Is this Ethical?

August 3, 2017 9:27 AM

Employee has been on probation for a variety of complaints. Now they are leaving with triple the normal severance package. Details below. You are not my lawyer, laws vary from state to state, etc.

I work for a medium sized nonprofit organization. I have been involved in raising formal complaints against another employee, both for poor job performance and misconduct. I am also not the only person to file complaints against this individual. These complaints include verbal abuse against several different staff, several well documented cases of dishonesty, misuse of company technology, failure to perform basic job responsibilities. We know the employee owes a substantial sum to the organization, and we strongly suspect they stole from the organization.

For several months, there has been an ongoing probationary process, and the individual has now finally been terminated.

All good. Except somehow this individual is receiving a severance package that is at least triple what any other employee would normally expect. The personnel policies say that any employee can take a payout of their accrued leave as a severance package. This is the same for all employees, whether they leave of their own accord or are terminated for gross misconduct. Somehow this person is receiving a variety of payouts in addition to their accrued leave.

I understand that I do not know all the details of the situation, and I really want to trust the org's leadership on this. But I am really struggling with it. I am trying to think through all the scenarios that would cause things to work out this way, and they all seem icky. The only option that seems remotely ok is they are paying extra so the employee doesn't sue them. I can understand this from the point of view of protecting the org's assets from a costly lawsuit, but even so it seems like the wrong way to do it, and a perverse incentive for the future.

My questions are: 1. does this appear to be ethical from an employment law point of view, and 2. what on earth could cause an organization to do this sort of thing (assume they have legal counsel so are not just shooting in the dark)? I have already raised my objections to the leadership and I'm not seeking info about how to navigate this situation politically. I would be interested to hear your opinions about whether this warrants going to the board or speaking to a lawyer.

posted by anonymous to Law & Government (19 answers total)

Accrued leave payouts and severance are different things - accrued leave is theoretically money that you have earned (in the form of time off) which you are cashing out because once you no longer work there you cannot use it as leave. There are varying state laws governing how or if this leave time is treated.

How do you know that other separated employees have not been offered payment upon leaving in excess of PTO cashouts? I'd say you definitely don't seem to have enough information to say whether or not this is potentially sketchy.

To your point that this might set a bad precedent/incentivize other employees to take payouts in lieu of lawsuits: what if they didn't offer the payments, the employee sued, and the outcome was either a larger payment plus legal fees or legal fees for the company? what kind of precedent or incentive would that demonstrate?
posted by Exceptional_Hubris at 9:33 AM on August 3, 2017 [2 favorites]

paying the problem to go away is a common occurrence. Companies look at the cost of litigating if an ex-employee sues, chances of losing the case, etc and the legal advice is usually pay the employee enough to get them to go away, and make sure they sign on the dotted line to not sue, disparage, etc.
posted by k5.user at 9:37 AM on August 3, 2017 [14 favorites]

First, ask yourself whether this is all actually true. How certain are you of it? Did you hear about it from someone who heard it from someone who heard it from Janice in Accounting? Are you Janice in Accounting and you know for a fact that this employee is getting this money?
If you're not certain that it's actually happening, then drop it. Office gossip. Not your problem.
If you are certain that it's actually happening, then:

Second, ask yourself whether this is a dumb precedent (i.e., it's not a thing that happens a lot) or this is a dumb thing among many other dumb things this organization does.
If it's a one-off, file it away in the back of your head and drop it. Not your problem.
If it's part of a pattern, then polish up your resume.

But mostly, stop letting this occupy your headspace. Leadership knows your concerns. Let them lead, or stop following.
posted by Etrigan at 9:38 AM on August 3, 2017 [8 favorites]

I have no idea why you think this is any of your business unless you are on the board of directors of the organization. You have not been damaged by the termination, so there is no reason to go to a lawyer - the lawyer will just take your money and say so.

No, there is no requirement that an employer treat all terminated employees the same. The employer is required to fulfill any obligations they have by law or by employment agreement, but anything on top of that is per the employer's discretion.

Yes, severance payments for involuntary termination, even in cases of obvious employee fault, are a thing and are ethical. They protect the organization against lawsuits, which is generally in the organization's best interest. You likely have no idea what has happened behind the scenes that makes the situation more complicated than you think. It is surprisingly common for *both* the employee and the employer to be in the wrong. Generally, the employer has significantly more assets than the employee, which makes the employer more vulnerable to lawsuits..
posted by saeculorum at 9:41 AM on August 3, 2017 [11 favorites]

Back when I was a union steward, I was involved in a couple of cases where management had the goods on an employee, to the degree where criminal charges were a genuine possibility.

