Firing Employees

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Most Common Employment Law Issues:

Can I Fire an Employee for Any Reason?

No. Most employees are considered "at will" employees.  This means that you can fire the employee for any reason you wish, so long as it is not an illegal reason.  Examples of illegal reasons include discrimination and retaliation.  As long as your reason for firing an "at will" employee is not illegal, it doesn't have to be related to job performance.  But, if the employee has an employment contract, the permissible reasons for firing will usually be contained in the contract.   

What Is an Illegal Reason?

Employers can be fired for any reason except:

If I Fire an Employee, Do I Have to Offer a Severance Package?

No, you are not required by law to offer severance packages to employees you fire.  But, under some circumstances you probably should consider providing severance pay or a severance package. For example, if you promised one to the employee or signed a contract which contained a clause promising a severance package, you should honor the promise or contract.

If I Fire an Employee with Retirement Benefits, Do I Still Have To Offer Those Benefits?

Typically not, though the precise answer will depend upon the employer’s general policy regarding retirement benefits and the contract with the employee in question. If the policy or the contract annuls the benefits upon termination, then the employee cannot expect to receive those benefits.

If there is nothing in the contract or general policy which annuls the benefits, the employer can still take certain precautions. The employer can still require that the employee sign a waiver upon termination. This waiver can annul the benefits if the employer and employee agree that the benefits should cease, or the parties can agree that the benefits can be received on the condition that the employee not take legal action against the employer.

What Should I Do If I Terminate an Employee with Access to Confidential Information?

If a former employee had access to confidential information, the best course of action might be to just change the passwords and locks. If the employee decides to look for work with a competitor or if the employee is looking to start his own business afterwards, it might be wise to have the employee sign a non-compete covenant.

If the employee possessed company property, the employer should have a general policy and waiver that all company property must be returned upon termination. Defining “company property” will be based on each individual business.

What Should I Tell Coworkers of the Employee I Fired?

When you fire an employee, it may cause a disturbance among that employee’s coworkers.  It is best to limit your discussion of why you fired the employee as much as possible so you can avoid defamation and wrongful termination lawsuits.  If employees are concerned, just tell them you cannot discuss the matter because you are respecting the privacy of the person fired.  If necessary, discuss what you're looking for from an employee and how the person concerned is meeting your expectations to reassure them they won’t be next to be fired.

What Should I Do if I am Listed as a Reference for an Employee I Fired?

If a prospective employer seeks a reference from you about an employee you fired, just do what you are comfortable with doing.  For example, if you feel comfortable providing a positive reference, then do so.  On the other hand, if you are not comfortable doing this, then limit what you say as much as possible.  For example, say that you can only verify job responsibilities and dates of employment.  It is best to not say negative things about the former employee because you will open yourself up to a defamation lawsuit.

I'm Thinking about Firing an Employee, Do I Need a Lawyer?

Employment law is very complicated and is undergoing constant change.  A knowledgeable employment lawyer can help you come up with firing practices that will help you avoid liability.  An experienced employment attorney can represent you if you are sued for defamation or wrongful termination.

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Last Modified: 04-04-2013 12:29 PM PDT

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