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Whether voluntary or involuntary, the termination process should always be handled with extreme care. This means that proper precautions should be taken before, during, and after the termination meeting, including but not limited to: ensuring you have supporting documentation on file, weighing the pros and cons of a termination decision as well as the alternatives, and following applicable laws with regards to payment upon termination.

This guide will cover the termination process, from start to finish, as well as policy and practice considerations, including:

  • The difference between voluntary and involuntary termination
  • At-will employment
  • Worker notification requirements under the WARN Act
  • Making the decision to terminate an employee
  • Preparing for, and conducting, the termination meeting
  • Handling negative reactions and managing employee morale post-termination
  • Providing references for terminated employees
  • Managing unemployment claims

Resignation:

Resignation, or quitting, is the most common form of voluntary termination. Some reasons employees may resign include:

  • Other employment
  • Relocation
  • Family demands (elder or child care, caring for an ill spouse)
  • Personal issues (legal problems, substance abuse)
  • Health problems

Common practice is to request resigning employees to give at least two weeks’ advance written notice. This allows the employer to begin looking for a replacement and to coordinate appropriate coverage. All resigning employees should also be asked to complete a resignation letter, which formally documents the reason for the termination and serves to demonstrate that the termination was employee- and not employer-initiated. In addition, resigning employees should take part in an exit interview.

Job Abandonment:

Job abandonment occurs when an employee is absent for longer than a pre-determined amount of time without notice (usually two to four consecutive days). That pre-determined timeframe should be communicated to all employees and stated in the employee handbook so all employees are aware of the policy. Generally, policies on job abandonment state that after three consecutive days of absence without notice the employee will have been considered to have abandoned his or her job and will be terminated.

Note: Your state may have specific guidelines with regards to job abandonment. Check your state laws before terminating an employee for job abandonment reasons.

When it has been determine that an employee has abandoned their job, the employer should send their final paycheck to their mailing address via certified mail. Along with the final paycheck, include a job abandonment letter to document the reason for termination.

Retirement:

Retirement is another form of voluntary termination and occurs when an employee permanently leaves the workforce; typically this occurs around age 65. Retirement should be a decision made solely by the employee. As such, employers should be careful not to “force” or otherwise entice employees to retire. This can be viewed as a form of age discrimination.

Prior to the employee leaving, consider holding a retirement party in order to show your appreciation for the employee’s tenure with the company. It’s also important to conduct exit interviews with retiring employees as well as to discuss pension benefits and other important information that can help the individual transition into retirement.

Exit Interviews:

Though losing an employee may be difficult, plenty of valuable information can be gained from an employee’s resignation. Through exit interviews, the company can learn a lot about employee perceptions of the organization and can make changes, when needed, to help improve employee retention.

 

Consider the Alternatives:

Whenever possible, seek alternatives to termination. Naturally, there are some clear cut cases in which termination is necessary, as is the case with flagrant violations of company policy; however, if work quality issues, work relationships, or outside personal problems seem to be the cause of an employee’s poor performance or misconduct consider alternatives such as reassignment, additional training, or counseling:

  • Reassignment: This may be a viable option for employees who are experiencing conflict within a unit or with a supervisor; also, for employees who seem ill-fitted for their current positions.
  • Further training: If job performance is the issue, consider offering extended or specialized training. This may involve external training programs or workshops and should be considered as an investment in the employee.
  • Counseling: If a normally satisfactory employee begins to slip, or if you suspect that a personal issue may be hindering job performance, consider employee counseling. This may be done through your company’s Employee Assistance Program (EAP), or by encouraging the employee to seek assistance on his or her own. Counseling may also take the form of peer mediation if workplace conflict is the root of the problem.
  • Furlough: A furlough refers to a voluntary or involuntary temporary leave of absence from employment. Furloughs are frequently temporary layoffs due to economic and financial conditions. Furloughs can be short, long-term, or intermittent based on company needs.

