Termination best practices to protect employees and employers

Terminating an employee is one of the most difficult and significant actions an employer or supervisor can take. It should be approached with careful consideration, as its repercussions extend beyond the employee and the employer. Even when employees recognize that a coworker was underperforming, had a negative attitude, or was not a good fit, a termination can create uncertainty and unease among the remaining staff. Additionally, a termination may lead to a wrongful discharge claim, which, even if not legitimate, can be costly, distracting, and detrimental to workplace morale.

Consider the following factors throughout the termination process to ensure that employees’ rights and dignity are protected while also safeguarding your organization’s best interests.

Is termination an option?

First, let’s take a brief look at some important legal issues.

Under the traditional doctrine of employment at will, workers without an employment contract serve at the discretion of their employer. The employer has an absolute right to fire employees “at will” for any reason or for no reason at all—except for reasons that violate anti-discrimination laws.

Many federal and state laws place restrictions on termination. Title VII of the Civil Rights Act of 1964 prohibits employers from firing employees for discriminatory reasons or retaliating against employees who oppose any unlawful employment practice or who make a charge, testify, assist, or participate in any investigation, proceeding, or hearing under the law. Similar job protections are extended to employees under the Age Discrimination in Employment Act (ADEA), Family and Medical Leave Act (FMLA), and Americans with Disabilities Act (ADA), which protect them from termination based on age, medical leave, or disability status.

Under federal labor laws, employers are forbidden to fire workers for banding together to bargain with the employer. Employers are also prohibited from firing employees for making complaints about wage and hour violations. Under the U.S. Occupational Safety and Health Act, employers may not impose discipline in retaliation for the filing of a complaint about work safety. And, in unionized workplaces, employers bargain with labor unions, and there are rigid procedures for taking discretionary action and challenging disciplinary decisions.

Once you decide a termination is warranted and non-discriminatory, you should carefully plan out the rest of the process.

The termination meeting

Every termination meeting should be planned carefully and executed quickly and competently. To achieve that, use these best practices:

• Conduct the meeting as privately as possible, at either the start or end of the workday.
• Have at least two members of management, or one member of management and one HR representative attend the meeting.
• Keep the meeting brief. The purpose of the meeting is to communicate the message, not to discuss the reasons, or rights and wrongs, behind the decision. Stay focused.
• Remain compassionate, but do not compromise the company’s position by “siding with” the employee.
• Arrange for security if an employee has a history of violence or could react violently.
• Prepare a final paycheck, including all outstanding vacation, sick time, etc., when applicable.
• Provide information and forms regarding the continuation of group health insurance, unemployment insurance, etc., to reduce the need for a former employee to return to the workplace and possibly cause disruption.

The employment relationship should end at the conclusion of the termination meeting. Unless an intervening employment contract states otherwise, employers are not legally required to provide an employee with a notice period prior to termination. In fact, in most cases, it is not recommended.

Releases and waivers

Employers may ask an employee who is resigning, being terminated, or laid off to release potential legal claims the employee may have against the employer (e.g., for alleged employment discrimination) in exchange for additional compensation. Some state and federal laws prohibit the release of claims under those acts and prohibit employees from waiving certain rights under those laws. For this reason, any general waiver of claims must be written carefully. If the employee is aged 40 or over, the Older Workers Benefit Protection Act contains specific requirements for such a waiver and release of claims that must be followed to ensure that the release is enforceable.

Severance pay

No federal law requires that an employer pay severance upon terminating an employee. However, severance benefits are often offered in conjunction with waivers and releases of claims. Additionally, some employers opt to provide severance benefits to ease the transition for discharged employees, particularly those with lengthy tenure with the organization.

Return of company property

Employers should assign responsibility for seeing that discharged employees return any company property, such as uniforms, keys, or credit cards, before departure.

For employees with access to trade secret information, proprietary software, or product development plans (e.g., computer programmers), especially those with telecommuting arrangements, additional measures may be taken to protect company property. These measures might include immediate termination upon receipt of a resignation letter, escorting the employee from the premises, and arranging for the prompt retrieval of company-owned computers, software, etc., from the employee’s home office.

Recordkeeping and retention

All termination-related documentation should be filed in the employee’s personnel file. If departmental personnel files are also maintained, they should be kept in a confidential and secure place. Some states have laws that specifically govern the maintenance and retention of all employee personnel files. For example, California requires employers to retain personnel records for at least three years and provide employees access within 30 days of a request. Connecticut and Maine mandate that employers keep records for at least one year after termination, while Illinois and Massachusetts have strict access and notification requirements. Because these laws vary by state, employers should ensure compliance with applicable regulations in the states where their business operates.

Takeaways for fair terminations

Termination decisions are often difficult and may sometimes require immediate action. However, even when time is of the essence, taking the extra time to pause and carefully consider the approach can make the difference between an employee accepting the decision and an employee contacting an attorney. By prioritizing fairness, compliance, and thoughtful execution, employers can navigate terminations in a way that respects the employee while protecting the business.