July 20, 2020 en_US Protect your company's reputation and avoid legal liability by learning when termination is the right choice and how to terminate an employee the right way. https://quickbooks.intuit.com/cas/dam/IMAGE/A2ItglPZi/How-to-terminate-employees_featured.jpg https://quickbooks.intuit.com/r/employee-management/when-and-how-to-fire-an-employee/ How to terminate an employee

How to terminate an employee

By Eric Carter July 20, 2020

How do you know it’s time to terminate an employee? If there were a single answer to this question, every business owner and HR professional would know it by heart. But no such answer exists. Ultimately, you will need to decide what deserves termination within your business. But in creating your guidelines for termination, you must:

  • Be consistent
  • Follow company policies
  • Comply with applicable laws

How do you know when it’s time to fire someone?

Terminable offenses vary, so you must decide what warrants termination at your company. Some companies use four behavior categories to gauge terminable offenses.

  1. An employee has violated core company values.
  2. An employee has damaged the company’s reputation.
  3. An employee hasn’t corrected known behavioral mistakes.
  4. An employee hasn’t met communicated performance standards.

You may use these four categories to create termination guidelines for your business. By building policies and following them consistently, you implement practices that avoid lawsuits for unfair dismissals.

Employers’ rights regarding termination

In the United States, most workers are “at-will” employees. Theoretically, you can fire employees for any reason. But government regulations and case laws have altered what it means to be an at-will employee.

In reality, you can fire employees for any reason that is not a protected reason. Poor performance, for example, is not a protected reason. It remains an employer’s right to terminate employees for non-protected reasons.

However, the list of protected reasons for which employers cannot fire employees is growing. The list protects workers from retaliation or discrimination if they participate in protected activities and express protected characteristics. So review state and federal laws or consult an HR professional regularly.

Employees’ rights regarding termination

When you fire an employee, keep in mind that they have a right to receive their final paycheck. Federal law doesn’t require employers to issue last paychecks immediately, according to the U.S. Department of Labor, though state laws may vary. Depending on the circumstances, employees may also have a right to continued health coverage, severance pay, or a PTO payout.

Otherwise, you can’t terminate workers on the basis of certain protected activities or characteristics. Terminating a worker on the basis of protected activities or characteristics alone may result in an unlawful dismissal lawsuit.

Protected characteristics include:

  • Age
  • Citizenship
  • Race
  • Genetic information
  • National origin or ancestry
  • Color
  • Physical or mental disability
  • Religion or creed
  • Sex, including pregnancy and sexual orientation
  • Veteran status

Protected activities include:

  • Making good-faith complaints
  • Filing lawsuits
  • Joining a union or participating in collective bargaining
  • Discussing working conditions
  • Participating in strikes
  • Requesting access to a personal employee file

Several federal laws protect employees from unlawful termination, including:

  • The Fair Labor Standards Act (FLSA)
  • The National Labor Relations Act (NLRA)
  • The Americans With Disabilities Act (ADA)
  • The Occupational Safety and Health Act (OSHA)
  • The Civil Rights Acts of 1964 and 1991
  • The Age Discrimination in Employment Act (ADEA)
  • The Equal Pay Act
  • The Genetic Information Nondiscrimination Act (GINA)
  • The Pregnancy Discrimination Act

These laws and regulations protect employees against unlawful termination and discrimination. Employee rights under these laws supersede company policies and procedures. And if company policies prohibit protected activities, you cannot fire an employee for participating in the protected activity. State and local governments also use similar or more restrictive laws to protect employee rights against unlawful termination.

How to fire an employee legally

To fire an employee legally, you must terminate the employee for a lawful reason and carry out the termination without violating their rights. It helps to review your company policies and follow a termination protocol. You don’t want to run afoul of employment laws and government regulations. Penalties for unlawfully terminating employees can include reinstatement, back pay, and treble (triple) damages in some instances.