My job as a steward is to aggressively advocate on behalf of the employee. (This is difficult when there's potential or actual criminal charges involved, since steward-grievant conversations are not privileged and nobody condones wrongdoing.) Still, by law, we have to be that person's advocate.

The best-case scenario in those situations is to get rid of the employee asap. Management wants them gone right away. Even when we, too want them gone right away, we have to act on the best interests of the employee. So we always try for a deal with management: give them severance, give them a small settlement, give them something to go away quickly and quietly. The other option is force management to go nuclear: not just fire the employee, but bring charges. Bad publicity, legal costs, just a big headache.

In short, what your organization did is par for the course. Better to quietly cut this person loose, even if it means giving the bad apple some money to leave, than to have it hit the news and then be endlessly litigated in civil or criminal court, or both.
posted by Lunaloon at 9:49 AM on August 3, 2017 [5 favorites]

Paying to make a problem go away is SOP for many nonprofits because they can't afford to get involved with costly litigation. The lawyers probably looked at the financial options and had the terminated employee take the money in exchange for a legal document preventing the terminated employee from doing... well, anything. You don't know what the terminated employee had to do to get that severance payment, and you never will. Enjoy your imagination on this one.

Trust when I say that large severance payments for terminated-for-cause individuals are almost always a better financial bet than not.
posted by juniperesque at 9:55 AM on August 3, 2017 [4 favorites]

Paying to make a problem like this go away is not uncommon. I understand that it may not look or feel fair to you from the outside, but I would bet that there are complications you don't know about. It's likely that your employer was choosing between a number of unattractive options, and chose the one least likely to drag this out into some kind of Lovecraftian legal horror show.

Is it legal? Almost certainly. It was probably done in consultation with a lawyer, and it probably included a severance agreement that makes the problematic employee go away forever and removes the opportunity for them to bring a lawsuit later.

Is it ethical? Depends on your view. It's very likely that this protects the organization in the long run, and thus is ethical in a utilitarian sense.

Does it set bad precedent? Maybe, but so does a legal battle which, even if it's ultimately decided in your employer's favor, might bankrupt or severely damage the organization.

If you really suspect hijinks on the part of your leadership, you could bring this to the board -- but if your leadership is competent, the whole thing will have been done with the board's knowledge and agreement. They'll probably tell you to stay out of it and that it's none of your business, and that's probably correct. I'm sorry -- it sounds you (understandably) have a lot of anger left about this whole situation and it's really gnawing at you -- but you will likely have to make your peace with this and move on.
posted by ourobouros at 10:00 AM on August 3, 2017 [1 favorite]

I'm not even sure why anyone would have any information about another employee's severance package unless it is part of a group buy-out situation. I'm also not sure why you think voicing an objection to this business decision is in any way going to change things. There are a million and one reasons why a company might offer a severance, almost all of them related to settling some dispute in a way that ensures this employee isn't ever seen or heard from again. Let this go and be glad the employee is not your problem anymore.
posted by dpx.mfx at 10:00 AM on August 3, 2017 [6 favorites]

I would be interested to hear your opinions about whether this warrants going to the board or speaking to a lawyer.

Think about what it is you're trying to accomplish here - the organization terminated the employee based on complaints from you and others. The organization settled outstanding claims (legitimate or not) with that employee using information and meetings that it sounds like you were not involved in but might have second-hand knowledge of.

What facts and evidence are you bringing to a lawyer or to the board that they can actually investigate and/or have a legal opinion on? If the lawyer is representing you personally (I have no idea who else they'll be representing), what harm was done to you by this settlement that can be either undone or compensated by another?

Many employment lawyers do free, confidential consultations. I would suggest calling one and explaining the situation and what actual evidence you have of untoward actions. If anything, it will probably steer you away from a bunch of career-ending insubordination that it sounds like you're thinking about.
posted by notorious medium at 10:05 AM on August 3, 2017

Listen, I feel you. This person was a bad apple and fairness would have demanded that their departure be accompanied by a hard boot to the behind, not a fat check.

