All employers will be faced at some point with ending an unsuccessful employment relationship. California is an “at-will” state, so an employer may terminate an employee for any reason except an illegal one (for example, because of an employee’s race or gender). Sound simple? Not so fast. The numerous legal restrictions surrounding the termination process give employers pause even when making legitimate personnel decisions. Of course, a hasty personnel decision can cost an employer far too much—in legal fees, management time, damaged client relations, and negative employee morale. To reduce the legal risk associated with terminations, employers should keep a few key concepts in mind.
Ensure Consistent Decisionmaking
Even with the legal right terminate employment at will, most employers only make the decision for legitimate business reasons, and do their best to treat similarly situated employees the same. In addition to being a sound business practice, consistently reserving termination for serious performance and behavior problems helps avoid the suspicion that the reason given for the decision is insincere and actually masks an improper or illegal motive.
Employers are sometimes reluctant to take adverse employment actions against “protected” employees—for example, employees on certain leaves of absence, or those who have filed harassment or discrimination complaints. However, these employees are only shielded from adverse actions made because of their protected status. In other words, employers can and should continue to treat employees in protected categories the same way they would others, including when making disciplinary decisions for reasons unrelated to their protected status.
Of course, to ensure consistency, employers must review their previous practices in similar instances. Often, this review requires supervisors, managers, and Human Resources professionals to evaluate practices in other departments or locations within the organization.
Review the Paper Trail
To prevent later surprises, employers should also review relevant documentation leading up to the termination. Such documentation may come from a variety of sources, including the employee’s personnel file, the supervisor’s unofficial “drop” file, and email. No matter the source, an employer must be able to explain any documents that contradict the termination decision. For example, if an employer is terminating an employee for poor performance but the employee received only excellent performance reviews, the employer must be able to explain the discrepancy.
Generally, the documentation and other feedback given to the employee should be consistent with the decision. Because even a supervisor’s offhand comments—for example, about an employee’s age or pregnancy—may be attributed to the employer in a lawsuit, the employer must ensure it has detailed information about previous conversations on particularly sensitive subjects.
Finally, employers should keep in mind that in most instances, employees and former employees have the right to view and copy their personnel files. And even documents stored in other locations may come to light in a lawsuit. The employer needs to identify in advance what documents exist, so it is prepared to address challenges or questions.
Consider Offering a Separation Package
To lessen legal risk, some employers offer terminating employees separation packages in exchange for a release of existing legal claims. (It usually does not make sense to offer separation pay without getting a release.) Employers must ensure they follow procedural rules when drafting these agreements—for example, employees who are releasing age-related claims must have adequate time to review and rescind the agreement.
Additionally, employers should weigh the strategic value in offering separation packages. Although a valid release will give an employer closure and eliminate risk, these agreements can create a perception that the employer did something “wrong” even when it did not. And, if the employer routinely offers separation pay and other benefits, employees may feel entitled, making it difficult for the employer to terminate an employee without offering a package. Finally, the amount of money offered in exchange for the release must be significant enough that the employee will agree to the release, which can be costly.
Communicate the Decision Appropriately
An employer must also carefully consider the logistics of ending the employment relationship. First, it must be prepared to pay the employee all wages owed, including unused “vacation” (including personal/paid time off, persona holidays and the like), at the time of termination.
Also, the employer should consider who will tell the employee how about the decision, what to say, and when to say it. Because the termination decision should not come as a surprise, in most cases the employee’s supervisor, manager, or a Human Resources professional should give a brief, honest explanation to the employee, without going into great detail or attempting to fill any silence that may ensue. Instead, the supervisor or manager should focus on logistics, such as processing final pay and addressing the return of the employer’s property. Many employers prefer to have the discussion at the end of the workday, to give the employee the opportunity to pack up personal items without coworkers present, and for the employer to retrieve its own property.
Similarly, employers should be discreet when discussing the termination decision with others, including coworkers, clients, and prospective employers. Although coworkers and clients will undoubtedly have questions, the employer should emphasize the need to respect the privacy of the employee, just as it respects the privacy of the inquirer. And many employers follow a uniform practice of only providing basic employment information in response to reference requests—such as dates of employment and job title—to avoid the legal risks and potential disagreements associated with providing negative information about former employees.
Although terminating an employment relationship is never easy, an employer can lessen its legal risk and decrease the anxiety associated with the decision by taking the few steps described above. These considerations do not guarantee a risk-free termination, but they do increase the likelihood that the employee and others will recognize the decision as fair and appropriate.