Decision Authority Guide
You’re the CEO. Your department manager wants to fire an underperforming employee today. You think it’s the right call, so you approve it.
Three months later, you’re facing a wrongful termination lawsuit that could have been prevented with a 30-minute HR review.
After two decades of helping businesses through HR crises, we’ve learned this: The most expensive mistakes CEOs make aren’t from bad decisions—they’re from making the right decisions without proper HR review. The difference between a clean termination and a $75,000 settlement often comes down to one question that was never asked.
(If you’re about to approve a major personnel decision right now, pause for five minutes and read this!)
“I own this company. I can make any decision I want about employees.”
Technically true. You have the legal authority.
Practically disastrous. You lack the specialized knowledge to avoid catastrophic mistakes.
The companies that face the fewest lawsuits and compliance nightmares aren’t the ones where CEOs make all the decisions. They’re the ones where CEOs know which decisions require expert review before they’re made.
Common pattern:
The companies that avoid these messes do one thing differently: They establish clear decision review protocols before crises force them to.
Signing Authority (covered in our previous guide):
Decision Authority (this guide):
You may have the authority to sign a termination letter, but that doesn’t mean you should make the termination decision without first consulting HR. The signature is just the final step—the decision process is where most mistakes happen.
Based on two decades of pattern observation, employment decisions fall into four risk levels:
Low Risk: Safe for executives to make independently
Medium Risk: Should involve HR consultation
High Risk: Requires HR expert review
Critical Risk: Needs both HR and legal review
Let me break down each category with real-world examples.
These decisions carry minimal legal risk and typically don’t require HR review:
Examples:
Why These Are Low Risk:
When HR Review IS Needed:
Even low-risk decisions need HR review if they involve:
Pattern Observation: After helping hundreds of companies, we’ve learned that even “routine” decisions can become high-risk if they create patterns. Approving one vacation request is low-risk. Denying all vacation requests from employees over 50? That’s age discrimination waiting to happen.
These decisions benefit from HR input but don’t always require formal review:
Examples:
Why HR Consultation Helps:
Cost of Getting It Wrong:
Our Honest Assessment as Brokers:
Companies that consult HR on medium-risk decisions avoid most compliance problems. The 30-minute consultation, which costs $150-$ 300, prevents the $25,000 settlement down the road.
These decisions create significant legal exposure and need expert review before execution:
Examples:
Why Expert Review Is Critical:
According to EEOC data, wrongful termination claims cost employers an average of $125,000 in legal defense and settlements. Most of these could have been prevented with a proper HR review identifying:
The 20-Year Pattern:
Companies that require HR review before terminations face 70-80% fewer wrongful termination claims. Not because they terminate fewer people—but because they terminate the right people, at the right time, with the proper documentation.
What HR Review Typically Costs:
The math is obvious.
These decisions carry severe legal and financial consequences:
Examples:
Why Both HR and Legal Are Necessary:
HR Expertise Provides:
Legal Expertise Provides:
Cost of Getting These Wrong:
Research shows employment litigation costs vary dramatically:
Pattern From 20 Years: Every company that skipped legal review on critical-risk decisions and got sued said the same thing: “I wish we’d spent the $2,000 for the review.”
Call HR expert support immediately if the decision involves:
🚩 Timing Concerns:
🚩 Protected Categories:
🚩 Pattern Risks:
🚩 Documentation Gaps:
Reality Check from 20 Years of Experience:
We’ve never seen a company regret getting expert review on these situations. We’ve seen dozens regret not getting it.
Step 1: Categorize Your Common Decisions
Step 2: Create Decision Authority Matrix
Step 3: Establish Review Procedures
Step 4: Train Your Leadership Team
According to Department of Labor data, employment law varies significantly by state, creating decision-making challenges:
The Complications:
What This Means for Decision Authority:
A decision that’s low-risk in Texas might be high-risk in California. Companies with multi-state operations require HR expertise that understands the nuances of jurisdictional differences.
Our Observation as Brokers:
The companies that handle multi-state decision-making well work with providers who:
✅ Maintain current knowledge of state-specific requirements
✅ Can quickly identify jurisdiction-specific risks
✅ Have experience with multi-state compliance
✅ Consult state-specific legal counsel when needed
As brokers, we don’t make HR decisions for you—we connect you with HR providers who can:
Decision Support Services:
Framework Implementation:
Ongoing Partnership:
We’re Transparent About:
Our Promise:
We only succeed when you make better decisions that protect your business. We’re not incentivized to make every decision seem high-risk—we’re incentivized to help you accurately assess risk and get appropriate expertise when needed.
DIY Approach (Highest Risk):
Per-Decision HR Consultation:
Fractional HR with Decision Support (Recommended):
Per-Decision Legal Review:
According to SHRM research:
If fractional HR prevents just ONE lawsuit every 2-3 years, it pays for itself.
Most companies using fractional HR for decision support prevent 3-5 potential lawsuits annually through:
📞 Call us immediately: 407-863-0222
We’ll assess your situation within business hours and:
📧 Email: [email protected]
We’ll help you:
The guidance in this article is informed by:
For specific legal questions about decision authority in your jurisdiction, consult with an employment law attorney licensed in your state.
Merritt Business Solutions is an HR solutions broker connecting businesses with optimal HR service providers. We specialize in helping CEOs and executives establish effective decision-making frameworks and access expert consultation for high-risk employment decisions.
Our Certifications:
Our Approach: We don’t make HR decisions for you—we connect you with vetted HR experts who can provide the specialized knowledge you need. Our success is measured by the lawsuits you avoid and the compliance problems you prevent, not by maximizing placement fees.
Contact:
Legal Disclaimer: This guide provides general information about HR decision authority and should not be considered legal advice. Employment law varies significantly by state, industry, and company structure. Consult with qualified HR professionals and employment law attorneys for guidance on your specific decisions. Merritt Business Solutions is an HR broker and does not provide legal services.
Merritt Business Solutions is a Certified Women’s Business Enterprise and holds NGLCC Certification as an LGBTQ+ business.