If your company is contemplating a layoff, consider the following alternatives first, which may help to cut costs and prevent the need for downsizing:

  • Reduce employee hours: Cutting employee hours can help you to save a lot in employee wages. Although cutting hours is a great cost-saving solution, be sure to comply with FLSA regulations, especially if you are considering a reduction in hours for exempt employees.
  • Restrict overtime: Require your non-exempt employees to receive written authorization from their manager before working any overtime hours and instruct managers that overtime should be authorized only when absolutely necessary.
  • Freeze salaries: Consider foregoing any sort of pay raises for awhile; just be sure to do so in a consistent manner. If merit increases aren’t possible this year, let employees know the reason why and that you hope it gives the company an opportunity to offer raises next year. 
  • Reduce overhead: Consider flexible work arrangements, such as compressed workweeks or work from home programs, to reduce overhead costs. When more employees work offsite it means your facility can save money in energy costs,phone bills, and workspaces.

Basic Employment Law Issues:

Employers are prohibited from retaliating and discriminating against employees. Both retaliation and discrimination may lead to termination of employment, among other negative employment decisions, such as transfers or demotions.

Retaliation:

It is unlawful for employers to retaliate against employees engaged in a protected activity (i.e., filing a wage and hour complaint) or who exercise their right to take a protected leave of absence.

Terminating an employee who recently filed a complaint regarding poor working conditions, discrimination, unfair wages, or sexual harassment will be viewed as retaliatory. Same goes for employees who are on:

  • Disability
  • FMLA
  • Military leave
  • Jury duty
  • Workers’ compensation

Discrimination:

 

Adverse action against employees, such as termination of employment, is prohibited when based on age, race, sex, genetic information, national origin, disability, and religion. Some states have anti-discrimination laws that protect additional characteristics, such as victim status and sexual orientation. Check your state laws to avoid discriminating against protected workers.

Other Points to Consider:

Are employees aware of which actions warrant termination?

Though it may seem like common sense to some, it doesn’t hurt to let employees know which forms of misconduct are considered serious enough to lead to immediate discharge. Just be sure to clearly communicate that the company’s standards of conduct is not all inclusive and is only intended to provide examples of the type of conduct that may lead to immediate termination. Some examples may include:

  • Theft
  • Falsification of employment records, time records, deposit slips, or other company records
  • Use, possession, or being under the influence of alcohol, narcotics, or similar substance while on duty
  • Willful destruction of, or damage to, company property
  • Fighting or acts of violence (on the job, on company premises, or on company business)
  • Willful disclosure of confidential company information
    Insubordination

Will the employee be surprised?

In most cases, employees should not be caught off guard by termination because either: (a) termination is the next step in the progressive discipline process; or (b) they have acted in a manner that represents serious misconduct. Employees should be confronted early on, as soon as they begin to perform below company standards. They should receive direction that is clear, concise, and specific as to expected improvements that are needed–and by when. It should be communicated that termination may be a likely consequence for failure to improve.

Are you considering termination for the right reasons?


Your reason for terminating an employee must always be job-related. For instance, if an employee’s work performance is sub-par or they have engaged in unacceptable conduct, a termination decision may be considered legitimate, as long as you have accurate documentation to support your decision.

Do you have the appropriate documentation?

Before discharging an employee make sure that you have fully documented their history of poor conduct or performance. The employee’s personnel file should include recent performance reviews, documentation of meetings you had with the employee in which the problem was discussed, and records indicating the corrective measures that were taken.

When appropriate, have you thoroughly investigated?

Employers with good reason to believe that an employee has violated a rule, policy, or guideline should thoroughly investigate the circumstances of the case. For instances in which serious violations are in question, consider suspending the employee pending investigation findings. Once it is determined that the employee’s actions are grounds for dismissal, then communicate your decision to the employee.

Have you make any promises of employment?

Employment contracts or implied promises can alter the at-will employment relationship. Including a disclaimer in your employee handbook is one way to help combat the issue. The disclaimer should state that employment is at-will and that written or oral statements made to the employee are not to be interpreted to alter the at-will relationship.

 

Covered Employers:

Employers with 100 or more employees – excluding employees who work less than 20 hours a week and employees who have worked less than 6 months in the previous 12 months – are covered under WARN. Profit and non-profit employers are covered under WARN while Federal, State, and government agencies are not.

