Employment Regulations
In addition to ensuring your company’s internal rules and regulations are clearly defined and adhered to, termination of an employee is subject to federal and state laws. The Fair Labor Standards Act ("FLSA") governs the issuance of wage, overtime, and recordkeeping standards for both private sector employers and those in state or local government. 29 U.S.C. §§ 201-219. The FLSA sets forth minimum wage and overtime pay standards for employees. All employers must pay wages to employees and abide by their chosen rates of payment such as hourly wages or a salary . Additionally, the FLSA imposes requirements to maintain accurate records of employment for its employees including their wages, hours worked, and payments. An employer who has failed to meet the federal law requirements may be improper in its termination of an employee.
Also, important questions to ask include: are you firing an employee who is a member of a protected class such as age, sex, race, etc? Is the employee a whistleblower? Or are they a Union employee? All of these factors can result in an unfair dismissal. A lawful termination requires consultation with a licensed legal professional.
Employee Performance Documentation
Keeping records of employee performance problems is essential to establishing that an employee’s termination was legally justified. In addition, when employer’s reasonably expect lowest-level employees to have no other terms and conditions employed for them, it is nearly impossible for the employer to defend an adverse employment action based on an employee’s termination for performance problems, because the employee has no way to know they are doing anything wrong to begin with. When properly documented, termination of an employee for such a reason is relatively easy to prove in the event an employee brings suit. If the employer employed someone for a period of time with no indication as to what that employee was doing wrong, it becomes virtually impossible to show that the employee actually ever did anything wrong at all. If no one told them they were doing anything wrong, how could the personnel policies, or at-will employment disclaimers provide sufficient warning to terminate the employee just because someone later decided the employee was terminated for performance issues?
Reviews and Evaluations
The main purpose of a performance review is to document the employee’s work level. While this can be difficult to remain objective, it is necessary to remain fair and balanced. The performance review is also an opportunity to discuss additional performance issues or problems that may have arisen during the period being reviewed.
It is important to take the time to prepare for the review. If you can, provide the employee with a copy of the evaluation prior to the meeting, so he can review it beforehand. Also, it is suggested that you allow the employee to have someone with him to take notes or act as a witness, but only in a ministerial capacity. The employee should not be allowed to get counsel on issues that arise during a review.
Make sure you are concise and specific when conducting the review. An employee’s failure to correct his performance can be used to terminate his employment. For example, if the employee is tardy every day, take note of it and make a note in the evaluation. If he is repeatedly corrected on various issues, make sure they are noted. Do not wait until what you think is a "final" straw to address issues in the employee file.
Written Warnings and Notices
It is most important that an employer actually issues formal warnings to employees before terminating their employment for unsatisfactory performance or misconduct. Not only may the failure to issue such warnings be fatal to the case when the employee subsequently claims he or she was terminated without cause, but it also evidences in a most compelling way that the employer has treated the employee fairly prior to termination.
In all but the most egregious of cases, verbal and written warnings will form part of a progressive discipline system which aims to place the employee on notice of their unacceptable behaviour and/or performance, giving the employee a reasonable opportunity to correct these behaviours. Even in the most serious scenarios, a verbal or written warning may be appropriate. The verbal warning can at least give the employee a warning of the behaviour, drawing the attention of the employee to the incident that the employer finds unacceptable. A single case of misbehaviour may not be serious enough to warrant dismissal, but an employee who has had one warning may be more aware of the seriousness of the matter if a second or subsequent incident occurs.
Verbal and written warnings form the foundation of progressive discipline. Progressive discipline is the most effective method of warning employees and providing them with fair notice that their employment is in jeopardy. It tends to be viewed favourably by the Courts and Human Rights tribunals. The provinces in Canada also legislate how many steps must be taken before an employee who is on a probationary period or who has been employed for less than three months can be dismissed.
In assessing whether an employee has cause to terminate the employment of another, Courts will examine whether it can be said that the employee knew or ought to have known that his or her conduct would warrant such a penalty. Will the employee be astounded that the sanction was so severe? Did the employee have notice?
The Termination Interview
The day of the termination meeting has arrived. You’ve mustered up the courage to tell the employee the bad news. Now what?
First, have a plan for the meeting. We recommend having a neutral member of management present. The second witness can be a Human Resources professional or another member of management. The employee’s immediate supervisor should not be present. If the employee reports directly to the Owner or chief officer, then that person should be the one to conduct the meeting. The person who conducts the meeting needs to have advance knowledge of which documents will be provided to the employee and what the employee will need to know.
We also recommend doing the meetings at the end of the day. This prevents the employee from working for other employees during the rest of the day.
When conducting the meeting, thank the employee for their service to the company. Be brief and non-emotional. Do not engage in an emotional conversation or give any unplanned reasons for the termination. Be prepared to explain the reason for the termination in simple, neutral terms. For example:
"Due to the reduction of business in this department, XYZ Company is being forced to reduce payroll expenses.
XYZ Company is compelled to eliminate this position as the business is no longer able to support this position.
This is an unacceptable performance, which has continued even after counsel and consideration by management and a final opportunity to cure the deficiencies."
