At this point in the discharge process, employers should have already ensured that all bases have been covered prior to an employee’s termination and are now prepared to inform the employee. Now it’s time for the often uncomfortable and daunting task: notification of termination. Following are five steps to consider taking at the time employment is terminated. 

Step #1: Pay All Earned Compensation and Offer Severance

Employers should pay all earned compensation to the employee in a timely manner. Keep in mind state law varies, so the employer should be aware of the law and prepared to pay accordingly.

This is also the time to offer any severance pay to the employee. However, unless severance pay is required by law or contract, this should only be done in exchange for a release of all claims by the employee.  If there is any uncertainty, prudent employers should seek advice from employment counsel.

Step #2: Perform Exit Interview

When appropriate, or if at all possible, the employer should perform an exit interview that is documented and retained in the file. This interview should explain the post-employment process and any benefits issues.  It may also be useful if litigation subsequently arises regarding this discharge.

If there are any restrictive covenants placed on the employee, the employee should be reminded of these obligations as well. The employee should also be provided with copies of any non-compete, non-solicitation or confidentiality agreements.

All restrictions should be confirmed in writing to the employee in order to reinforce them and avoid any confusion. This will help safeguard the company from any future legal issues in relation to the discharged employee.

Step #3: Document Termination

The employer should document all facts and reasons for termination of employment and confirm that all supporting documentation is in the personnel file, or otherwise retained, for legal purposes.

For example, if an employee resigns, the employer should document this and have it confirmed in writing by the employee in the personnel file. If an employee is discharged for poor performance, wrongdoing, poor attendance, or other observable actions, the files should be reviewed to ensure that all relevant conduct has been documented and retained in some useful fashion.

Keep in mind, it is one thing to have written documentation of termination per company preference, but it’s another to have it required by law. Therefore, it is also prudent to determine if written notice of termination, or some other disclosure regarding termination, is required under applicable state or local law.

Step #4: Explain Reference Policy

Any and all company policies and practices regarding references should be explained to the discharged employee at termination. Unless state or local law requires otherwise, the employer should provide any reference checks with name, dates of employment and job title only.  The last pay rate or salary amount can usually be provided, but should be done only upon request and with employee consent. 

It may also be prudent to have the employee instructed in writing to direct all future employment reference checks to a particular department or job title.  This will permit the employer to train those providing employment references to be as consistent as possible, which will help avoid or minimize risk from claims of retaliation, discrimination, or defamation regarding allegedly negative references.

Step #5: Disable Access and Recover Property

Once the employee is discharged, the employer should immediately disable all access to employer systems, buildings, codes and communications, such as e-mail, voicemail, remote log-in and passwords. At this point the employer should also recover all company devices, property and records.

The recovered items, at a minimum, should include the following:

  • Computers, laptops, mobile devices and phones;
  • External hard drives, thumb drives, printers, fax machines, webcams, speakers, building cards/passes, electronic key fobs, documents, data and files in any format;
  • Corporate credit cards; and
  • Company vehicles and other property.

Once all property has been returned, the final step is to obtain written confirmation from the terminated employee that all property has been returned and all pay has been correctly received. It is appropriate to provide the terminated employee with a copy of this confirmation.

In summary, when an employee is informed of termination, a prudent employer is willing and able to provide the discharged employee with all earned compensation, information and documentation regarding employment and discharge. These steps not only serve to legally protect employers, but also allow the terminated employee to understand the legal limits going forward.