Q: What should I know and review in regard to terminating an employee?
A: There are three major reasons why employees are terminated: Illegal or improper behavior, poor job performance, and position elimination. When first deciding that termination may be necessary, consider the impact on the organization. How many employees will be affected, is the job loss permanent, will there need to be a media spokesperson, are there any bargaining agreements that affect this termination, etc.? Do not discharge an individual without properly assessing the situations surrounding the termination.
Once you have decided that termination is probable, double-check your policies, procedures, and past practices to maintain consistency. If the termination is affecting an employee from a protected class, this is especially important. If the policies and procedures in the past support a termination action, make sure all the appropriate documentation is in place. At this time, make sure the assessment for the reasons of termination was conducted thoroughly and that there is a paper trail supporting your decision. Consult with an attorney, HR representative or consultant to determine any other potential legal issues or risks. Finally, conduct a termination meeting in which the reason for termination is clearly communicated to the employee and a member from management and/or the Human Resource function present.
Many of the risks inherent in terminating an employee have to do with possible claims of discrimination and/or wrongful discharge. There are additional laws which impact the manner in which we may terminate an employee, and steps we need to take upon termination. It is impossible to list all laws that might cover this issue, but here are the more important ones.
Some major laws dealing specifically with discrimination: Title VII of the Civil Rights Act and amendments, Pregnancy Discrimination Act, American’s with Disabilities Act, Age Discrimination in Employment Act, Family and Medical Leave Act, Immigration Reform and Control Act, Workers’ Compensation, OSHA, and a variety of state and local laws. Basically, you cannot terminate employment based on a characteristic protected by law, such as their race, age, use of family and medical leave, etc. You also need to be careful of an adverse impact upon such a class of employees, such as a layoff that impacts only workers who are over 40 years old.
Other laws that impact termination of employment: Workers’ Adjustment and Retraining Notification Act (WARN) dealing with large layoffs or plant closings, Consolidated Omnibus Budget Reconciliation Act (COBRA) dealing with employee benefits and notification to employees and covered dependents, Fair Labor Standards Act and state wage and hour laws dealing with final pay issues. Also, some states require a written service letter (Oregon doesn’t, but Washington does) at the request of the employee, which must provide the reason for termination.
Check all state and local laws which may apply.
Q: If an employee resigns, when must wages be paid?
A: This depends on the how much notice the employee has given you and individual state requirements. The two extremes tend to be – you must pay on his/her last day or you do not have to pay out the final paycheck until the next pay period. Generally, if at least 48 hours notice is given, the employee must receive all wages owed (not necessarily all wages earned), including any already calculated commissions or vacation/sick pay, on the final day of employment. Check with your state to determine what the specific requirements are.
Q: Do I have to give severance pay when I fire someone?
A: The law does not require any type of severance pay to be granted to any employees, regardless of whether it is a termination because of performance or a lay off. Because of civil rights issues, if severance pay is granted, make sure that it is offered consistently and impartially with all employees based off the standards your company sets. For instance, if you offer one-week severance for a male employee who has been with the company for one year, make sure you offer the same for a female in a similar situation. Keep in mind that when you offer any type of severance package for the first time, you are setting precedence for the future.
Q: If requested, are we obligated to provide a former employee with a written letter explaining his/her reasons for termination?
A: An employment termination letter serves multiple functions, including providing proof of unemployment, as well as essential information for the employee, as she makes her transition away from the company. Putting transitional information into writing is often helpful, as many employees are upset when they learn that they are being laid-off or fired, and they may not remember what they were told by a supervisor or a human resources manager about benefits and offboarding. The employment termination letter accomplishes the following:
- Documents the termination: The service letter states that the employee has been, or will be, terminated from the company. It also provides the reasons for termination. The document provides proof of unemployment to unemployment agencies, social service providers, school financial aid offices and any other person or organization that has an interest in whether or not the named individual is employed.
- Provides benefit continuance information: Typically, an employment termination letter includes information about the status of employee benefits after termination. This is particularly important if the worker and his family are covered by employer-provided health insurance.
- Outlines offboarding details: Offboarding processes may include returning electronics, such as laptops and smartphones; deactivating accounts; and returning electronic key cards and company ID cards.
A number of states like Arizona, California, Illinois, New Jersey and Washington require employers to provide employees with a service letter. Some of these states also require that the letter outline the employee’s work history. Please check your state laws and regulations for more specific information. Employers in the state of Florida are not required to provide service letters.
Q: Is an organization permitted to terminate an employee whose performance is just below and has not had any corrective action taken against him/her?
A: As an “at-will” employer you could legally terminate the employee without reason or notice, however, we don’t recommend this type of action. We recommend that you document at least an initial attempt to bring the employee’s performance up to standards. The most logical process for that would be the performance appraisal which is due now. State in the review exactly what the issues are and what you expect with regard to improvement. Make sure to set up an action plan with follow up dates and possible consequences for inadequate improvement. Remember to document any subsequent discussions including the termination discussion, if it comes to that. Our philosophy is that any termination for performance reasons should not come as a surprise to the employee – they should be well aware of the performance issues and be given a chance to improve.
Q: Is it legal to request a longer resignation period for management employees than other employees?
A: Yes, you can request a longer notice period for management employees, but there are several things you need to be aware of. First, as you suspect, such a requirement may not be enforceable unless it’s part of a valid employment contract. Management employees who fail to give the required six weeks’ notice will not be liable to you in any way. Second, requiring notice of intent to resign may jeopardize the “at-will” status of management and non-management employees alike – an unintended consequence for many employers who request notice from resigning employees. A warning: Think twice before attempting to enforce your provision by warning employees that they will forfeit any rights to unused vacation if they do not provide the requested notice. Provisions regarding forfeitures may be problematic under state law. In California, for example, accrued vacation is not forfeitable.
Q: What are other alternatives to terminating an employee with a problem?
A: There are many forms of corrective action that can be used as alternatives to terminating an employee. These include mediation, Employee Assistance Programs, demotion, decision making leave, verbal or written warnings, and suspension. Keep in mind that the action should be appropriate to the situation and problem. Also, look at the actions taken so far to correct the situation and the long-term objectives.