If the employee inquires further about the reason for the termination, it is probably best to simply say:
"Thank you for your service to our company. I wish you the best of luck in your future endeavors."
You should not get into an argument or allow the employee to raise points against the termination. Remember the conversation is being documented and any statements can be misconstrued by the employee. It is important that you maintain your composure and stick to the facts.
There will be questions about severance pay, continuing insurance coverage and the like. If you have policies in place that speak to these issues, reference those policies. Tell the employee that the policy is available for review. If your policy does not speak directly to the issue , reference the Employee Handbook. If you simply do not have a policy in place, tell the employee you will follow-up with the information they have requested and provide your contact information.
You may want to have two copies of the required layoff notice prepared in advance. This way each party will have a copy of the notice. Remember to ask the employee to sign both copies of the layoff notice to acknowledge receipt.
If the employee has a company car or any company property, be sure to retrieve the items from the employee before they leave the premises. Similarly, the employee should return any company property that they may have in their possession at the time.
If the employee is eligible for continued health insurance coverage through COBRA, explain this benefit to the employee. Remind the employee that they will be sent a COBRA notice and all paperwork will be sent by mail. Tell the employee that they must review the notice and contact the provider with questions. Similarly, if the employee is owed financial compensation that is outside of their normal pay cycle, such as commissions, overtime or corporate bonuses, be sure to let them know that the monies will be paid according to your normal corporate schedule. Make sure you leave the employee with the general length of time they can expect the payment to be being processed.
Make sure you have all of the documents for the employee ready to be handed to them before the meeting. Hand the documents to the employee at the end of the meeting. Be sure to notify security of your plan to terminate the employee, so they have sufficient time to arrive and escort the employee off the premises. If you do not have security personnel at your place of business, ask your trusted employees to help you supervise the situation and notify police if necessary.
Finally, remind the employee to clear out their personal belongings and to gather any loose business files they may have either left in their car or left behind in their workspace. It is always best if two managers can accompany the employee to the door. Make a clean break and no further contact until after the employee is off the premises.
Final Compensation and Benefits
For terminated employees in the United States, the rules about final pay vary by jurisdiction. In California, for example, if you fire an employee with less than a 90-day notice period, you have to pay them on the day of termination. If they have worked for at least 90 days and have a formal notice policy, you have 72 hours to pay them unless they request it in writing and appear at your office during regular business hours.
Federal law requires that terminated employees receive the benefits for which they are eligible. You may not withhold benefits that were promised. Usually, severance benefits are subject to the terms of an agreement between the employer and the employee.
Post-Termination Procedural Matters
When an employee is terminated, there are a number of administrative and logistical steps that need to take place. The employee will likely have company property (e.g., a laptop, phone, uniforms, building or security access codes, keys, etc.) that must be retrieved. The employee may also have passwords, credentials, or digital information stored on company servers that must be recovered. In some cases, emails or other electronic communications can provide valuable information for future litigation. Access to social media accounts, user names and passwords, and other IT-related information should be requested from the employee at the time of termination for immediate retrieval or retention. Social media policies are essential for preemptively obtaining consent from employees for this information to be collected. In addition to collecting property or credentials, state or federal law may impose a duty by the employer to notify other employees of the termination, or to provide other notices if the employee who was terminated is entitled to reemployment rights or other benefits. As you are implementing these steps, you must be careful to avoid spreading the circumstances of the termination further than necessary. The decision to terminate must be kept confidential, and the reasons for termination should not be discussed with any person except those who need to know for the purposes of the termination or managing the business of the company. Maintaining confidentiality about this information is imperative if there is a potential for legal action by the employee after termination. Avoiding non-legal confrontations with the former employee at termination is also critical. We recommend the following: These steps will help you complete the termination process properly. However, there will always be unexpected issues arising during or after termination. Take time after the termination to periodically review the terms of your employee termination checklist, and try to ascertain whether the termination has gone as planned.
The Legal Aspect and Preventing Wrongful Dismissal
It is important to keep in mind the various statutes that protect employees against discrimination and wrongful termination. While you may feel you have a good reason for terminating the employee, be sure to review any potential problems you may encounter as a result of your decision. You do not want to end up in an unemployment hearing or worse yet, in a lawsuit because you did not fulfill all requirements for terminating an employee. You want to tread carefully and make sure there are no problems because the majority of employers can expect an unemployment claim every two years. Furthermore, wrongful termination claims filed with the Equal Employment Opportunity Commission increase by an average of 10% each year. Before proceeding with a termination , be sure to think through all of the ramifications to the employee, the business, future business you may wish to pursue, etc. Be careful not to fire an employee for engaging in conduct that is protected under federal, state, or local discrimination laws. If you do consider an issue to be conduct that warrants termination, be sure you have a legitimate, nondiscriminatory reason for the termination. The Equal Employment Opportunity Council has several protected classes, such as race, color, sex, religion, national origin, age, disability, and genetic information. If you terminate a employees for any of these reasons, you could be facing consequences you hadn’t realized existed when the termination occurred.