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Legal Tips When Firing an Employee

Small business owners need workplaces that run smoothly. If an office has only a dozen employees, it won't function if one worker isn't pulling their weight or is unreliable.

Terminating an employee is never pleasant, particularly in a small business where you know all your workers. If you need to let an employee go for whatever reason, review the state and federal laws surrounding employee termination.

This article provides some legal tips for the best ways to dismiss a worker.

Before Firing an Employee

Some human resources specialists suggest five fair reasons for firing an employee. If you analyze the reason you need to fire or lay off an employee based on these reasons, you'll be safe most of the time:

  • Conduct covers things like absenteeism, insubordination, or sexual harassment complaints.
  • Capability means job performance issues or inability to fulfill the job description even with reasonable accommodation.
  • Redundancy is commonly used during layoffs or downsizing. If there are two employees where you can only pay one, you have to fire the other.
  • Statutory restriction refers to situations where the employee cannot hold the job for legal reasons but is otherwise qualified. An example would be a worker who lost their driver's license but needs to drive for their job.
  • Some other substantial reason (SOSR) include legitimate reasons which don't fit the other four categories. Examples include conflicts of interest, the end of a fixed-term contract, or reputational damage. An example of the last is when a law firm dismisses a partner when the attorney is caught in a compromising scandal.

Have a Solid Basis for Termination

Whatever reasons you have to fire employees, you must have a basis for the termination. Even in an at-will state, you will be courting legal trouble if you tell an employee, "You're not working out. You're fired."

Firing someone without cause or notice may be technically possible, but it's not a good idea. If the worker has been there long enough for performance reviews, you must have copies of these as well.

Before you can fire an employee, they have to know what a fireable offense is and have a warning when they have committed it. It's important to have a termination policy, and employees must know the policy. You should document the termination process, and each step of the offense should have a paper trail.

For instance, if repeated tardiness is a firing offense, your policy should state how many times an employee may be late before they get a warning and whether they will be oral or written warnings. You should have copies of these warnings when it is time to fire the worker.

You need this documentation because even in at-will employment states, you cannot fire an employee in bad faith. With a written policy and documentation showing the steps taken, an employee cannot claim bad faith or favoritism. They cannot claim you fired them for a single incident of tardiness when another worker was late 15 times before a write-up.

Preparing for the Termination Meeting

When it's time for the termination meeting, you should get legal advice. If you don't have an attorney, consult your state labor laws. Every state has specific laws regarding employee termination. Some of the things you may need to have ready for the final interview include:

  • Final paycheck: Some states require you to give employees their paycheck on their last day when possible.
  • COBRA information: If your employee had healthcare benefits, you must give them the option of continuing their insurance benefits through COBRA.
  • WARN Act: Larger businesses having mass layoffs must meet the Worker Adjustment and Retraining Notification (WARN) Act standards. This requires employers to give workers 60 days' notice of impending layoffs or shutdowns.
  • Unemployment benefit information: If you are not firing an employee for cause, they can apply for unemployment insurance. You must give them information on applying for these benefits.

If your employee has vacation time, back pay, or commissions due at the time of termination, provide an accounting and include them with the final paycheck or in a separate payment. Confirm the requirements for these payments with your legal advisor.

The Termination Meeting

Human resources management companies have made many suggestions about holding the ideal termination meeting. Some say you should never have it on Monday, while others say never have it on Friday. A few suggest midweek is a poor choice, leaving no good day to fire workers. The same companies are equally unhelpful when selecting the right time of day, with mornings and afternoons problematic.

In his book, The Gift of Fear (Random House, 1997), risk assessment specialist Gavin deBecker suggests that you fire problem employees on Friday afternoons if managers think they are at risk for workplace violence. Fridays close out the employee's day like a normal week, and don't leave them at loose ends the next day without anything to do.

Whatever day and time you choose, these are more important things to keep in mind:

  • Keep it private: Unlike a planned retirement or departure, firing a worker is never pleasant and often embarrassing for the employee. Have the employee come to a private location and keep spectators to a minimum.
  • Keep it brief: Nobody is going to be happy, least of all the employee. Explain the issue, show the worker the disciplinary steps and why this is the last step, and conclude the meeting.
  • Keep it honest: Be direct about the reasons for termination. "You have been tardy 15 times in the last two months, you've had three verbal warnings and three written warnings. You had one suspension. You were tardy again yesterday. Now you are being terminated."
  • Don't argue, and don't waver: If you have kept complete records, there should be nothing to argue about. Do not suggest that "things just aren't working out" or "maybe if things were different," you would keep the worker. This can create grounds for legal action.
  • Collect all keys, keycards, and other access equipment: Remind IT to change or disable the employee's passwords and passcodes.
  • Let the employee take their personal possessions: If the termination is amicable, they can retrieve their possessions themselves. Otherwise, have them discreetly escorted to their desk or personal space. Do not make a spectacle of having security march them and a box to their desk and stand there like a police officer.

Workplace Violence Concerns

In today's society, there are always "those employees." The ones who challenge every rule as not applying to them, the ones who like tension and drama, the ones who threaten to come back and get the manager or the rat who got them fired. Sometimes, these workers end up staying on the job because employers fear that those employees are dangerous.

Small business owners cannot let those employees stay on the job, creating a toxic company culture. These workers are the ones who will eventually violate EEOC rules and get the entire company in trouble.

If you believe you have a problem employee and there may be a danger to other employees or the business itself, contact law enforcement or risk management specialists. Your HR department should monitor the former employee's social media for threats.

After the Termination

Don't let rumors or office gossip about the terminated employee spread. Rumors are always bad for employee morale, especially when they involve someone who is no longer there. Don't discuss the employee's performance or circumstances surrounding the termination. The best thing to do is move on past the termination.

If the former employee returns for any reason, be cordial, but notify security if you have any and law enforcement if you do not. If the employee initiates any kind of lawsuit, contact an employment law attorney immediately.

Things You Should Never Do

There are some reasons you may not terminate an employee. Even in an at-will state, firing an employee for the wrong reason will result in losing a lawsuit. You cannot fire someone for:

  • Whistleblowing: Whistleblowing occurs when an employee reports wrongdoing to a government agency, such as OSHA. State and federal whistleblower statutes have steep fines for wrongful termination in these cases.
  • Participating in protected activities: Voting, jury duty, unionizing, or being a witness in an EEOC investigation are all protected activities. Firing someone for doing any of these protected acts violates federal law.
  • Membership in a protected class: You cannot fire someone or refuse to hire someone solely because of their race, religion, gender, national origin, age, or disability, among other protections.

Get Legal Advice

If you're firing an employee, remember that they may have rights to unemployment compensation or other benefits. You can avoid a wrongful termination claim by finding a competent employment law attorney to discuss your situation.

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