Plant Closings:

WARN’s notification requirements are triggered for plant closings and mass layoffs. Under the Act, a plant closing occurs when shutting down an employment site results in an employment loss for 50 or more employees during any 30-day period.

An “employment loss” refers to:

  • A termination, other than a discharge for cause, resignation, or retirement;
  • A layoff exceeding 6 months; or
  • A reduction in an employee’s hours of work by more than 50% in each month of any 6-month period.

Mass Layoffs:

Additionally, a covered employer must give notice if there is to be a mass layoff which results in an employment loss during any 30-day period for 500 or more employees, or for 50-499 employees if they make up at least 33% of the employer’s active workforce.

Notice Guidelines:

The employer must give written notice to all affected employees and their union representatives, if applicable. The employer must also provide notice to the State dislocated worker unit and to the chief elected official of the unit of local government in which the employment site is located.

All notices must be in writing and provided to all applicable parties at least 60 days prior to a plant closing or mass layoff. The notice must contain the following:

  • Name and address of the employment site where the closing or layoff will occur;
  • Name and phone number of a company official to contact for more information;
  • A statement as to whether the closing or layoff is expected to be permanent or temporary;
  • Expected date of the first termination and the anticipated schedule for terminations;
  • Job titles of positions to be affected and the names of the workers currently holding affected jobs;

The notice may also include additional information useful to employees, such as information on available dislocated worker assistance, and, if the planned action is expected to be temporary, the estimated duration, if known.

WARN Violation:

Employers who violate WARN may be liable to each affected employee an amount equal to back pay and benefits for the period of violation, up to 60 days. This amount may be reduced for wages paid over the notice period. Meanwhile, employers who fail to provide notices required to a unit of local government will be subjected to a civil penalty not to exceed $500 for each day of violation.

State WARN Laws:


Some states have different notifications requirements and cover a greater number of employers than what is covered under federal law. California, Hawaii, Illinois, Iowa, Maine, New Hampshire, and New York are just some of the states that have their own WARN requirements. Federal WARN does not preempt any other state or local law, or any employer/employee agreement that requires additional notification or benefit.

 

Consider the Alternatives:

Whenever possible, seek alternatives to termination. Naturally, there are some clear cut cases in which termination is necessary, as is the case with flagrant violations of company policy; however, if work quality issues, work relationships, or outside personal problems seem to be the cause of an employee’s poor performance or misconduct consider alternatives such as reassignment, additional training, or counseling:

  • Reassignment: This may be a viable option for employees who are experiencing conflict within a unit or with a supervisor; also, for employees who seem ill-fitted for their current positions.
  • Further training: If job performance is the issue, consider offering extended or specialized training. This may involve external training programs or workshops and should be considered as an investment in the employee.
  • Counseling: If a normally satisfactory employee begins to slip, or if you suspect that a personal issue may be hindering job performance, consider employee counseling. This may be done through your company’s Employee Assistance Program (EAP), or by encouraging the employee to seek assistance on his or her own. Counseling may also take the form of peer mediation if workplace conflict is the root of the problem.
  • Furlough: A furlough refers to a voluntary or involuntary temporary leave of absence from employment. Furloughs are frequently temporary layoffs due to economic and financial conditions. Furloughs can be short, long-term, or intermittent based on company needs.

If your company is contemplating a layoff, consider the following alternatives first, which may help to cut costs and prevent the need for downsizing:

  • Reduce employee hours: Cutting employee hours can help you to save a lot in employee wages. Although cutting hours is a great cost-saving solution, be sure to comply with FLSA regulations, especially if you are considering a reduction in hours for exempt employees.
  • Restrict overtime: Require your non-exempt employees to receive written authorization from their manager before working any overtime hours and instruct managers that overtime should be authorized only when absolutely necessary.
  • Freeze salaries: Consider foregoing any sort of pay raises for awhile; just be sure to do so in a consistent manner. If merit increases aren’t possible this year, let employees know the reason why and that you hope it gives the company an opportunity to offer raises next year. 
  • Reduce overhead: Consider flexible work arrangements, such as compressed workweeks or work from home programs, to reduce overhead costs. When more employees work offsite it means your facility can save money in energy costs,phone bills, and workspaces.

