Employee terminations are often complicated, and if not conducted properly, employers can open themselves up to costly legal challenges and negatively affect their business or reputation. Understanding the legal obligations of employee terminations can help employers ensure this process is conducted in a manner that minimizes legal risks and accounts for various business considerations.
Employers should carefully consider their obligations at each stage of the termination process, including:
- Pre-termination Considerations
- Establishing a lawful reason for termination; and
- Considering alternatives to termination.
- Preparations for and Conducting the Termination
- Reviewing relevant documentation;
- Considering severance benefits;
- Carrying out the termination; and
- Ensuring the return of company property.
- Post-termination Considerations
- Distributing final pay and benefits;
- Complying with recordkeeping obligations;
- Notifying internal and external relevant parties;
In almost all states, employees are considered “at will,” absent an agreement to the contrary. Employers may terminate an at-will employee at any time for any lawful reason. Employers should carefully review any existing agreements with the employee, including offer letters, handbook agreements or other contracts, to ensure that there is no language that indicates employment is not at will.
Even if an employee is at will, it is considered best practice to have a clear, legitimate and non-discriminatory reason for the termination. Valid termination reasons may include performance-related or attendance issues, inappropriate behavior in violation of company policy, cost-saving measures and position elimination.
Remember: Even if the employer has established a lawful and appropriate basis for termination, employees may take legal action against employers in connection with a valid or lawful termination when other circumstances could reasonably suggest the employee was terminated for lawful reasons.
Kim Figurski, SPHR, is an HR consultant and trainer at the Manufacturer & Business Association. Contact her at 814/833-3200, 800/815-2660 or kfigurski@mbausa.org.
For more information, contact the MBA’s HR Services Division at 814/833-3200, 800/815-2660 or hrservices@mbausa.org.
