Have to Let an Employee Go? Read This First!

It is true that your defense against a wrongful termination suit is almost entirely developed when the employee is hired and during employment. But handling the termination itself in a professional manner will also help reduce the incidence of problems. So, here’s what smart companies do:

Pause Before You Terminate: Avoid spur-of-the-moment terminations. Don’t terminate when tempers are high and don’t let your managers do it either. Use suspensions (provided for in a pre-established disciplinary procedure) to provide time for investigation, documentation and careful analysis. This process can provide an objective review of the documentation and steps leading to termination and can help assure that the process is being administered fairly and consistently and that the termination action fits the circumstances.

Conduct the Termination Notification Privately but with a Witness: The witness should be another company manager or your attorney. Make sure any termination is discussed only with persons on a need-to-know basis to limit the potential for claims of defamation, invasion of privacy or emotional distress.

Have a Written Termination Statement: Make sure it is carefully and accurately written to minimize allegations of defamation or intentional infliction of emotional distress. Give the employee the opportunity to review, comment on, and sign the statement, and if the employee refuses to sign it, make a note of that fact.

Conduct an Exit Interview: In addition to letting the employee know the business reason for the termination, give the employee ample opportunity to share his or her feelings. Better than that, ask for them in private and listen to the answer. Take the opportunity to correct misperceptions about the termination and to uncover and defuse a potentially litigious situation. If the results lead you to want to talk to your legal counsel, do so.

If You Have Special Concern, Talk to Legal Counsel Before Termination: If you suspect that a legal problem has developed or could develop, talk to your lawyer before you terminate the employee. For example, it might be smart to try to negotiate with the employee a general release of claims. There also may be certain circumstances where such agreements are not appropriate.

Protect the Employees’ Interests as Well as Your Own: Your employees will want and need to know what the reason was for the termination. They have a right to know, but you don’t want to open yourself up to a defamation or disparagement suit. Be professional and respectful. Focus on the questioning employees’ relationship with the company, the future of the company, and how employees can gain and retain employment security with the firm.

Don’t Withhold Compensation: Do not withhold for any reason any accrued and unpaid salary, benefits or reimbursable expense. Either pay them in full upon termination or when they would have otherwise been paid.

Mike Lissau, an employment law expert with Hall Estill, and William O’Connor, an attorney with Norman Wohlgemuth, each provided his expertise for this article.