1. Review your company policies and employee handbook

Company policies allow you to set expectations with employees regarding acceptable behavior, company property, and interactions with business partners. You should address fireable offenses that you don’t cover in an employee’s performance reviews in your employee handbook. Anti-harassment policies, core values, codes of conduct, and IT policies may apply to a termination.

You should require all workers to read and acknowledge your company policies when they join your workforce. Review company policies with workers regularly and whenever you update a policy. Ask workers to sign off on new and updated company policies as part of your company record-keeping procedure. When workers sign off on new and updated policies, you have a record that verifies that they understand the policies.

2. Document employee violations

A written record of employee violations is critical if you need to take disciplinary actions against an employee. Documenting an employee’s behavior, and sharing that documentation with them, ensures you and your employee are aware of underperformance or policy violations. A clear record of violations can help you communicate that you’re not terminating an employee for engaging in protected activities or expressing protected characteristics.

3. Explain your reason for termination to the employee

Whether it’s a minor verbal correction or final written warning, you must communicate disciplinary actions to the employee. Think of it this way: If you didn’t communicate the disciplinary action to the employee, it didn’t happen.

In some cases, managers communicate performance problems or company violations to HR personnel. But if the feedback doesn’t get back to the employee before they’re terminated, they may accuse the managers of misconduct or unlawful dismissal. And that’s hard to disprove to a government agency or jury.

4. Follow a termination protocol

When you think it’s time to terminate a worker’s employment, you might follow this eight-step termination process.

  • Assign a decision-maker: Determine who in your organization can make termination decisions. They could be a manager, an executive, HR personnel, or a combination of roles. Having designated decision-makers for termination decisions can ensure that employees are treated equally and help your company avoid discrimination lawsuits.
  • Pick the right time: Consider the most appropriate day and time to terminate an employee. You’ll want to choose a day or time that won’t disrupt your business or workforce.
  • Have a witness: Conduct terminations with a witness present. The witness should take notes and verify any events that occur during the separation process.
  • Follow a script: Follow a simple and straightforward script when terminating an employee. Give the lawful reason for termination and avoid irrelevant facts.
  • Limit discussion: You must control the conversation. Terminating an employee is stressful. If you can’t communicate clearly, you take the focus away from the employee.
  • Open the floor for questions: Allow the employee to ask questions about relevant topics like their termination, last paycheck, and health insurance. If you don’t know an answer, don’t guess. Ensure the employee that you will follow up with them regarding their questions.
  • Communicate post-termination benefits: The employee could be entitled to benefits like severance pay and COBRA health insurance coverage. Communicate to the employee when their current benefits will end and when they can expect their final paycheck.
  • Escort the employee out: You may give the employee a few minutes to collect their belongings. If you can’t give the employee time to collect their belongings, set up another time for them to come back.

How to fire an employee gracefully

Whenever you have to terminate an employee, your goal should be to end things on the best possible terms. As you prepare to terminate an employee, ask yourself, “How do I want them to speak about the company after they leave?”

If you are hostile or combative while terminating an employee, they may not speak positively about your company online or to others. Future employees will be looking at your reputation in the market and among your workforce. So your separation from an employee is a key moment for your company’s reputation.

What to say when you fire an employee

When you’re ready to have the conversation, follow a script. You should have identified a lawful reason to terminate the employee, so stick to that point. Be empathetic, but keep the conversation direct and on-topic. If you say too much or present irrelevant facts, you may open your company to discriminatory behavior or an unlawful dismissal lawsuit.

Terminating employees isn’t easy, so it’s important to do it right

Terminate employees the right way. Make sure your reason for termination is lawful and in line with your company practices and government regulations. Firing employees is a stressful experience, but it’s also an opportunity to promote goodwill with former employees.

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Eric is the founder of Dartsand and Corporate Counsel for a global technology solutions provider. He is a frequent contributor to technology media outlets and also serves as primary legal counsel for multiple startups in the Real Estate Development, Virtual Assistant and Mobile App industries. Read more