The first thing an accountant does before agreeing to take on a new engagement is to check the books! It's the same for me. Typically, I get involved when trouble is on the horizon or staring the employer in the face. The first thing I do when a client asks for advice on a tricky termination decision is to ask for the documentation. Employees who feel that they were disciplined or terminated without good cause now think lawsuit rather than heading for the want ads, The bad news for employers is that employees do not have to look very far because it isn’t difficult these days to fit into a specifically protected class under Title VII of the Civil Rights Law and other state and federal statutes. Additionally, we have the issue of protected conduct (which is addressed in the anti-harassment/discrimination and retaliation policies that are step one in my compliance plan). Consequently, it is crucial that employers, including accountants, take steps to properly document the legitimate, business-based reasons for their employment decisions.
Employers should document ALL employee problems, conversations about problems, complaints made by employees, actions taken with regard to employees, and any discipline. Don’t document only the negatives, either. It is important to put pen to paper to recognize excellence. It can also be in your best interests to do so: Including praise for good performance shows that the employee’s supervisor does not harbor any ill will against the employee, even if later that same supervisor needs to impose discipline
There are three basics to effective documentation. The documentation must show that the decision is fair, consistent, and supported by legitimate, non-discriminatory, business-based reasons. For example, when disciplining an employee, your documentation should include the facts of the situation; the effect the situation had on the workplace; the standard or policy that the employee violated; whether there were previous incidents involving the employee; what the discipline is (e.g., verbal counseling, suspension, final written warning); and the future consequences of continued violations. This formula highlights the reasons for the discipline in a fair and consistent manner and puts the employee on notice regarding future consequences if the employee again violates company standards and/or policies.
Even if an employee problem will not result in disciplinary action, the supervisor should document the facts of the situation, why the issue was a problem, and any conversations with the employee about the issue. History may repeat itself or the employee will have another issue. Those early notes may illustrate a pattern and give rise to an employment decision about the employee
The timeliness of documentation is critical. The longer you wait, the less you remember. As a result, you should document the circumstances as soon after the event as possible. And most importantly, be sure to include the date, including the year, and sign the documentation! If you have a form, fill it out completely. Nothing looks worse than a form that’s missing the supervisor’s signature, date or other key information. Documenting the reasons for your employment decisions creates a tangible point of reference which can be used to refresh your recollection in a court of law but, truthfully, carefully drafted documentation can help avoid litigation or play a key role when successfully defending employment discrimination lawsuits. Supervisors should be trained in creation of vital employee disciplinary records. Take a critical look at your own files. Will they serve you well in the event of a lawsuit? An ounce of compliance outweighs pounds of depositions!
Judge Ruth Kraft, Chair of the Employment Law Group at Kirschenbaum & Kirschenbaum, represents a national clientele. She conducts external audits of employment practices and makes recommendations for continuous process improvement. If your client's books are a mess, can you imagine the status of their personnel records, employee handbook and other vital documents? The best recommendations are those that are supported by both the CPA and the attorney. The accounting profession is held in higher regard by businesses than the bar and the relationship of the accountant and client is ongoing and supportive.