From the desk of Linda Carter Batiste, J.D., Director of Services and Publications
Employers generally try to retain current employees because an experienced employee can bring value to a company and because of the high costs of hiring and training new employees. When employees experience temporary problems that cause them to violate company policies to the point they are facing termination, employers may want to consider using a last chance (also called firm choice) agreement as a last ditch effort to retain the employee, while at the same time protecting the company. A last chance agreement is an agreement between an employer and an employee setting out terms the employee must comply with to keep his job. Although employers are not required to offer last chance agreements under the Americans with Disabilities Act (ADA), these agreements are often used for employees with drug or alcohol addiction who have relapsed and their current use of drugs or alcohol has created the workplace problems.
The following is from question 29 in: The ADA: Applying Performance and Conduct Standards to Employees with Disabilities.
Must an employer provide a “firm choice” or “last chance agreement” to an employee who otherwise could be terminated for poor performance or misconduct resulting from alcoholism or drug addiction?
An employer may choose, but is not required by the ADA, to offer a “firm choice” or “last chance agreement” to an employee who otherwise could be terminated for poor performance or misconduct that results from alcoholism or drug addiction. Generally, under a “firm choice” or “last chance agreement” an employer agrees not to terminate the employee in exchange for an employee’s agreement to receive substance abuse treatment, refrain from further use of alcohol or drugs, and avoid further workplace problems. A violation of such an agreement usually warrants termination because the employee failed to meet the conditions for continued employment.
The following are some of the terms that are typically included in last chance agreements for employees with drug or alcohol-related problems:
1. Basis for the Agreement
The agreement should include a summary of the employee’s conduct and performance violations and cite the company policies that were violated. A summary of the progressive discipline the employee received can also be included or if the employer kept detailed personnel records, those can be referenced.
The agreement should spell out exactly what the employee must do to keep his job. For drug and alcohol problems, the employer often requires the employee to complete a drug or alcohol rehab program, provide periodic status reports or a medical release to contact the rehab facility directly, and periodic drug or alcohol tests upon the employee's return to work. Under the ADA, employers are advised against dictating employee medical treatment. However, a last chance agreement is an exception to this rule; employers get more leeway because they are offering to withhold termination or other discipline when they do not have to do so.
3. Time Frames for Meeting Expectations
It can be useful to give general time frames for the employee to comply with each of the terms of the last chance agreement to make sure the employee progresses toward a return to work and productivity. For example, the employee might be required to enter rehab as soon as the facility can admit him, provide status reports halfway through and upon completion, and submit to monthly drug or alcohol testing for the first six months after his return to work.
4. Consequences of Violating the Agreement
In this section, the employer states what will happen if the employee fails to comply with all the terms of the agreement. Typically the consequence is immediate termination unless the employee has a valid reason for non-compliance. For example, if the employee signs a medical release so the employer can get progress reports, but the facility fails to provide them, this could be a valid reason for non-compliance.
5. Date the Agreement Expires
Assuming the employee fulfills all the terms of the last chance agreement and returns to work and fully complies with company policies for a period of time, at some point he should be released from the terms of the agreement and treated the same as other employees. Typically the agreement ends after the employee has been drug or alcohol free and in compliance with company policies for a reasonable period of time, for example, six months to a year depending on the circumstances.
After the employee reads and agrees to the terms of the last chance agreement, the employee and the employer should sign and date the agreement.
Last chance agreements can be a very useful retention tool in some situations, but they should be customized to fit each individual situation. Employers who choose to use them may want to check with their legal counsel. Find more on other issues to consider see: Using Last Chance Agreements as a Retention Tool.