Terminating Employees the Right Way

The process of terminating an employee should not be taken lightly, as improper handling can lead to unpleasant results, such as the employee suing the company. It’s therefore vital that you follow the law when firing or laying off an employee.

“At-Will” Employment

Employment is “at will” in most states—meaning, either the employer or the employee can end the employment relationship at any time, for any reason. The employer, however, cannot fire the employee for an illegal reason.

 

Unlawful Reasons to Fire an Employee

The following reasons constitute unlawful terminations:

  • Discrimination. Federal anti-discrimination laws protect employees from being fired because of their race, national origin, gender, religion, genetic information, disability, or age (if the employee is over 40 years old). Federal law also prohibits most employers from firing an employee because of pregnancy or a medical condition linked to pregnancy or childbirth. Many states have their own anti-discrimination laws, which, in some cases, provide broader protections for employees than federal law.
  • Retaliation. An employee cannot be fired for engaging in certain protected activities, such as reporting his or her employer’s illegal activity to a federal or state agency. The employee also cannot be fired for filing a discrimination claim against his or her employer.
  • OSHA Complaints. It is unlawful to fire employees for reporting noncompliant work conditions to the federal Occupational Safety and Health Act agency.
  • Alien Status. Employers cannot use an employee’s alien status as the basis for the firing—provided the employee has the legal right to work in the United States.
  • Other Reasons. Employers generally cannot fire an employee for refusing to take a lie detector test, and in many states, it is unlawful to fire an employee for reasons that are morally or ethically wrong to most people, such an employee’s refusal to commit an illegal act for the employer.

Layoffs

According to the Worker Adjustment and Retraining Notification (WARN) Act, applicable employers must provide at least 60 days’ written notice in cases of mass layoffs or plant closings affecting 50 or more employees at a single worksite.

Employment Contracts

Will the termination violate an employment contract? That’s the pivotal question here. Regardless of whether the contract is oral or written, make sure the termination will not result in you breaching the agreement.

Final Paychecks

As a general rule, employers cannot withhold an employee’s final pay. Most states have final paycheck laws that determine when terminated workers should be paid. In some cases, the timeframe depends on the employee’s industry and whether he or she was fired or laid off.

State law may dictate whether unused vacation or paid time off should be paid upon termination, the method for disbursing final wages, and the types of deductions that can be made from the last paycheck. Other potential areas of examination include employment contracts and company policies that address final or post-employment wages.

Employment termination is a sensitive process that can have long-lasting effects on both the employee and the organization. Therefore, you may need legal counsel along the way. Call us today for information on our available services which can provide additional guidance on proper terminations.


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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.

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