Employee Termination: Best Practices, Common Pitfalls

On a sliding scale of workplace pleasantness, few—if any—professional circumstances manage to rank below employee termination. Having to fire or lay off an employee is generally not on a manager’s wish list, and rare is the employee who relishes being shown the door.

Terminating an employee may be one of the “necessary evils” of the working world, but there are best practices for mitigating a potentially conflict-ridden situation; these protect the interests of both employer and employee and ensure the legality of the process for all involved.

Contrary to those best practices are the common missteps employees and employers make in the event of a firing or layoff.

Jennifer Craighead Carey, partner at Barley Snyder Attorneys at Law who specializes in labor and employment law, said there is one error of which both parties are frequently guilty.

“For both employers and employees, a common mistake is a lack of civility in the termination process,” Carey said. “The employer may react out of anger and fire an employee on the spot, sometimes in the earshot of others. Or, the employee may become irate and use foul or threatening language he or she later regrets.”

Carey also warns employers against disregarding their own procedures. If the company has a progressive disciplinary policy, for example, the company should have documented evidence the policy was followed, except for instances of egregious conduct, such as theft or violence, she said.

“Another common mistake is an employer who puts up with bad performance for many years and then suddenly wants to pull the trigger and terminate without going through some type of performance counseling,” Carey added.

She further cautions employers against abruptly terminating a longtime employee, especially one over age 40. Without a record of progressive discipline, it is more difficult for an employer to defend against a complaint of age discrimination, Carey said, particularly when dealing with a long-term employee.

Pennsylvania is an at-will employment state; an employer or employee can end the relationship at any time, with or without cause or notice, but the at-will doctrine does not trump employment discrimination laws.

“Consequently, employers are advised to have a legitimate, nondiscriminatory reason for termination in order to defend against a charge of discrimination,” Carey said. “Also, employers may not terminate employees for certain public policy reasons, e.g., filing a workers’ compensation claim or serving on a jury.”

In the event of a layoff, a separation agreement can be a valuable document for both employer and employee that serves as a record of the severance package granted the employee.

“Separation agreements are generally offered in two situations,” Carey said. “The first situation is where the employer wishes to foster an amicable separation of employment, usually in challenging situations. The second situation generally involves a layoff or workforce reduction, either directed at an individual or a group of individuals.”

According to Carey, the separation agreement customarily offers monetary consideration that the employee is not already entitled to in exchange for a release of all claims the employee may have against the employer.

Employers are also advised to consider the age of the employees they must sever. Under the Older Workers Benefit Protection Act, an employee over 40 must be given “reasonable consideration”—something he or she was not already entitled to receive—in exchange for that release of claims, such as one week of severance pay for each year of service.

Additional features of the separation agreement:

• The employee must be offered the opportunity to consider the agreement for 21 days and the opportunity to revoke the agreement within seven days after signing it.
• If the separation involves a group termination, e.g., a decision to terminate more than one person (such as a workforce reduction), the time to consider the agreement is extended from 21 to 45 days for all persons over 40.
• The employee must be told of his/her right to consult a lawyer.
• In a group termination where a claims waiver is sought, the employee must also provide to employees over 40 a list of the job titles and ages of those both selected and not selected for termination.

“The purpose behind the statistical disclosure is to evaluate whether the decision has a negative impact on older workers suggestive of age discrimination,” Carey said.

There are other legal requirements that may need to be heeded when drafting a separation agreement, including Equal Employment Opportunity Commission considerations—an employee cannot waive his or her right to file an EEOC charge or participate in an investigation, for example, and publicly traded companies should be sure to reference whistleblower protections.

“The law in this area is constantly evolving, so employers should have separation agreements reviewed by legal counsel to ensure they meet current legal requirements,” Carey added.

When it comes time to sit down face-to-face for the termination meeting, keep it brief, Carey advised, with a succinct reason for the termination and an explanation of any post-employment benefits. This is also an opportunity to collect any company property.

“While the employer should provide a listening ear to the employee,” Carey said, “the termination meeting is not the time to debate the reasons for termination or review all of the employee’s history with the company. The employer has made the determination to move forward, and this should be the focus.” BW