An involuntary employee termination, in addition to being an uncomfortable duty, can present legal risks. Much needs to be accomplished within a short time. Gathering supporting documentation, finalizing payroll, retrieving company property, and terminating access to systems are only a few of the tasks needing to be done. A standardized offboarding process helps ensure your business remains compliant, all is accomplished in an orderly manner, and proper documentation is secured. Effective offboarding protects a business from liability.
Involuntary terminations are a necessary part of operating a business. Every action, whether hiring or terminating, should strengthen the enterprise. Often, terminating one employee is the right thing for all the others. But terminations do not need to be stressful or chaotic. Plan, then execute.
To speed this planning process, reference the article below. Bankers Insurance provides several powerful resources to our clients to help them navigate the complex human resources landscape of legal compliance. And this article is provided by one of them, MyWave, an online repository of legal guidance, HR toolkits, and compliance advice. More on how clients can obtain direct access to MyWave and other HR tools is found at the end of the article.
Considerations Prior To an Involuntary Termination
Protect your business from claims of wrongful termination by considering the following.
- Protected Classes: Involuntary terminations involving protected class employees warrant special consideration. Ensure the reason for termination does not break compliance law. For example, the Equal Employment Opportunity Commission upholds that businesses cannot discriminate due to race, color, religion, national origin, sex (including gender identity, sexual orientation, and pregnancy), age (40 or older), or genetic information. In addition, the Americans with Disabilities Act prohibits discrimination due to disability and requires businesses provide “reasonable accommodations” to disabled employees. For more information regarding protected classes, contact your SESCO representative.
- FMLA and Workers’ Compensation: If the terminated employee is on FMLA leave or is receiving work comp benefits, businesses must ensure they would have been terminated regardless of status and document their reasoning and supporting evidence. This protects against claims of retaliation.
- Employee Morale: Involuntary terminations can raise fears of potential impending actions as well as concerns regarding workload. Planning and communication are vital. Determine how workload will be distributed and communicate such in an internal termination announcement. And since terminations rarely remain internal knowledge, consider if external communication is needed. Public perception is fickle and should be guided when appropriate.
- Outstanding Vacation: Requirements to pay a terminated employee for outstanding vacation time vary by state. Some require businesses to pay it out and dictate how, others provide no guidelines, and many lie in between. For more information on your state’s requirements, contact your SESCO representative.
- Severance: Businesses are typically not required to offer severance pay. Some states have severance pay laws if terminations are due to a facility closing or layoffs. In addition, oral and written agreements must be upheld. Businesses that have a severance policy must apply it consistently to avoid discrimination claims.
Best Practices for Involuntary Employee Terminations
The best means to ensure a smooth offboarding process is to plan. Planning reduces stress, moves the involuntary termination process into a positive light, and reduces legal risks. We recommend the following best practices.
- Employee perception – Ensure the employee is aware of the issues and has been provided an opportunity to improve. Specifically, they should understand the severity of the situation and the possibility it could lead to being fired. Involuntary terminations should not be a surprise.
- Prepare – Review business policies, contracts, and precedents to ensure protocols are followed. Prepare what you want to say and be ready to answer questions and responses.
- Involve IT – Determine what devices were issued to the employee and how they will be returned. Any business and client information should be removed from devices that do not belong to the company, an issue which is especially important for businesses with bring-your-own-device policies. Plan when logins and systems access will be removed.
- Terminate in-person – Unless impossible, avoid having such an important discussion remotely. Ideally, HR should lead, and an appropriate manager should witness. The manager should be properly prepared so they don’t say anything that may cause liability.
- Timing/location – An involuntary termination meeting should be brief, between five and fifteen minutes, and take place in a private room to avoid other employees overhearing. Hold the meeting when fewer staff are present, such as at lunch. This will allow the terminated employee to gather belongings and exit with dignity and minimum disruption to the business.
- Security – Employees being terminated react differently. If reason exists to suspect they may react physically, involve security or local law enforcement as an escort. Collect ID badge, laptop, cellphone, parking pass, and other company property before the employee leaves.
- Be honest – Tell the truth about why they are being let go. Avoid apologizing. Maintain a positive and professional attitude. Do not pass responsibility for the decision to others, and ensure they know the decision is not negotiable.
- Benefits – Communicate how health insurance, 401(k), health savings accounts, and any other benefits will be handled. Most of this will be lost in the emotion of the event, so have it written down and deliver it to the employee for later reference. Discuss any outstanding balances and COBRA eligibility.
- Respect – Treat terminated employees with respect. Even afterwards, they may be brand ambassadors or clients. End the conversation on a positive note. Thank them for their contributions, and wish them the best in the future.
Many reasons exist why a business may terminate an employee, and these factors may impact how the offboarding process flows. So, be flexible. The reasons behind an involuntary termination can trigger related compliance issues. Be proactive. Plan the process today to avoid the risks involved with being reactive tomorrow.
For more information on this or other HR and employee benefit topics, Bankers Insurance offers clients a complementary subscription to MyWave, an online resource full of HR tools and legal guidance. In addition, we also offer free phone and email access to SESCO Management Consultants, the nation’s longest standing HR consulting firm. Follow the links to request access.
Questions on employee benefits insurance? Contact your Bankers Insurance agent. Not a client of ours? Let us earn your business! Each client is assigned a personal agent in our office, given their email address, and provided a phone number that rings right on their desk.
This article has been prepared for informational purposes only and is not legal advice. This information does not create an attorney-client or similar relationship. You should consult with your legal counsel if you have a legal matter requiring attention.
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