Despite the increasingly strong job market that makes it tougher to find the workers you need, you may have an employee that you have to discharge. In taking this unpleasant action, make sure to do it in the least troubling way for the worker and to follow legal requirements.
Pre-firing actions
First and foremost, decide whether you want to take the step of terminating an employee. For at-will employees, you may think you can terminate for any reason at any time, but there are exceptions to this rule (e.g., public policy, having an implied contract with the worker, and unfairness by the employer). Nonetheless, if you are terminating a worker:
- To scale back on payroll costs, review whether other cost-saving measures can be implemented before reducing the size of your staff. Remember that your unemployment tax costs likely will rise when workers collect benefits.
- For a particular reason related to his or her conduct, this decision should only be made following attempts to correct a problem, such as warnings about being late, additional training to get job skills up to your standards, or mentoring to help the person fit into your company culture.
If the person you’re firing has an employment contract, review the terms with an attorney to see whether there are grounds for termination.
Before you decide to ax an employee, make sure you have the appropriate paper trail to document the conduct of the work and your responses. The paper trail is protection in case the terminated worker sues you for wrongful termination (today one of the most common workplace lawsuits).
How to swing the ax
Decide when to tell the worker about the termination. Some experts suggest you do this at the start of the week rather than on a Friday so the worker has time to take helpful action (e.g., reach out to prospective new employers) rather than stew over the weekend.
Decide whether the termination is effective immediately or at a future date (e.g., end of the month). This depends on the situation and the person you’re firing. If you need the worker to help train a replacement and the worker is the type of person who would be helpful to your business despite termination, then immediate termination isn’t necessary.
If you are terminating an employee for suspected criminal action (e.g., stealing company property), you may want to escort the worker immediately from the premises.
What to pay the discharged worker
While there is no requirement to offer any severance pay, you may want to do so if the situation calls for it (e.g., you are downsizing or otherwise jettisoning the employee for no fault of his/her own). Whether or not you give any severance pay, check with your state’s law to see how quickly you must issue the final paycheck. Note: If you terminate an exempt worker mid-week (someone not subject to the federal Fair Labor Standards Act on minimum wage), you aren’t obligated to issue a paycheck for the full week; you won’t be violating the law if you don’t but you may choose to pay the full week anyway.
In addition to severance pay, you may be required to pay unused personal leave time (e.g., vacation days, sick days). Again, state law dictates what you can and cannot do. In some states, personal leave time is accrued for workers and must be paid to them upon termination.
Inform the terminated worker about fringe benefits, such as retirement plans and health coverage. If you have medical coverage and more than 20 employees, you must offer the terminated worker COBRA coverage. But check with your state because its own COBRA rules may apply to companies with even fewer employees.
Other things
Simply informing the worker about the job loss and possibly offering a severance package isn’t the end of your responsibilities. Also:
- Reclaim company keys and other company property
- Remind the worker about any confidentiality agreement he or she may have signed at the start of employment
- Change passwords if the terminated employee had access to company data.
Conclusion
When in doubt about taking proper action, you may want to talk with an HR expert and/or an employment law attorney.
