Employment Law Series: Termination
Just like many other relationships, the employment relationship does not work out sometimes. Employee termination can be tricky, regardless of the circumstances. All policies and procedures for investigating, disciplining, and terminating employees should be clearly defined, written, and communicated to employees.
Planning for the End—at the BeginningThe company’s employee handbook, as well as any employment contracts, should establish your company’s termination protocol. If the company does not have a standard for handling terminations, one should be implemented immediately. The employee handbook or termination protocol should include policies regarding at-will employment and workplace rules and conduct. Employees should know and accept the company’s policies and procedures. Additionally, any employee contracts should be careful not to create an implication that they can be fired only “for cause.”
Document Performance ProblemsIf an employee’s conduct or performance is not in line with the company’s stated guidelines, policies, and procedures, the employer should document warnings and any other disciplinary action taken. The documentation should outline the facts of the situation, the policies that were violated, and the conditions, if any, that were placed on continued employment (e.g., probation, final warning). If an employer formally disciplines an employee, not only should the encounter be documented, but there should be a witness—for example, someone from human resources or another manager—to compliment the written documentation. The decision to terminate the employee should be supported by the facts and documentation. That is to say that there should be no surprises to the employee when he/she is terminated, and performance evaluations should be consistent with the employee’s failure to perform.
Evaluate and Comply with Legal ObligationsAn at-will employee may be terminated from employment at any time, for any reason – with or without notice. Just because an employee is at-will, however, does not give an employer the right to discriminate or to terminate out of retaliation. Under federal law, it is illegal to terminate an employee for reasons of age, race, religion, national origin, or a disability—assuming it does not influence their job performance. Further, an employer may not terminate whistleblowers or employees for taking family or medical leave, military leave, or time off to vote or serve on a jury.
With contract employees, an employer must also be careful not to breach an employment contract or an implied employment contract prematurely. If an employee is terminated before the end of the employment contractor, he or she may have a claim for wrongful termination or breach of contract.
It is also important for employers to understand what benefits their employees are legally entitled to if they are fired or terminated. Terminated employees may still be entitled to temporary continuation of health insurance coverage through COBRA, unemployment benefits, and the right to receive vested 401(k), profit-sharing, and/or pension benefits.
Tie Up Loose EndsThere is no requirement in the Fair Labor Standards Act (FLSA) that an employer provide severance pay. If severance pay is an incentive an employer decides to offer a terminated employee, the employer may have the employee sign an agreement not to sue in exchange for receiving severance. Regarding a terminated employee’s final paycheck, federal law does not require employers to immediately give former employees their final paycheck; however, some states require immediate payment and are specific about what should be included in the final paycheck, such as accrued or unused vacation days.
It is a good idea to have both the employer and employee sign a written document that covers severance, confidentiality, return of company property, and other matters. An experienced employment law attorney can draft the required documents in a manner that provides the most protection for the employer. Throughout the termination process, employers should strive to be civil, concise, and compassionate. Employers must remember that they are, first and foremost, running a business, and professionalism and planning can help to ease the tension that a termination may inevitably create.
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