How to (legally) fire one of your employees

May 9, 2022

In the process of hiring new employees, businesses go to great lengths to hire individuals who will make a great fit in their company. Sometimes it works brilliantly—while at other times, things may not work out at all. While some employees may realize the business is not a fit for them and leave voluntarily to seek a different opportunity, other employees stay in the position long enough it becomes an issue for their employer. 

Many employers likely have faced a situation in which they wish to terminate an employee only to remember that termination can become a legal minefield.

Looking into several details into the specific terms for termination and ensuring you follow any state-specific laws can ease the process for employers and greatly reduce any potential legal issues. While this article cannot offer guidance into what to say or how to approach the delicate situation of ending an individual’s employment, it will give employers an idea of the legal issues to consider when they decide it may be time to terminate an employee.

Question 1: Is the termination legal?

Employers must first check that they have the legal authority to terminate the employee. If a contract—including union contract—has been agreed to, then the procedures set forth in that contract apply to the termination. It is both straightforward by creating a clear guide to the termination procedures for the employer and complicated by likely making it more difficult to terminate the employee.

Most employees in the United States have at will employment contracts that allow for the termination of an employee at any time without cause. However, several exceptions do exist. Employers cannot terminate employees due to their age, race, religion, sex, national origin, or disability.[1] The Pregnancy Discrimination Act also protects pregnant women from discrimination in the workplace. This law prevents employers from firing a pregnant employee. If the employee cannot perform duties due to pregnancy complications, it may be considered a short-term disability and protected by this law and the Americans with Disabilities Act. State and federal family medical leave laws also protect workers from termination while taking family leave.

As a matter of public policy, employers may not terminate employment for numerous actions and choices an individual makes outside the workplace protected by statute or a constitutional right. Examples of this include the legal use of cannabis by any individual outside the workplace. While political statements and use of legal substances may be restricted in a workplace, employers cannot extend such limits unless permitted under narrow exceptions. Whistleblowing laws also exist—both at the federal level and in many states—protecting employees who either report or refuse to perform work they reasonably believe may be illegal.

Question 2: What does the employee handbook say?

First, employee handbooks may create an implied contract between the employer and employee without carefully worded disclaimers. Should an employee handbook create a contract, the employer would be legally bound by the terms within the document. If the handbook contained disciplinary policies and said employees would only be fired for just cause, then the employer still would be legally bound by those terms.

To avoid such situations, all employee handbooks should include a clear statement that the document is not intended to be a contract. Such a simple, concise statement makes it clear that the handbook does not imply a contract. An additional disclaimer should be added with any termination policies to specify that the causes and procedures in the manual are illustrative only with the employer retaining the right to terminate employment with or without cause at any time. Such disclaimers do not prevent employers from following the policies and procedures in the handbook whenever possible, they simply give employers flexibility they may find necessary in certain situations and avoid potential legal issues for deviating from the employee handbook.

Question 3: How to tell the employee?

After employers confirmed they may legally fire an employee without creating a potential legal issue, they must then ensure the actual firing does not create one. When an employer communicates to the employee that he or she has been terminated, the employer should word the explanation carefully and keep it concise. The employer does not need a reason to terminate the employee unless required by the language of an expressed or implied contract. The employer may provide a reason, but it should not be sugarcoated. When an employer attempts to explain the reasoning and soften the language, the higher the risk of a potential legal issue due to something the employer states.

An employer also should bring a human resources manager to any termination meeting. Alerting HR offers a valuable check—both on the legality of the termination and any factors the employer may not be fully aware of that may affect the decision. During the termination, the HR manager can act as a witness who can provide support to the employer in potential legal disputes over the termination.

States have specific requirements for written notice of termination. In New York, Labor Law Section 195(6) requires employers provide the terminated employee written notice stating the exact date of termination and the exact date any employment-related benefits will be canceled, such as health insurance.

Connecticut General Statute Sec. 31-128 requires employers to provide employees with a notice documenting the termination of employment that includes a statement that the employee may submit a written statement disagreeing with the termination. The notice must be kept in the employee’s personnel file that he or she has a right to request in the year following the termination of the employment.

New Jersey, New Hampshire and Vermont do not have specific written notice requirements. However, providing the terminated employee with a written statement that includes necessary information about his or her final paycheck, the cancellation of benefits, and other details is advisable as legal documentation of the employer’s duties during the termination process.

Question 4: What happens after the termination?

Once the employment termination has taken place, the employer must provide the former employee with information regarding benefits. These include the employee’s last paycheck, unused vacation time, COBRA, unemployment options, and the transportability of employment-based insurance policies. Employers should be cautious if attempting to challenge any benefits such as unemployment. These challenges can lead to legal issues for the employer that cost even more than the attempted savings.

Notes to conclude

While short on tips to firing an employee, this article should help clarify some of the legal concerns many employers have when trying to make it as smooth of transition as possible without needing to turn to their employment practices liability insurance coverage.

For layoffs, especially at large companies, additional laws apply that may require additional notices and a minimum amount of severance pay. Each situation is distinct, so it is still advisable to consult an attorney to minimize any risk of legal disputes regarding the termination of a worker.

No employer enjoys or should admit to enjoying the process of firing an employee, yet it may sometimes be the best step forward, at least for your business.

[1] The Americans with Disabilities Act requires employers make reasonable accommodations for employees with disabilities to perform their work. If reasonable accommodations not possible, then the employee may be terminated, but this should be done with great care.

Clare Irvine, Esq.
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Clare Irvine, Esq., graduated from Fordham University School of Law and Arizona State University.

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