U.S. employers will hand out pay raises averaging 2.5% across all employee categories in 2010, according to the annual WorldatWork 2010-2011 Salary Budget Survey. But in most cases, the size of the raise will depend on how well employees have performed. Employers "are no longer averse to withholding merit increases for poor performers so they can afford to grant meaningful increases to better performers,” says Anne C. Ruddy, president of WorldatWork.

If you manage a team that’s stuck in a rut or not working up to its full potential, it may have nothing to do with the drive and talent of the participants. They all may want to succeed and be giving 100% effort, but the results can still disappoint. The problem could be conflict—not too much, but too little.

While employers have an obligation to offer reasonable accommodations to help employees who are disabled, it doesn’t follow that disabled employees can keep their jobs if they simply can’t get work done. But termination often causes a disability discrimination lawsuit. Be prepared to show exactly how poor the employee’s performance really was.

The ADA requires employers to provide a reasonable accommodation to qualified individuals with a disability, unless doing so would cause an undue hardship. A recent 7th Circuit case sheds light on the extent of an employer’s obligation to accommodate an employee’s accommodation request.

In these difficult economic times, if you have to conduct a reduction in force, think carefully about how you select those who will be terminated, especially if you anticipate bringing some workers back when the financial picture improves. For example, don’t tell employees they were picked for layoffs because their work was substandard. Use a gentler approach.

Some employees can’t or won’t acknowledge that they aren’t meeting their employer’s expectations. They ignore negative evaluations, don’t follow through on improvement plans and won’t take direction. You may have no choice but to fire the employee. If you do, don’t worry. Careful documentation will stifle any later lawsuit alleging some form of discrimination.

Nothing raises suspicions among employees (and juries) than effusive praise followed by a pink slip. So here’s a tip that will make courts more likely to uphold your termination decisions: Make sure whatever reason you use to justify a firing also shows up in past performance evaluations.

Presumably, when you terminate an employee, you have good reasons for doing so. If you pile on more reasons later, it may look as if you are trying to cover up a discriminatory decision with a host of excuses for why you fired the employee.