The process of discharging employees can be chaotic and emotional. However, if employers are proactive and prepared when the time comes, many hassles can be avoided down the road. Following are five prudent steps to take before discharging employees.
Step #1: Review Documents
Employers should review all relevant documents prior to an employee’s termination. This review at a minimum should include the following:
- Personnel files, especially performance reviews;
- Disciplinary action forms;
- Offer letter(s);
- Employee Handbook or Policies;
- Non-competition or non-solicitation agreements or provisions;
- Employment agreements; and
- Supervisor “personal” files on the employee.
It is also important to evaluate any bonus or incentive plans, stock option agreements and employee benefit plan documents that supplement an employee’s profile. Additional resources for review and consideration should be any FMLA file and any internal complaint and investigation files. Evaluation all of these documents may be a time-consuming task, but it will ultimately save the employer time following termination.
Step #2: Analyze Potential Obligations
Next, it is vital for an employer to analyze potential obligations from the employee to the employer and vice versa. This means providing notices to the employee required under COBRA and FMLA and other applicable federal, state and local laws.
Collective bargaining agreements, employment agreements, state law and other bonus or benefit plans should also be examined to ensure that the employer is prepared for any objections or discrepancies when the time comes to discharge the employee.
Step #3: Remind Employee of Any Legal Restrictions
After the employer has completed all the necessary reviews, it is wise to be prepared to remind the employee of any legal restrictions arising from employment.
If any restrictions exist, the company should emphasize and remind the employee of any restrictive non-competition agreements, non-solicitation or confidentiality provisions that were signed. Ultimately, if the employer develops a concern or suspicion of violation, it can (and should) investigate. Searching company e-mails, data and other documents and communications can help to expose any accountability.
Step #4: Calculate Financial Compensation
Next, the employer should begin calculating earned but unpaid compensation and loan repayments. Remember, employers should calculate what has been earned by the employee in compliance with federal, state and local laws, and then pay what has been earned within the required time periods, which vary state-by-state.
After compensation has been calculated, the employer should analyze loan repayments to determine if any deductions are needed and, if so, whether they are allowed under state and local laws. This ensures the employer has all of its financial bases covered before terminating the employee.
Step #5: Decide If Pay Severance
The final decision for the employer involves offing the terminated employee severance pay and/or other benefits. In most states and situations, this decision is completely up to the employer; state law and employer policies should be reviewed first. If the company decides to offer severance pay, it is advised to pay it only upon the execution of a release agreement that is consistent with federal, state and local laws.
In summary, if a prudent employer initiates the process to discharge an employee, following these steps can expedite the process. It can help ensure that once the employee is notified of the discharge, all possible questions and uncertainties have been previously addressed and understood by both parties.