Basic Employment Law Issues:

Employers are prohibited from retaliating and discriminating against employees. Both retaliation and discrimination may lead to termination of employment, among other negative employment decisions, such as transfers or demotions.

Retaliation:

It is unlawful for employers to retaliate against employees engaged in a protected activity (i.e., filing a wage and hour complaint) or who exercise their right to take a protected leave of absence.

Terminating an employee who recently filed a complaint regarding poor working conditions, discrimination, unfair wages, or sexual harassment will be viewed as retaliatory. Same goes for employees who are on:

  • Disability
  • FMLA
  • Military leave
  • Jury duty
  • Workers’ compensation

Discrimination:

 

Adverse action against employees, such as termination of employment, is prohibited when based on age, race, sex, genetic information, national origin, disability, and religion. Some states have anti-discrimination laws that protect additional characteristics, such as victim status and sexual orientation. Check your state laws to avoid discriminating against protected workers.

Other Points to Consider:

Are employees aware of which actions warrant termination?

Though it may seem like common sense to some, it doesn’t hurt to let employees know which forms of misconduct are considered serious enough to lead to immediate discharge. Just be sure to clearly communicate that the company’s standards of conduct is not all inclusive and is only intended to provide examples of the type of conduct that may lead to immediate termination. Some examples may include:

  • Theft
  • Falsification of employment records, time records, deposit slips, or other company records
  • Use, possession, or being under the influence of alcohol, narcotics, or similar substance while on duty
  • Willful destruction of, or damage to, company property
  • Fighting or acts of violence (on the job, on company premises, or on company business)
  • Willful disclosure of confidential company information
    Insubordination

Will the employee be surprised?

In most cases, employees should not be caught off guard by termination because either: (a) termination is the next step in the progressive discipline process; or (b) they have acted in a manner that represents serious misconduct. Employees should be confronted early on, as soon as they begin to perform below company standards. They should receive direction that is clear, concise, and specific as to expected improvements that are needed–and by when. It should be communicated that termination may be a likely consequence for failure to improve.

Are you considering termination for the right reasons?


Your reason for terminating an employee must always be job-related. For instance, if an employee’s work performance is sub-par or they have engaged in unacceptable conduct, a termination decision may be considered legitimate, as long as you have accurate documentation to support your decision.

Do you have the appropriate documentation?

Before discharging an employee make sure that you have fully documented their history of poor conduct or performance. The employee’s personnel file should include recent performance reviews, documentation of meetings you had with the employee in which the problem was discussed, and records indicating the corrective measures that were taken.

When appropriate, have you thoroughly investigated?

Employers with good reason to believe that an employee has violated a rule, policy, or guideline should thoroughly investigate the circumstances of the case. For instances in which serious violations are in question, consider suspending the employee pending investigation findings. Once it is determined that the employee’s actions are grounds for dismissal, then communicate your decision to the employee.

Have you make any promises of employment?

Employment contracts or implied promises can alter the at-will employment relationship. Including a disclaimer in your employee handbook is one way to help combat the issue. The disclaimer should state that employment is at-will and that written or oral statements made to the employee are not to be interpreted to alter the at-will relationship.

Obtain a release form

Provide terminated employees with a reference release. By signing this form, terminated employees are releasing you from liability when providing accurate job-related information to future employment references.

Obtain a signed authorization form

Before releasing information about a former employee’s work history, request that the prospective employer provide a signed authorization form with the former employee’s signature.

Consider providing terminated employees with service letters

Service letters can be provided to terminated employees as a alternative to responding to reference requests. They can help save you administrative time by reducing the time dedicated to responding to references.

Service letters describe the nature and duration of the services provided by the employee as well as the reason for termination. This practice is an efficient way of providing exiting employees with verification of basic employment information so that they can pass it on to potential employers.

