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Insubordination. Intellectual Property Disclosure. Bad behavior. Breach of restrictive covenant.
All of these are legitimate reasons to fire someone, but what do HR managers and business owners need to know about the legal technicalities of terminating employment?
Components of a legal resolution
To avoid legal problems after termination of employment, it is important to understand the main elements of a legitimate termination of employment.
- Be sure to identify any documents required to be provided to the employee under state or local law. For example, in California, employees must be provided with some form of employment change notice as well as an unemployment benefits brochure upon termination of employment.
- Check your state’s severance paycheck rules. You may have to pay your employee on the termination date or within a certain period thereafter, despite the normal payroll cycle.
- Identify any legal risks in relation to the resolution. For example, is the employee a member of a protected class? Were they informers?
- If termination is for performance or other “cause,” have you documented the performance issues? Has there been some sort of progressive discipline or will this be a surprise to the employee? These are important questions because performance dismissals should not come as a surprise to the employee; an employee should be made aware of performance problems and given the opportunity to improve. This protects the company in the event that the employee reports unfair dismissal. It also helps with morale; employees won’t want to stay if they think they might be fired suddenly.
- Always have a witness at a severance meeting, which can benefit the company in the event of a dispute. In most cases, the witness should not be an attorney. This is to prevent the attorney from becoming a witness in the trial, which could present a problem on attorney-client privilege grounds.
Related: How to Fire an Employee: 4 Ways to Make the Process Kinder
What not to say during a conclusion
While there is no one-size-fits-all guide to everything to say – and not say – during a layoff, there are some guidelines that an HR manager or business owner should pay attention to.
Termination discussions should be brief. Less is more in this case.
Don’t digress about the reasons for the dismissal. Don’t talk about other employees; if the layoff is a layoff, don’t explain what job status is secure or why. Don’t get into a long discussion or exchange. Be respectful but firm.
The gray areas of legal resolution
A broader and more objective vision
HR and legal professionals can get a broader, more objective view of layoffs that are important to the company, which can help mitigate risk. For example, a hiring manager might opt to lay off or otherwise terminate some employees because those employees are having difficulty adapting to the new software. However, this can often lead to dismissal, mostly of older employees. It is important to think about whether there is an issue of age discrimination. It is also worth considering whether the manager needs to be advised on how to better train these employees.
High-risk layoff situations
Human resources managers and entrepreneurs should protect themselves from falling into high-risk dismissal situations. Therefore, it is important to have policies to document employment issues and progressive discipline; this can serve as a written record to support the resolution. This is especially useful in situations where an employee in a protected class or situation needs to be terminated. For example, you need to fire an employee who is going on maternity leave. If performance issues are documented and if there has been a progressive discipline process, the company will be better prepared for a job request.
Effective and legal use of severance contracts
Severance agreements can be invaluable in terms of mitigating the risk of lawsuits, but the law surrounding them changes rapidly. Do not reuse forms and be sure to work with an attorney who is familiar with current employment law at both the state and federal levels.
Related: 11 Tips for Firing an Employee
Repercussions of illegitimate dismissal
Failure to comply with final paycheck laws can lead to wage claims and penalties.
Failure to provide proper documentation required by state and local laws may result in penalties.
Failure to document work performance issues and failure to engage in progressive discipline can leave the company vulnerable to wrongful termination lawsuits. For example, if someone who just asked for a disability accommodation was fired, but the HR manager says it’s for performance reasons, a jury is unlikely to believe the manager if those performance issues haven’t previously been documented.
Failure to identify whether there are risks associated with dismissal can lead to suboptimal dismissal decisions being made. If you notice that there is a high probability of an employee making an unfair dismissal claim, you can better prepare yourself in terms of offering a severance package or perhaps delaying the dismissal while establishing a better documentation process.
The bottom line
As a business owner or human resources manager, it is inevitable that you will have to lay off employees. Keeping these considerations in mind can help protect you and your business in the long run.