsuits against Employers Work?

This post is part of an ongoing series on Employment Practices Liability Insurance, the high cost of employment discrimination lawsuits, and EEOC laws. Stay tuned for more on what can go wrong when hiring (and firing) employees.

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EPLI | Errors & Omissions | Errors and Omissions Insurance | Risk Management | Small Business | Small Business Risk Management | Tips for All Small Businesses

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