That said, if your information is correct, it is almost certainly because the Board has been advised by their attorney that this is the most cost effective way of getting rid of this person. I agree it sucks and is not fair but yeah, as everyone above said, don't poke at this. You don't have all the information and poking at this is only going to paint you as someone with bad judgment who can't mind their own business.
posted by fingersandtoes at 10:05 AM on August 3, 2017 [2 favorites]

I would be interested to hear your opinions about whether this warrants going to the board or speaking to a lawyer

I went to our board with an internal problem. It was a high profile board who would rather have had the organization crumble rather than invite the spotlight by addressing the issue. I resigned, the issue was fired shortly after, and it was uglier than it has to be.
posted by Room 641-A at 10:14 AM on August 3, 2017 [1 favorite]

Is part of the issue that this is making you feel like management didn't take your complaints seriously — and maybe didn't work hard enough to defend or protect you?

If so, I'd address that separately. Ignore this person's severance package. Do you feel confident that the organization will have your back if something like this ever happens again? If not, think about whether there are realistic things they can do to reassure you, and whether you might be in a position to suggest or ask for some of those things.
posted by nebulawindphone at 10:21 AM on August 3, 2017 [2 favorites]

Nthing that paying extra to make a person go away is SOP in every industry. Most likely this payment was contingent upon execution of a general release and waiver of all possible claims against the employer. It may also have contained things such as non-disparagement or non-compete clauses together with clawback provisions and/or other penalties for violating them. How much the departing employee is paid in these circumstances is highly variable and depends on many factors such as perceived litigiousness and ability to litigate, possible exposure to negative publicity, possible competition, how much the company wants to get rid of the employee and how soon, etc. Also, what an employee is entitled to get as severance and what they may actually get depending on the circumstances are not necessarily the same thing. Terminating an employee is a lot more complicated than laying one off or eliminating a position.
posted by slkinsey at 10:29 AM on August 3, 2017 [1 favorite]

my take on this is that the employee had some actionable complaint against the company, probably one you're unaware of, and the company settled with them by offering this large severance.

i'd guess lawyers have already been involved and helped the company to make this decision.
posted by hollisimo at 11:09 AM on August 3, 2017 [5 favorites]

Yeah, the lawyers certainly approved this and probably advised it, possibly in consultation with your insurers. When I was in local government, we had a guy we spent THREE YEARS attempting to fire, as he exhausted every single procedural option he had, while only showing up to work 60% of the time, and we had to keep paying him ... and since he knew he was being fired, couldn't really trust him to do any work. In retrospect a generous severance package to GTFO -- even a whole year's pay! -- would have been absolutely worth it in terms of productivity, employee morale, costs, attorneys fees, pointless litigation, etc. Big savings.

I've also seen people on the chopping block file spurious workers comp claims, or make whistleblower claims, to jam up the process so they take longer to fire or can bring a lawsuit for retaliation if terminated. All of these take money and time and resources to pursue. Sometimes the right thing to do is pursue them! (My organization was known for being soft on workers comp, so we got some freakin' ridiculous claims and had to make a decision to spend the money to contest the obviously made up ones.) It does indeed create a perverse incentive if you pay off the bad actors. But sometimes the right thing to do is pay off the bad actor, to extricate the organization as quickly and painlessly as possible from a bad situation.
posted by Eyebrows McGee at 4:39 PM on August 3, 2017 [2 favorites]

As VP of a nonprofit board, I would think that they already know and concur that this is the right way to get a problem person to go away quietly. They certainly would not take this sort of action without discussing it with an employment lawyer (and if your organization is that dysfunctional, you should focus on brushing up your resume and finding a new opportunity).

The wrong person can bankrupt your organization, or divert critical attention and resources from your core mission that make it impossible to function.

Or, on preview, what Eyebrow McGee said.
posted by dancing_angel at 4:45 PM on August 3, 2017

It's my understanding that any post-employment agreements -- non-disparagment, for example -- require payment as they'd otherwise be one-sided contracts and therefore non-enforceable. Payout of accrued leave isn't generally considered severance any place I've worked, so that wouldn't suffice for covering any of these agreements.
posted by HiddenInput at 6:39 PM on August 3, 2017

Yeah, Eyebrows McGee has got it. The higher up in the hierarchy, the more common this is. It SUCKS morale-wise to know about it, but try not to dwell on how unfair it seems for the jerk to get paid off to go away quietly.
posted by desuetude at 10:28 PM on August 3, 2017

Also consider that severance payments upon termination of employment can be higher for people in protected groups. This is partially to prevent discrimination suits and partially because it can take more time for people on these groups to find a new job (particularly those who are older, pregnant, or have disabilities). Those in senior roles can take more severance than those in junior roles, again due to length of job search.
posted by crazycanuck at 8:29 AM on August 4, 2017