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We help real estate agents.
Everything you need to hire, train and develop your administrative team
Welcome to Hire LAB
We help real estate agents.
Everything you need to hire, train and develop your administrative team.

How to Fire Gracefully (and Hire Slowly!)

Have you ever heard the saying “Hire slowly and fire quickly”? So have we. While this may be good advice, firing quickly can definitely lead to some unanticipated and unwanted consequences. Even when an employee doesn’t meet your standards and expectations, it is in your best interest to end the employment relationship amicably. That’s why we recommend hiring slowly and firing gracefully. Below you will find 6 recommendations for how to fire an employee while minimizing your liability.
1. Classify your employee correctly when you hire them.

You actually begin laying the groundwork for successfully terminating an employee when you are hiring them. If you establish your employment relationship properly from the start, then you will face fewer possible challenges later on. The IRS considers most administrative professionals to be employees, rather than Independent Contractors. Inappropriately classifying an employee as an independent contractor is actually illegal. If you do so, you face a significant risk of being sued by the employee and could incur large fines from the IRS. Here is an example of how a real estate agent gets discovered and penalized for misclassifying their employee:

Let’s say an agent hires a licensed assistant to work for them for 25 – 30 hours per week. The assistant also does some work for other people on the side. Even though the agent classifies the assistant as an independent contractor and has their bookkeeper mail the assistant a check every two weeks, the assistant is technically defined as an employee according to the IRS. The assistant is required to have a set work schedule and uses the agent’s computer and other supplies when they are in the office. At some point, the agent’s business slows down and they decide to lay off the assistant. As a result, the assistant applies for unemployment benefits, yet is ineligible for these benefits because they were not paid via W-2. In turn, the IRS is contacted and starts an investigation.
You should be aware that the IRS is highly motivated to pursue these types of cases. Many courts do not favor employers who inappropriately classify their employees. If you have any doubts about how to classify your employees, we encourage you to contact your CPA or your attorney for advice.
2. Make sure your assistant signs an employment agreement with you.

This contract should lay out the specific terms of their employment, including work hours, job duties and responsibilities, and all types of compensation and benefits that you are offering. The agreement must also include an employment-at-will clause. In most states, employees are presumed to be “at will”, which means that they can be terminated for any legal reason without warning. Illegal reasons for termination include discrimination on the basis of race, gender, or religion. However, if the contract does not specify that the employment is “at will”, then an employee can only be terminated for reasons that are stated in the contract.

3. Keep records of everything.
For each employee you have, you should maintain a complete employee file. Make note of every time they take time off, are late to work, and make any significant errors. At least once a year, you should sit down with your assistant to conduct a review of their performance. If possible, do a performance review every quarter, since it is more effective for improving performance and growth. Document all of your conversations with your assistant about their performance and have them sign your notes from the meeting as evidence that the conversation occurred.
4. Do not try to get your assistant to quit.
Some people would do anything to avoid being the one to end a relationship. Rather than firing an employee, they might start acting like a nightmare boss so that their employee will decide to quit on their own. However, by creating such a toxic environment, they are exposing themselves to a greater risk of being sued, compromising their integrity, and harming their reputation in the world of real estate. If you find that you are dissatisfied with the performance of one of your employees, then you should address this issue with professionalism and take steps to terminate their employment, if appropriate.
5. Follow the proper procedure when you fire an employee.
Most employers are quite uncomfortable terminating an employee, which is completely understandable. Even just the idea of firing someone can lead to stress, real and imagined fears, and some intense emotions. Fortunately, if you followed the suggestions that we made in steps 1 to 4, then you will likely find that most employees know when they are about to be terminated. They may not be as shocked or distraught as you had anticipated. Here are the steps you should take when you are ready to fire an employee:

Step One – Be sure to have figured out all the details of the termination ahead of time, including the dates and amounts of paychecks and information about benefits.

Step Two – Prepare for the conversation by writing down what you will say to your employee. For example, you might write, “I am sorry to let you know that as a result of company restructuring, your employment is being terminated. Here is your final check that includes payment through July 1, two weeks severance pay, and any vacation you have earned.” When you terminate them, have their final check ready to hand to them.

Step Three – Have another member of the management team present when you tell the employee that their employment has been terminated. Deliver this news in a private office area to protect the employee’s privacy and dignity.

Step Four – Answer any questions the employee may have about why they are being let go in a manner that is non-combative. Do not engage in a discussion about the specifics of why they are being terminated.

Step Five – Allow the employee a few minutes to express their emotional response to the news, and then walk them to their desk so they can gather their affairs. Ask them for their parking pass and key. Then accompany them to the door.

6. Do not give damaging or negative information when providing a reference for a past employee.
This is the perfect time to heed the advice, “If you don’t have anything nice to say, don’t say anything at all”. When an employee leaves, either because you terminated them or because they resigned, it is always a smart idea to tell them what kind of reference they can expect you to provide. As an example, you may let them know that if they list you as a professional reference, you will only give their dates of employment and their ending salary. Alternately, if the employee wants to provide you as a reference and you think you will be able to give a positive, valuable evaluation of their performance, then you should have them sign the Authorization for Release of Information and Waiver of Liability for Employment References.

This post is intended to provide information and does not constitute legal advice. If you need legal or other advice concerning the matters discussed here, you should contact your attorney or CPA.

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