Below are some general best-practices when terminating an employee. Keep in mind, however, that most states have their own employee’s rights laws that may affect an employer’s ability to terminate an employee, or may require an employer implement additional protocols when doing so. Each employer should be mindful of any applicable State or local laws.
1. Review the Terms of any Employment Agreement
As an initial step, employers should review any employment contract, offer letter, or other document setting forth the terms and conditions of the employee’s employment. For instance,
Most employees are considered “at-will”, meaning they can be terminated at any time or for any reason – as long as the reason is not discriminatory (based on a protected class, such as race, ethnicity, religion, sex, national origin, age, or disability) or retaliatory (based on the employee’s protected activity, such as exercising the employee’s statutorily granted rights or complaining to the employer about a violation of the law). However, some employees contract to work with the employer for a specific period of time and, per the terms of the agreement, are not employed “at will.” Moreover, some employment agreements require “just cause” for termination. Accordingly, reviewing an employee’s employment agreement before initiating termination should always be the first step.
To that end, if the employee is a union-worker, you must review the collective bargaining agreement prior to terminating the employee. Collective bargaining agreements often contain mandatory notice requirements or prohibitions against termination on certain grounds.
It is also good to review the company’s policy regarding paying out benefits upon termination. For instance, if the company policy states that an employee will be paid out the cash value of any accrued, but unused, paid time off (sick leave, vacation leave, personal leave, etc.), then the employer should determine whether the employee in question is entitled to any such payout before proceeding with the termination. (This is also a good example of why employers should review their State and local laws, because some states [e.g., California] have laws governing paying out benefits upon termination.)
2. Review the Employee’s Personnel File
Again, it is generally illegal to terminate an employee because of his or her protected class or protected activity. And, to protect against a possible wrongful termination claim, employers should do what they can to avoid even the appearance that the termination was related to a protected class or activity. Thus, prior to meeting with the employee, you should consult the employee’s personnel file to determine whether the employee has any known disabilities or has recently filed a workers’ compensation claim or workplace safety complaint, etc., as firing an employee shortly thereafter may give an employee ground for a wrongful termination suit.
3. Determine the Appropriate Time and Place for Termination
It is recommended that terminations take place behind closed doors, preferably in the employee’s office. This way, other employees are not aware of the termination and you can leave the room when you have provided all of the information necessary to effectuate termination. It is also important to consider the time of day that an employee is terminated. It is suggested to wait until the end of a work-day and – if possible – the end of a work-week, so that other employees are less likely to be exposed to impacts of the termination should the employee handle it poorly.
There should always be two company representatives (two witnesses) present at the termination. If you have a human resource (“HR”) department, a human resources representative should always be consulted prior to termination and should be present during the termination meeting. If you anticipate hostility with the employee, it may be appropriate to ask security to either sit in the room or stand outside of the door. The decision to have security or a witness present should not be taken lightly – you do not want to cause unnecessary hostility to angst where none existed in the first place.
4. Provide Brief but Direct Explanation for Termination
In some instances, it may be best to provide the employee with a specific reason for the termination so as not to leave any ambiguity for the employee to make alternative assumptions as to why he or she was terminated; while other instances may call for a more broad and general explanation (e.g., the employee is “not a good fit”) that does not “put you in a box” regarding the exact reason for termination.
In either case, the reason for termination should be expressed briefly and directly. Small-talk should be avoided. Employers should be respectful with the terminated employee, get straight to the point, avoid arguments, and leave the room when termination is effectuated. Remember, any statements you make while firing an employee can be used against you in the event of a lawsuit.
5. Communicate Post-Employment Benefits
Employers should communicate all post-employment benefits to the employee prior to termination. This generally includes, but is not limited to, continuation of health benefits (COBRA or “mini-COBRA”), options for filing for unemployment, transferability of 401k or similar benefit plans, the procedure for obtaining a final paycheck, and any applicable severance packages.
Remember that the benefits an employee is legally entitled to will vary by state. While there is federal legislation that entitles employees to some benefits upon termination, such as the Consolidated Omnibus Budget Reconciliation Act (COBRA), many states offer more coverage than what is provided for under federal law. For a full breakdown of the benefits you must provide to a terminated employee, please contact your attorney.
6. Encourage Employees to Sign Termination Releases
If possible, employers should ask employees to sign an acknowledgment or a release after being terminated. At a minimum, the acknowledgment should include language where the employee agrees that that he or she was briefed on the reason for his or her termination, that the reason was not discriminatory or in retaliation for exercise of a statutory right, and that the employee was notified of his or her right to continuation of health benefits, etc.
Where an employer is concerned about the employee taking legal action after being terminated, the employer may seek to obtain signed releases from terminated employees. Ideally, the release would state that the employee releases the employer from all legal action pertaining to the employment and termination. However, for the release to be valid, the employer must give the employee some form of consideration in return – meaning the employer is required to offer the terminated employee some form of compensation that the employee was not otherwise legally entitled as a condition to obtaining the signed release. This can come in the form of a severance package, the continuation of a benefit that the employee would otherwise not be eligible for, and/or waiver of a non-competition provision to which the employee would otherwise be subject.
7. Additional Notes for COVID-19 Related Layoffs
Employers must be aware of the recently enacted Families First Coronavirus Response Act, which went into effect on April 1, 2020. This Act includes anti-discrimination and anti-retaliation provisions related to new paid leave laws, and also provides for enhanced unemployment benefits for employees whose termination is related to the COVID-19 pandemic. Please review our article for more information (https://www.rooferscoffeeshop.com/post/everything-roofing-companies-need-to-know-about-the-families-first-coronavirus-response-act).
Additionally, if an employer is considering mass layoffs or widespread reductions in hours or compensation—which many companies are considering amidst the COVID-19 pandemic—the employer should be mindful of the requirements of the Worker Adjustment and Retraining Notification (WARN) Act. If you an employer is covered under the WARN Act, it must follow certain requirements prior to instituting mass layoffs. Please review our article for more information on the WARN Act (https://trentcotney.com/warn-act-and-covid-19/).
Finally, employers should be aware of the impact terminating employees may have on its ability to receive small business loans from COVID 19-related stimulus bills, specifically, the newly passed CARES Act. In order to be eligible for loan forgiveness on a small business loan procured under the Paycheck Protection Program, an employer must verify that it maintained the same or greater number of employees over the first eight (8) weeks that it had access to the small business loan funds. For more information on the impact terminating employees could have on your business under the CARES Act, please review our article (https://www.roofingcontractor.com/articles/94398-2-trillion-covid-19-stimulus-to-help-roofing-contractors-stay-in-business).
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.