How Do I Handle Employee Terminations?

Gusto Editors

Ah, the circle of work. First, comes the immense joy of onboarding, and then, the emotionally intense offboarding. When an employee doesn’t work out, it’s a tough experience for everyone involved especially when that person has to leave involuntarily. Even though it’s not exactly a warm and fuzzy event, termination is sometimes the best (and kindest) thing to do to make sure your company and the employee can move forward. Hiring is all about finding a match, and when the two pieces don’t line up, change can be the best remedy.

So when is it okay to fire someone? And what steps should you follow to make sure the termination doesn’t subject you to liability or create waves? In this article, we’ll lay it all out for you.

Getting to know your at-will employment laws

When you reach the end of this paragraph, you will definitely know what at-will employment means. Most states have this kind of policy in place, which means either an employer or an employee can cut off their relationship at any time, for (almost) any reason under the sun. While many states have some extra rules baked into their employment laws, the only state that doesn’t fit the pack is Montana, which has the “Wrongful Discharge from Employment Act.” At-will employment can also be overridden by other agreements, including employment contracts.

That’s why it’s key to double-check the state laws that might apply to your situation. While at-will employment is generally the default, there may be other laws that address termination notices, requirements for the final paycheck, and other rules you’ll need to study up on.

Gah, I’m thinking about letting someone go. What should I do?

First, don’t beat yourself up about it. At the same time, you need to make sure your rationale is solid as a rock. While there are many valid reasons to let an employee go, the first thing you should do is review the laws floating around that are designed to protect your employee.

  • This might seem like a no-brainer, but we’ll just put it out there. You can’t fire anyone for discriminatory reasons, which includes age, sex, race, or religion.
  • Whistleblowers are protected by law from retaliation. Therefore, you can’t let go or single out anyone who complains about safety issues, illegal activities, or other protected concerns.
  • Employees are also protected when exercising their legal rights, like voting, serving on a jury, or taking leave under the Family and Medical Leave Act. If they’re taking FMLA leave, you have to keep their job for them whenever they come back to work.

If the points above don’t apply to the person you’re thinking of letting go, then most likely you are in the clear. Now, start laying out your plan.

Document, document, document

Good documentation starts on day one. Kick off your onboarding process with an employee handbook that sets out your company’s policies and expectations, including any government regulations you need to advise them on. Have employees acknowledge in writing that they’ve received and read the information, and then store the confirmation in their file. If someone breaks these rules, it’s important to discuss it with them and then document the behavior.

Whatever your reasons are for terminating an employee, don’t leave any gaps in the process that could leave your business exposed and at risk of being sued. Keeping accurate and up-to-date records takes time, but it’s essential to leave a good paper trail when dealing with any human resource issue. Not only are accurate records often legally required, they add weight to your actions in potentially rocky situations.

With that in mind, here’s the safe and smart road to terminating an employee who isn’t working out.

Give them written feedback

What is troubling you about their work? Is it the quality? Lack of commitment? Write it down, and then use it to set up a plan for how they can make strides to get better. Performance improvement plans, nicknamed PIPs for short, provide you with an opportunity to clearly document the issues on hand. You can then use them to give your employee actionable steps to improve. Set up a face-to-face meeting together where you review the plan so you’re both on the same page. Be sure to record all meeting dates, action items, and signatures after each discussion.

This step will both document any problems (in case your employee seeks legal action down the road), and gives your employee a well-defined path to make things right. If however, there’s a serious disciplinary problem, a threat to other teammates, or criminal activity, you may want to skip this part.

Plan out the termination conversation

If your employee doesn’t improve after the feedback discussion, it’s time to move forward with the actual termination. There’s no easy way to do this. Be kind, but try to stay unemotional and stick to the facts. There’s a reason why you’re at this point, and it shouldn’t be a surprise to your employee, as you should have had performance talks along the way. Luckily, there are things you can do to try to ease unnecessary stress:

  • Consider the time and place: Getting let go is embarrassing to many people. Set up your meeting in a way that ensures it will be ultra private.
  • Listen: It’s a traumatic experience, so make sure your employee feels like they’re being heard throughout the conversation.
  • Stay focused: Dwelling on the past isn’t useful during this talk, so don’t waffle. The goal is to move things forward.
  • Offer help if it makes sense: Do you think this person would be amazing somewhere else? Provide a reference or introduction if that’s the case.
  • Have someone with you: A good idea is to bring someone from HR to help you with the paperwork. If you’re the HR person, consider including the employee’s manager or another leader in your organization. It diffuses some of the tension, so you can focus on action items, and less on the emotions of the situation. Plus, it’s good to have a witness with you in the small chance that your employee might fight back. Emotions run high during this time, so you want to play it safe.
  • Make sure you know all the logistics: During your meeting, have all the details on hand. This includes when the last day is, severance, career counseling, and any other bits of information they need.
  • Depending on your state, bring the last paycheck: The federal government requires companies to give employees their final paycheck by the next regular payday. That being said, your state may have different rules. For example, in California, you would have to give your terminated employee their final paycheck right away. If they quit, you need to give them their paycheck within 72 hours, and if they gave 72 hours’ notice, immediately. Click here to discover the law for your particular state. You’ll also need to calculate any money that might be owed for unused benefits, like vacation time that never got taken, so don’t forget this crucial step.
  • Last day checklist: Have them submit any expenses, log last hours not accounted for, hand over their keys, equipment, any sensitive company information, and anything else to help you get things squared away. The last thing you want to do is call them up weeks later asking them for the stuff you should’ve already collected.

Check with a lawyer about termination papers and severance agreements

Whether or not you think an employee termination is going to be amicable, you should consider talking to a lawyer to make sure you address possible liabilities to your business, and that you have all the right documentation lined up. The types of papers you need to have on hand when terminating someone will depend on your situation.

Don’t forget the benefits

When an employee is terminated, they have the right to hold onto certain benefits, like health coverage, whether they’re leaving voluntarily or involuntarily. As explained by the Department of Labor, these things may include:

  • Health benefits: Under the Consolidated Omnibus Budget Reconciliation Act, also called COBRA, employees who lose their health insurance have the right to continue their group health coverage. More on COBRA here.
  • Unemployment insurance: Each state manages its own unemployment insurance program, and you need to let employees know whether they might be eligible and how they can apply.

The moral of the story? Make sure you follow the rules. Thumb through your employee handbook to see if there are any disciplinary procedures already outlined. Knowing exactly what the path entails will hopefully leave you a lot calmer and a lot more in control when you’re the one who has to make the call. Offboarding is never fun, but hopefully it won’t be as off-putting once you know exactly what to expect.

Gusto Editors Gusto Editors, contributing authors on Gusto, provide actionable tips and expert advice on HR and payroll for successful business management.
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