Establish a point of contact

Assign a point of contact within the organization responsible for handling all reference inquiries. Instruct all other employees not to provide any data to those requesting employment information, but to direct all reference calls or letters to the designated point(s) of contact. Make sure the point of contact is properly trained in the organization’s reference request policy as well as the do’s and don’ts of providing reference information.

Provide only accurate and verifiable information

The information given should be limited to the former employee’s job-related performance. Never provide personal information, such as information about an individual’s medical condition, political beliefs, or religious practices. It is recommended that employers only confirm the following when asked:

  • Dates of employment;
  • Starting and ending salary; and
  • Position held.

Important: If you are aware that an employee has a documented history of violence or aggression in the workplace and you knowingly withhold such information from a prospective employer, you may be held liable; that is, if the former employee subsequently commits a violent act under their new employer’s watch. If you have terminated an employee and think this may be an issue, it’s recommended that you consult with an attorney to determine what, if any, information you should provide.

Unemployment claims:

Once a former employee has filed a claim for unemployment benefits, you will receive written notice from the state unemployment agency. In general, you may acknowledge the claim as valid or dispute it. Because your unemployment compensation tax is closely tied to your company’s claims history, you should challenge any claim that you really believe is not justified. Not all claims are worth contesting; only those for which you have a strong, well-documented case.

In many states, it is assumed that a claim is valid if no information to the contrary is supplied by the employer within a statutory deadline, typically 7 to 14 days of receipt of the claim notice. Once the response deadline passes, it is usually too late to object to the worker collecting benefits..

In general, grounds for disqualifying employees from receiving unemployment compensation benefits are narrow, and whenever possible, are interpreted in a way favorable to the separated employee. However, workers can be legitimately denied benefits for a number of reasons, e.g., simply not earning enough in wages to qualify, following a discharge for misconduct, or for voluntarily resigning “without good cause.” Good recordkeeping is essential in successfully contesting any claim, so it’s important to always document the facts surrounding each separation.

Hearings:

An in-person hearing usually will be scheduled shortly after the employer files a written protest of the claim. The employer will receive a written notice of the date, time, and place to report. If you don’t show up, in all likelihood you will forfeit your right to contest the claim any further.

In general, careful preparation for the hearing is essential. The top priority is to achieve mastery of the facts of the case and the ability to present your side in a concise, professional manner. Equally important is a good grasp of the rules and laws that apply to your case (be sure that the law supports your view that the worker was separated under disqualifying conditions such as misconduct or voluntary separation without good cause).

Bring all relevant records and witnesses to the hearing. Legal representation at the hearing may be appropriate-particularly in contentious situations where other employment-related litigation may be anticipated. The hearing officer will issue a written decision shortly after the hearing. Although not cost effective, if you are dissatisfied with the outcome of the hearing, you can generally protest the hearing officer’s decision to one or more appeals within the state unemployment agency itself and then through the state court system.

Termination for cause:

If you are protesting a fired employee’s eligibility for unemployment benefits, prepare to show misconduct on the employee’s part. An employee who is fired for poor performance or judgment will usually collect benefits. However, an employee who intentionally or deliberately disregards certain standards of conduct or behavior may be denied benefits. Fighting, insubordination, stealing, committing illegal acts on company property, failing a drug test, etc., are often legitimate grounds for a misconduct-based disqualification.

If there is clear documentation that the worker’s conduct was completely unacceptable, that the employee knew or should have known that it was punishable by termination, and that customary disciplinary procedures were followed, you may be on solid footing to contest a claim. Furthermore, be sure that you can offer evidence establishing that the employee was not singled out for discharge but given fair treatment under your company’s established policies and work rules.

Voluntary termination:

Employees who resign voluntarily and without good cause are usually disqualified from unemployment compensation. “Good cause” refers to a real, substantial, and compelling reason that would lead a reasonable person to quit under like circumstances. Generally, the employee must establish that he or she had good cause to leave the job and that the reason for leaving can be attributed, at least in part, to the employer’s actions or lack of action, e.g., failure to correct sexual harassment in the workplace.