It’s a common dilemma for employers – what do you say to your staff to explain the sudden departure of an employee terminated for poor performance?

Tell the truth about why the employee was fired, and it can be seen as defamation, an invasion of privacy, or simply mean-spirited.

Say nothing, and co-workers may assume the worst or lose trust in the company.

So . . . what about saying it was the employee’s decision to leave, even if it wasn’t?

Well, that last explanation would be a lie – and courts may interpret such lying as a pretextual cover-up for discrimination.  That seems to be the lesson of McMullin v. Evangelical Services for the Aging T/D/B/A Wesley Enhanced Living, decided last month by Judge Savage of the U.S. District Court in Philadelphia.  In that case, the former CFO of Wesley Enhanced Living, Edward McMullin, sued for age discrimination and disability discrimination after his termination of employment at age 64 – one year after his hire.

Wesley argued that it terminated McMullin due to poor performance, including errors in financial reports.  McMullin claimed instead that the termination was because of his age and because he was perceived as disabled.  He had disclosed a chronic heart condition to his boss, CEO Jeff Petty, and McMullin also claimed that Petty had made comments about “making employees feel unwelcome so that they were encouraged to leave” when the employees were perceived as presenting a risk of costly workers’ comp claims or health insurance claims.

For Judge Savage, the decisive factor in allowing the claim to go forward to trial was that Petty sent an email to staff after McMullin’s termination announcing that McMullin “has decided to leave WEL effectively [sic] immediately.”  Stated the court, “Petty’s public explanation at the time of McMullin’s departure did not square with the reason he gave in this litigation for McMullin’s leaving.  McMullin claims that Petty misrepresented his termination to Wesley employees to conceal that he was fired for a discriminatory reason. . . A jury could infer discrimination if it concludes that Wesley’s explanation for terminating McMullin is not credible.”

In other words, Petty telling the staff that McMullin left voluntarily contradicted Petty’s later claim that McMullin was fired for poor performance, and based on that contradiction, a jury could conclude that Petty was covering up for unlawful discrimination.  Of course, Petty and Wesley likely would contend they announced that McMullin’s departure was voluntary so that he could “save face” and not be publicly embarrassed by his for-cause termination, but such a rationale apparently did not make it into the record.

Whether you agree with this decision or not, the lesson is simple – be very careful about statements relating to the reason for separation of an employee.  In our experience, these communications often make the difference as to whether an employer is sued or not sued for a termination.  Better to be vague and treat it as a private personnel matter, than to be dishonest. A simple statement that XYZ will be leaving the company effective October 1 will often suffice.  And if the employee wishes to treat it as a resignation to save face, ensure the parties sign a written agreement to do so.

Michael Homans is a Labor & Employment attorney and founding partner of HomansPeck LLC. For more employment law updates, including news and links to important information pertaining to legal developments that may affect your business, subscribe to Michael’s blog, or follow him on Twitter @EmployLawUpdate.