It happens. Eventually, there comes a time where an employee has to be terminated, for whatever reason. Most employers know that Texas is an at will state, meaning that unless there is an employment agreement guaranteeing employment for a specific amount of time – employees can be terminated for any lawful reason. Being legally entitled to do something, however, doesn’t necessarily make it safe. There are a variety of laws employers should be aware of prior to terminating an employment relationship with an employee. In general, no advance notice of termination is required, but that doesn’t mean that a prudent employer shouldn’t have a plan in place for terminating an employee.
Before the Termination Meeting
Employers should plan when and where a termination meeting should take place. It’s generally better to terminate an employee at the beginning or the end of the day when fewer people are present and to pick a private neutral place (if you do it in your office, you are trapped if they won’t leave and if you do it in their office it will be more uncomfortable to them). Additionally, employers should plan for any security concerns. If the employee is particularly volatile, it may be appropriate to warn building security and have them on standby. In a very bad case, call the police or sheriff, they will usually send someone out to oversee the event. Terminate this type of employee before they make it into the building if possible. Check payroll. The employer needs to make a final wage payment within six calendar days for a layoff or termination. Does the employee have any outstanding loans to the company or borrowed vacation they have not yet repaid? If they do and the loans are not memorialized, be sure to plan to get an agreement for repayment in writing at the meeting. This may include an agreement to deduct from final pay. Think about Company property. If the employee has a laptop, uniforms, company car, or cell phone, make arrangements to have the employee bring them to the meeting. Make something up if you have to. Getting that property will be costly and a pain after the employee leaves.
Also, be sure that you have documented the employee’s file for all the factors and reasons that support separation. Be sure the documentation is consistent with your employee handbook. The best way to defend yourself against a discrimination claim is to have a well-documented file that supports your reasons for termination. This is true even if the termination is not for cause. Even if you are having to lay employees off for economic reasons, you should have clear objective criteria for why certain workers were let go. Consider potential claims. Is the employee in a protected class? Is there anything the employee could argue you have done wrong? What can you do to limit your exposure before you terminate them? Call your legal counsel to talk it over if you have any concerns. It will likely cost less with your lawyer to do so before the termination than after. Finally, if there is a potential claim for which you want to get a release, prepare the release document in advance. Remember, you are buying a release from a claim – not paying additional wages or “severance” so the payment should be a lump sum with no taxes taken out. You will want to “1099” the payment. DO NOT tie receipt of a final check to signing off on a severance agreement. You do not want the former employee arguing that the money paid for the release was just additional regular pay that was owed. And, use a round number – if you want to use 2 or 4 weeks’ pay, round to the nearest $500 up or down as you see fit.
The Termination Meeting
Always have two people in the room. Two recounts of what happened are better than a he-said/she-said fight between a former employee and the employer in a later lawsuit. In general, an employer does not have to explain why it is letting an employee go – an employer can say as little or as much as it deems appropriate so do not give a reason, unless you have to because of an employment contract. This is the hardest one for employers to follow. There is a strong urge to give some polite “it’s not you, it’s me” excuse or some other excuse made to help the terminated employee feel better about their separation and ease the conscience of the terminating employer. For later defending a claim, employment lawyers are then hemmed into a polite excuse, rather than the real reason which is likely that the employee was no good. To preserve a clean slate for the employment lawyer to use, don’t give a reason. Keep it short. The fired employee will likely want to know why. He wants to know why so he can debate you about why the reason you have is not good enough. After all, the person is about to be unemployed. Don’t take the bait. Every word uttered in the meeting just clutters the landscape in a future case. You want as few words spoken as possible to decrease the words for the employee to use against you later. Be professional and polite. The terminated employee is going to make a decision about whether to sue, or report your company for any violation he or she can think of to governmental agencies based on how he or she feels shortly after the separation. You need to avoid making the employee feel badly as much as possible. Additionally, Texas law does not require written notice of termination or layoff, but a simple, clear, and unambiguous written notice of work separation can help prevent employees from later claiming that they are owed additional pay beyond the work separation date, since they did not know they had been laid off or discharged, and they allegedly continued to “work from home”, call on customers, or engage in e-mail correspondence with various parties as part of their supposed duties.
Do not make the employee do the walk of shame. A former employee’s desire to sue is usually at least somewhat related to how they felt about the termination. If you humiliate the person, they will have a stronger motivation to get revenge. As noted above, fire at the edge of business hours when there are fewer people around and allow the employee to leave after the meeting to return later for their belongings, which you can box up, if they prefer. Do not allow computer access. An angry employee can do a lot of damage. Prepare a memo. Each person who is in the meeting should sit down and prepare a short memo about exactly what happened in the meeting. A lawsuit involving the meeting will not come for months or a year. It will help a jury believe your recitation of what happened if you can point to a memo about what transpired. Final Pay. Deliver the final paycheck within 6 days after termination. It is the law. Additionally, in most cases, it would not be a good idea to tell other employees why a coworker was let go. If curious people keep asking, the best response is to inform them that the company respects people’s privacy and does not discuss personnel matters.
If you have any concerns as to how to proceed with a termination proceeding, your business attorney can help provide the advice you need to conduct a termination with respect and legal protections for both you and your employee.