Employee Terminations Dos and Don’ts

Employee termination is usually a delicate task.  Mishandled firings can lead to a nightmare of costly and time-consuming accusations. Yet keeping failing employees out of fear of lawsuits can destroy workplace production and morale.

To reduce the likelihood of post-employment litigation, employers should:

• Avoid issuing company policies and agreements that unduly restrict the employer’s right to terminate;
• Make the company’s internal dispute resolution system readily accessible;
• Document performance problems and management’s efforts to resolve them;
• Ensure management treats any faltering employee the same as others in such situations;
• Consult with competent employment counsel, especially on more contentious situations, for guidance on the termination process and its documentation;
• Pay all wages due on the last day of employment;
• Secure employment practices liability insurance to protect against frivolous suits; and
• Consider offering a severance agreement.

Properly drafted severance agreements can effectively eliminate wrongful termination lawsuits.  In exchange for a fair amount of severance pay (in addition to earned wages and accrued vacation benefits) the departing employee agrees to release all claims, real or imagined, known or unknown, including wrongful termination, discrimination, harassment, retaliation, breach of contract and disputed wages.

When offering severance, employers must fulfill all requirements to ensure courts and government agencies will fully honor the agreement.  For example, an employer with 20 or more on payroll must provide a departing employee who is 40 or older: (i) up to 21 days to consider and sign the waiver, and if desired, to have it reviewed by an attorney; and (ii) even after accepting, another seven days to change his/her mind and rescind the agreement.  Although an employer must wait the 21 days to withdraw the offer, the employee can choose to sign the agreement on the spot or at any time before the deadline is up.

For businesses with less than 20 employees and/or when the departing worker is under age 40, the waiting and rescission periods are not required.  The best practice here would be to permit a few business days to allow the employee to consider the terms, with or without legal counsel.

Take Away: Implementing proper written workplace policies, procedures and forms can go a long way to prevent questionable lawsuits from departing employees intent on retribution. Our employment forms package includes an overview memo on administering a severance offer, a sample severance agreement and a sample termination letter.  We also assist with specific terminations upon request.

For more information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

See also:

• Good Workplace Policy is Boss – Our Template Handbook & Forms for 2021 (May 28, 2021)
• Between a Rock and a Hard Place – When It’s Time to Call Your Lawyer (April 28, 2018)
• Employee Terminations – Firing Low- Performing Workers While Limiting Repercussions (April 20, 2018)

Cindy Bamforth
September 15, 2021