How to legally terminate an employee
Most business owners and managers will have to terminate someone’s employment at some point in his or her career. But before going through with the actual termination, you should consider certain issues to reduce the likelihood of getting into legal trouble after the termination. This post will explain five key things to consider before firing someone.
Employment At Will
Before terminating an employee you should first double check to make sure the employment is “at-will.” At will employment is a doctrine that nearly all states follow that says that an employer can fire an employee at any time for any reason or for no reason (with some limited exceptions). You should check your company policies on employment as well as the employee’s employment agreement, if any, to be sure you don’t have any obligations regarding the termination.
Although most states follow the at will employment doctrine discussed above, there are some limitations to the doctrine. For example, you cannot fire someone if the termination is based on race, gender, religion, a disability, or because an individual is age 40 or older (read more about employment discrimination here). There are also various laws against firing employees for taking family or medical leave as well as other laws protecting the rights of whistleblowers and employees taking leave for military purposes.
If any of these issues are present in your situation, you should definitely speak to an employment law attorney before taking action.
Document Performance Issues
Even though you usually have the right to terminate an employment relationship, it is usually a good practice to maintain documentation regarding the reasons for the termination. If the employee is simply not performing his or her job, is tardy, or receives disciplinary interventions, be sure to document those matters in your records. If your employee later sues or threatens to sue you for the termination, these records can help you defend or prevent a lawsuit.
Even after an employee is terminated, he or she may still be entitled to certain benefits. For example, depending on your state and the size of your company, a terminated employee may be entitled to continued health insurance coverage from your company’s group plan (often at the employee’s expense). Additionally, the employee may be entitled to unemployment insurance and he or she will remain eligible to receive vested financial benefits such as those from a 401(k) and other profit sharing and pension benefits.
Lastly, although a terminated employee is not entitled to severance payments under the law, he or she may have a severance payment provision in an employment agreement. Thus, be sure to double-check the agreement for any such payments you may owe the employee after the termination.
If you are concerned about terminating an employee, be sure you contact one of our Employment Law Attorneys today to discuss your legal rights and obligations.
*This article is very general in nature and does not constitute legal advice. Readers with legal questions should consult with an attorney prior to making any legal decisions.