Limit Business Liability by Measuring Employee Productivity

Litigation is extremely expensive. Win or lose, the costs of dealing with an employment lawsuit, both with respect to money spent and the strain on running a business, is a tremendous challenge.

Cynicism regarding the litigation process has existed for centuries; as was aptly put by Voltaire, a philosopher during the French Enlightenment, “I was never ruined but twice: once when I lost a lawsuit, and once when I won one” [source]. It is not often that an eighteenth-century French philosopher can be quoted for modern-day pragmatic business advice, but surprisingly little has changed on the impact litigation, win or lose, can have on a party. With this in mind, the goal for any business owner should be to mitigate the risks of an employment lawsuits as much as possible, because winning a lawsuit may prove to be a no-win situation because of the cost incurred.

Jon Hyman, Esq. a partner at Kohrman Jackson & Krantz, states the reality is that defending an employment lawsuit is expensive. Defending a case through discovery and a ruling on a motion for summary judgment can cost an employer between $75,000 and $125,000. If an employer loses summary judgment (which, much more often than not, is the case), the employer can expect to spend a total of $175,000 to $250,000 to take a case to a jury verdict at trial.

Under the law in most states, if there’s no employment contract, workers are employed on an “at-will” basis. That means employers have the right to fire employees at any time for any reason or no reason at all, and, conversely, employees have the right to leave the organization at any time. ON THE OTHER HAND if an employee is under contract, then that usually implies that termination can occur only for cause! That means the employer can terminate the worker only for poor performance, dereliction of duty, an act of dishonesty or insubordination, or because the company needs to eliminate the employee’s position.

While no federal or state law requires you to create and follow a progressive discipline policy, courts often come down hard on employers that promise progressive discipline but fail to deliver it, due to the tedious or uncomfortable nature of the task.

The most reliable way to protect employers from wrongful termination litigation is a Progressive Discipline System & Performance Improvement Plan (PIP), and make sure your supervisors enforce it. A PIP is a written document the employer/supervisor utilizes to increase productivity or alter behavior of the employee. The PIP looks into performance issues recognized in the course of the performance appraisal. Holding poorly performing employees accountable, on the other hand, to provide them with an opportunity to succeed.

Progressive Disciplinary Action

If you find that the employee cannot or is unwilling to better his performance, you may want to begin progressive disciplinary action. Documentation is essential here also, employers must record all the sequence of steps taken. The worker should receive a written document, explaining all deficiencies (Farr). It is important to thoroughly document both the offenses committed by the employee and steps taken to improve performance.

Without this written proof, employers may be at risk of losing any lawsuit filed by a terminated employee. Supervisors need to understand that they’ll need a poor-performance paper trail if they want to fire someone. Or else a judge will smell something fishy.

Poor Timing

For example, let’s say an employee files an internal complaint about the employer or a supervisor, and then shortly after is disciplined for a supposedly unrelated event. It won’t be hard for a lawyer to connect the dots in court between these two actions. Employees who file complaints can be disciplined, but the supervisor better have their documentation in order before making any moves.

Many employee lawsuits stem from the employee’s perception that he or she didn’t receive a “fair” deal. With that said, the terminated employee may paint the supervisor as bias or subjective at the minimum. Keeping in mind, the terminated employee is most likely disgruntled and may embellish facts in order to create additional claims such as discrimination or sexual harassment. Attempting to increase pressure, the recovery, probably to decrease attention from their poor productivity. The company is not only incurring thousands of dollars in legal fees, but the company's attention is diverted and employee's character may be tarnished.


Prior to the innovative cloud technologies available today, the only option available to companies was to lay a tedious paper trail of work reviews or discipline write ups. Today, companies like Prodoscore have emerged, that can serve as a useful business process enhancement for the organization.

Prodoscore works to provide an employee Productivity Score™ based on the employee's use of the company's internal business systems e.g. (email, calendar, docs, chats, crm activity, conferencing systems, screen share solutions, ultimately including phone systems). The Productivity Score™ is a unique number compiled by comparing all employee activity within the organization and then to the subset of the employee’s peers, within their respective departments (sales, support, operations, etc.).

This type of quantifiable measurement system can present a clear picture of exactly what type of productivity an employee was performing at, helping to provide the necessary support for a wrongful termination lawsuit. When terminating an employee for poor performance, always provide a clear explanation for the dismissal and have the documentation ready for review.


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