There are myriad reasons an individual’s employment may be terminated: poor performance, misconduct, or even just a layoff due to economic reasons. Regardless of the reason, it’s important that hiring managers and human resource professionals understand some of the legal components of an employment termination to avoid post-termination litigation.
Legal termination: a checklist
Each state has specific laws around employment termination; therefore, it is important that HR managers identify their state – and local – laws that address the paperwork that must legally be provided to the terminated individual. For example, California requires a Notice of Change in Employment Relationship and information regarding unemployment (even if the employee is not eligible); other states may require providing documentation about unemployment benefits.
Termination paycheck rules also vary by state, so it’s important to review them carefully. Some states require paying a terminated employee on the date of termination. Others allow for issuing the paycheck on the company’s next scheduled payday. The US Department of Labor has listings of each state’s labor offices and their respective guidelines.
Another important factor to consider is whether or not there are any legal risks associated with the termination. For example, if an employee is a member of a protected class, there may be risk in terminating that employee. If an employee is a whistleblower, there are legal protections in place for them, too. Conduct research to determine any legal risks to the termination to avoid litigation.
If an employee is going to be terminated for performance issues or other “cause,” the employee should not be surprised; they should have already been part of a performance plan and have been given an opportunity to improve. Ongoing documentation that points to performance issues or progressive discipline may help to protect the company if the employee alleges wrongful termination.
Finally, don’t terminate an employee alone; always have a witness whose role it will be to recall the conversation in the event of litigation. Note that this witness should not be an attorney; if the attorney is eventually called to testify, it can present issues with privilege.
What not to say when terminating an employee
Keep the conversations brief. In the event of an employment termination, less is more.
To avoid potential escalation, prepare a list of reasons for the termination. This will help to guide a focused conversation.
Keep other employees out of the discussion. The termination meeting should be about one employee only – not others or their employment status.
Emotions can run high in termination meetings. Be sure to maintain a professional level of composure, and don’t engage in arguments. Be respectful but firm.
The gray areas of termination
HR professionals often have a broader, more objective view of terminating employees and how it fits into the bigger picture of company success. This can help to mitigate the risk associated with termination.
Let’s say an older employee is having a particularly difficult time learning new software programs necessary to do his job. This is not an isolated situation; this employee has had these issues in the past. But terminating his employment may look like age discrimination since those who have difficulty adapting to new technology are often older workers. Is this an HR issue relating to age discrimination, or does the employee’s manager simply need to conduct better training?
Another gray area is in avoiding high-risk termination situations; it’s important to set up policies for documenting employment issues as well as any disciplinary action taken against those employees. Encourage use of these policies among team leaders, who will provide a written record that supports a termination. This is also helpful in situations where an employee in a protected class might be terminated. For example, let’s say an employee going on maternity leave is to be terminated due to performance issues. As long as her job performance issues have been documented, and there was a process of progressive discipline, your company will be better prepared to respond to an employment claim.
The use of severance agreements can also help to mitigate the risk of a lawsuit, but it’s important that they are both effective and legal. The law around severance agreements changes rapidly. Don’t just reuse old forms and hope they’ll be effective; work with an attorney familiar with the legalities around the use of severance agreements on both the state and federal levels.
Repercussions of an unlawful termination
Failure to follow applicable law in connection with terminating an employee can lead to wage claims, penalties, fines and/or wrongful termination lawsuits.
Penalties or wage claims may be imposed on a business that fails to comply with final paycheck laws. A business may be required to pay fines for a failure to comply with other paperwork required by state law and local law.
A business’s failure to document employee performance issues and engage in progressive discipline may open the company up to wrongful termination lawsuits. For example, let’s say an HR manager has terminated an employee for performance reasons, but the employee recently requested a disability accommodation. If that manager hasn’t documented that employee’s performance issues, a jury will have a hard time believing that the termination was performance-based.
Finally, failure to identify potential risks with a termination can lead to making nonoptimal termination decisions. If you see that there is a strong chance of an employee bringing a wrongful termination claim, you can better prepare in terms of offering severance or even delaying termination until a more effective documentation process has been put into place.
The bottom line
Terminating someone’s employment can be complicated due to ever-changing employment laws. It can also be an opportunity for those who are terminated to take legal action against their former employer. It behooves hiring managers, HR representatives, and the like to maintain a knowledge base of the legal ramifications of an unlawful termination to avoid post-termination litigation.
