Employee Terminations – Four Key Things to Remember

As many of our clients know and experience, terminations are a reality in today’s workplaces. Turnover is not always a bad thing – in fact, we often encourage “good turnover” of low-performing or toxic employees, but when employees leave, it is important to have procedures in place that decrease your company’s exposure to legal issues.

Here are four key steps to take that may protect your business:

  1. Maintain Proper Documentation. If you are terminating an employee for performance issues, be sure to document the reasons and any activities leading up to the final decision in the employee’s personnel file. This is excellent backup in case the employee later makes a claim about unlawful discrimination or otherwise challenges the decision. Likewise, if an employee quits, keep a copy of their letter of resignation on file.
  2. Issue Final Paycheck: When it comes to preparing an employee’s final paycheck, familiarize yourself with the rules in your jurisdiction that may dictate how and when it needs to be delivered. Most states specify that an employee be given their final paycheck at the time of termination or not later than the next regular payroll run. Payment for accrued but unused vacation time or PTO also varies, but is most often based on company policy and history – so, regardless of emotion, treat similarly situated employees equally.
  3. Return Property. If you provide employees company property for their use while employed in your organization, such as a company credit card, laptop, access card, mobile phone, etc., develop a process for tracking what you have issued and then, upon an employee’s termination, prepare a communication that lists the items that need to be returned, how, and by when.
  4. Require a Release before paying severance. While there is no requirement under the FLSA for severance pay, many companies opt to pay it. If you are paying severance as a matter of company policy, use this as an opportunity to secure a full release of all potential legal claims from the departing individual. When doing so, make sure the release complies with federal and state law to ensure its enforceability.

Following these steps will not only make the process simple and seamless for the outgoing employees, but will also protect your reputation and provide your company with maximum protection from future lawsuits.