If LD 1185 passes, you can only fire or lay off employees for “Good Cause”. The law then defines “Good Cause” as:
A. A reasonable basis related to an individual employee for termination of the employee's employment in view of relevant factors and circumstances, which may include the employee's duties, responsibilities, conduct on the job or otherwise, job performance and employment record; or
B. The exercise of business judgment in good faith by the employer, including setting its economic or institutional goals and determining methods to achieve those goals, organizing or reorganizing operations, discontinuing, consolidating or divesting operations or positions or parts of operations or positions, determining the size of its workforce and the nature of the positions filled by its workforce and determining and changing standards of performance for positions.
Clearly, there may be disagreements between employee and employer on the above issues. So, who decides whether the situation complies with “Good Cause”? Well without boring you with all the legal language (that bunch above was enough for me): You and the employee have to agree that you have Good Cause to let him or her go. If you can’t agree, you can pay severance equal to a month’s salary for every year the employee has worked for you – or you can go to arbitration. Oh – and to make sure you are doing things right, every time you let an employee go you would have to send a document to the state describing the circumstances.
Actually, according to some interpretations, as an employer you would want to have a written agreement with the new hire declaring whether the employment will operate under a Good Cause dismissal or severance pay. That’s a great discussion with a new hire, isn’t it? Chris Hall of the Portland Regional Chamber, says, “I think what it means in real life is that the employer will never want to spin the ‘good cause’ roulette wheel of arbitration, so employers will feel compelled to take the severance pay option when they hire someone.”
Who will this effect? Every employer with 5 or more full time employees – including those with seasonal employees who work 20 weeks a year.
Why should you be concerned?
• It puts a huge burden on employers and state agencies at a time when we can’t afford larger burdens and more cost in either sector.
• It doesn’t add any value. It will not help employers be better managers or employees to be better workers. It will help and encourage them to be more adversarial. It will add more state bureaucracy and give attorneys and arbitrators more business. It will not help small business grow. Large companies, with HR departments and extensive policies in place are generally already providing the feedback and warnings to their employees. Small companies, business owners who simply want to do the best they can, may not yet be as good at these skills as we would like them to be. This law won’t help them. In this job market, (in any job market in Maine) shouldn’t we help the people who create the jobs?
• Employers will make decisions that will result in fewer jobs for Mainers. They will create more part time positions; use any downturn to lay off more people; choose not to grow; or choose not to start a business to Maine.
• It “fixes” a problem that doesn’t exist. Most small companies hire too quickly and keep the wrong person on board too long. They don’t fire effective employees – heck they rarely fire ineffective ones. Companies need to grow and change with technology and competition. They need to be able to hire when necessary and fire or lay off when necessary. Often, this is good for the employee. He or she is forced to make a change that will result in a job with a better fit. We know that having the wrong person in a position brings down the productivity and morale of the department and the company. We need to help our companies be more productive, not hobble them further.
• Some people who could excel won’t get hired. Perhaps a qualified person couldn’t get a reference from a former manager; perhaps they were out of the job market for a few years; or perhaps they moved around a bit more than the business owner is comfortable with. I have seen such candidates be given a chance and succeed. If this law is passed, business owners and managers will take fewer chances. People who have made one or more bad career choices, people who are changing careers, people who don’t fit the ideal, will not be hired. It’s that simple. This will be a loss for all of us. Good people who deserve a chance and who can become outstanding team members won’t get that opportunity, because the companies won’t dare hire them. Those good people will leave the state or have to take lower level positions for lower pay.
If you agree, please contact your state legislator. I have been told that this bill is expected to be moved out of committee for a vote by our senators and representatives. We need to contact all democrats who will listen to the business community and make them understand that this bill is wrong.
