How Employers Can Manage the Risks of Problematic Employees

Managing people is fundamental to being an employer. And while doing so is often rewarding, it can also be difficult. Even the strongest teams may occasionally include employees who consistently perform poorly, engage in unacceptable behavior or are simply a mismatch for their positions. With the right approach, you can address problems and reduce your financial and legal risks.

Considering your options

If a staff member isn’t working out, you have three basic options. First, you can retrain the person under a formal performance improvement plan (PIP). Bear in mind, though, that issues related to misconduct, such as harassment or safety violations, may entail disciplinary action outside of a typical PIP’s scope. Second, you could transfer the individual to a different, more suitable job. And third, depending on the circumstances, termination may be permissible under applicable laws.

None of these options is easy, but the last one likely presents the greatest immediate risk. Taking an adverse employment action, such as firing, could lead to a costly lawsuit. Meanwhile, finding a replacement will consume time, money and resources. Legal guidance is essential.

Firing an employee also opens the door to unemployment claims, which can affect your unemployment tax rate. Even if termination is for cause, the employer must respond to the state agency and may need to provide documentation that proves misconduct to deny benefits. Poor performance alone usually does not disqualify someone from receiving unemployment benefits.

Confronting a staff member about troublesome performance or behavior is typically awkward and potentially contentious. And getting the individual to change for the better can take a while. However, never let substandard performance or inappropriate behavior slide. Doing so sends the wrong message to everyone and could lead to significant declines in productivity and work quality — and even disruptive or dangerous incidents. Of course, you should avoid knee-jerk reactions as well.

Conducting an investigation

Before doing anything, investigate what’s going on. Did the person materially misrepresent skills or experience during the hiring process? Have the employee’s actions clearly been unprofessional, unethical or even potentially dangerous? If so, there may be grounds for termination.

However — and this is the tough part — you also need to determine whether your organization bears some responsibility for the situation. Many employers have room for improvement in onboarding and training. Did your hiring staff clearly communicate the position’s duties and performance expectations? Was the employee warmly welcomed, thoroughly introduced to the organization, properly trained and provided the tools (such as adequate workspace and equipment) to perform well?

Ultimately, you want to identify the source of the problem. Sometimes the most direct route to resolution is simply to ask. Engage in an open, good-faith dialogue with the employee in which someone, usually a supervisor at first, states your organization’s concerns and openly listens to the staff member’s point of view.

Taking a measured approach

If a simple conversation (or two) fails to set things right, you’ll likely need to undertake a lengthier process to either get a problematic employee back on track or bid the person adieu. Work with your attorney to develop formal policies and procedures that require supervisors to:

• Consult HR or legal advisors before formal warnings or termination discussions,
• Document the employee’s mistakes or wrongdoings, including dates and times, over a significant period,
• Give an initial verbal warning in private, avoiding anger even if the individual responds emotionally,
• Use neutral, professional language, avoiding statements that could imply bias, retaliation or guarantees,
• Stick to documented facts and organizational policy,
• Be as specific as possible about what’s wrong and what needs to change, and
• Obtain reasonable assurance that the employee understands the concerns and how to fix them.

Employers can strengthen their legal basis for termination by following a measured, documented approach. For performance-related issues, developing a formal PIP in accordance with industry standards and best practices is generally advised. However, again, serious misconduct usually warrants disciplinary action administered under proper procedures rather than a PIP.

Seeking guidance

If you have any doubts about how to handle a problematic employee, seek professional guidance from your attorney to ensure compliance with employment laws. Meanwhile, contact us for help evaluating the financial impact of turnover and unemployment claims, as well as developing strategies to maintain a productive, compliant workplace.

© 2025