Terminating an employee can be a stressful endeavor for any employer for a lot of reasons, even if it’s necessary for the best interests of your business. The employer may be concerned about how the employee is going to react, how the rest of their staff is going to react, how to cover the hole left in their workforce, and often, whether or not they are inviting the terminated employee to try to take some sort of action against them. While an employer can never fully eliminate the possibility of legal action by a terminated employee, they can take steps to minimize their potential liability:

1. Is there a valid business justification for termination?

The first thing an employer needs to think about is whether or not they have a valid business justification for terminating the employee. While California is an at-will employment state, employers are not allowed to terminate an employee for any reasons that are prohibited by law, such as discrimination or retaliation. Obviously, an employer cannot terminate an employee based on their race, religion, sexual orientation, gender, age, disability, or other protected category. An employer also cannot terminate an employee because they engage in conduct to which they are legally entitled, or because they make a complaint about a violation of the law. 

2. Can you clearly identify reasons for termination?

Before an employer moves to terminate an employee, they should be able to clearly identify the reasons why they are terminating that employee, and they should have proper records and documentation illustrating those reasons. For example, if an employer is trying to terminate an employee for tardiness, they should make sure that each time that employee is late, they have addressed the issue with the employee and made a written note of it in the employee’s file. An employer should also make sure that terminating the employee for this conduct is consistent with how they have treated other employees in the past.

Proper Steps To Take For Termination

Once you have a legitimate reason for termination, and sufficient documentation to support that justification, you’re ready to move on to the actual termination itself. 

• Where possible, you should have the employee sign a release of claims, which will prevent the employee from instituting most legal action in the future. Such a release must include being in exchange for some sort of valuable consideration, separate and apart from the last paycheck. This consideration can take the form of a lump sum payment, a continuation of benefits for a set period of time, or some other valuable asset or service.  If the employee is over the age of 40, you should make sure that any release has the required elements in order to effect a valid age discrimination claim release.
• If you plan to terminate the employee in person, make sure that there are at least two people present from the company.  Once the meeting is over, prepare a summary of the meeting in writing, and keep it for your records.  It can be helpful to email the summary to yourself so that you can prove the time and date of the summary.
• Whether or not the termination is in person, you should provide the employee with a letter setting forth the termination reason, last day of employment, and the date benefits will terminate (if applicable).  The letter should also advise the employee of their obligation to update you with any address changes so that you can send them a copy of their W-2 in a timely manner.  Along with the termination letter, you should provide the employee with the Employment Development Department’s pamphlet on Unemployment Benefits rights.
• You must have their last paycheck ready, and it must include accrued vacation.  If any commissions are outstanding, it’s best practice to try to pay them out, but if it is not possible to calculate the commissions at the time of termination, make sure that it is clear to the employee that the commissions will be paid out as soon as they are calculable.
• Make preparations with the employee for the return of company property.  If the termination does not occur in person, provide an opportunity for the individual to gather their personal belongings.
• As soon as is practicable, terminate the employee’s access to company systems (email, internal messaging systems, etc.)

Finally, once the termination has taken place, you should provide notification to clients/vendors that the individual is no longer authorized to enter contracts or take action on behalf of your Company.

If you feel that you need assistance with employee termination policies or employment law matters, please contact Hackler Flynn and Associates.

DISCLAIMER: Content within this post should not be considered legal advice and is for informational purposes only. Communications made through this post do not create an attorney-client relationship. Hackler Flynn & Associates is not responsible for any content that you may access from third-party resources that may be accessed through or linked to this post. Hackler Flynn & Associates is only licensed to practice in California.