Salvage the Man When Possible; Replace Him When Necessary
An unfortunate reality of owning a business is the unpleasant task of terminating an employee. On occasion, the employee makes the termination a simple decision by conducting himself in a manner that demands termination. The most common examples of this would be employee theft or excessive tardiness and absences. Other times, a business owner is forced to terminate a person whom he/she respects but who is simply not up to the job.
Though it is impossible to have a one-size-fits-all checklist for employee termination, it is possible, and highly preferable, to have some guidelines in place. I have collected a few hints and ideas that I believe will make the termination process smoother and more efficient.
First, the State of Texas is a “right to work” state. That is, employees and employers are generally free to terminate employment for almost any reason. Nonetheless, an employee cannot be terminated due to race, color, creed, or national origin. There must be a nondiscriminatory reason for the termination. Not every state is a right to work state, so you will need to consult an employment attorney to ensure that your termination of an employee is proper under the circumstances.
Second, an employee can be terminated for specific incidents of misconduct. This is referred to “termination for cause.” Employees terminated for cause are generally not entitled to unemployment benefits. If an employee is terminated for misconduct, the termination letter – if provided – should specifically state the reason for termination. Do not ‘sugar coat’ the reason; let the employee know exactly why you are terminating them. It is important to understand that, if an employee is terminated for cause, the termination must occur at or near the time of the misconduct. Excessive delays in terminating the employee for cause may make it possible for such an employee to still collect unemployment benefits regardless of the employee’s misconduct. Employees terminated for unsatisfactory work, as opposed to misconduct, will generally be eligible for unemployment compensation.
Third, terminated employees must be paid all wages, bonuses, commissions, or benefits. Deadlines for such payments vary by state and the reason for termination. For example, in Texas these payments are due within six calendar days of the termination date. Other states will differ. It is imperative to check with an employment attorney familiar with your state’s law to confirm these deadlines.
I have also developed a brief checklist to help in the termination process. This list is not all-inclusive and grows every day.
- Conduct an inventory of items in the possession of the employee and create a list of same. For instance:
- Company credit cards
- Office keys
- Company issued laptops and cell phones or personal laptops and cell phones used for business purposes
- Company vehicle keys
- Pass Keys for buildings
- Access codes to company computer systems
- Passwords for company e-mail accounts
- Business cards
- Review employee’s files for post-employment obligations. These can range from non-competition agreements to confidentiality agreements. If they exist, make a copy of the agreement to give to departing employees to remind them of their obligations.
- Get IT involved. Partner with someone in IT to sever employee’s computer access while the termination meeting is taking place. Don’t forget that many staff members have remote access that will need to be taken care of at the same time.
- Carefully choose a location and time. The best time to meet is near the end of the day.
Meet with the employee either in his office or a conference room; from personal experience, I would recommend a ‘neutral’ location such as a conference room that is out of public view. Do not engage in an extended argument about the termination, and have someone with you at all times during the termination.
- Draft termination letter and review it with Human Resources or your employment attorney to ensure the letter covers Unemployment Compensation, Life and Health Insurance, and tax information.
- Determine if you will offer a severance package in exchange for a full release. Prepare the same and review with corporate counsel before termination. A severance package is not a requirement but may make the process smoother for all involved. If you are terminating an employee for cause, I strongly oppose any severance package.
- Explain to the employee that his/her computer access has been cut off.Also note that you’ll work with him/her to get any personal information he/she may have off the work computer.
- Get company property back.This may include phones, laptops, keycards, keys, etc. If the employee has any company documents or property at home, arrange for a time to pick those up. Finally, determine if the employee has emailed any company documents to himself/herself; if so, ask him/her to delete them. Use the pre-termination list you created to ensure all property is returned.
- If an employee complains about discrimination or retaliation, don’t dismiss it. Ask him or her to explain in detail why he/she is claiming bias. Make notes, and tell the employee you’ll investigate the claim, but make it clear your decision stands. DO NOT ADMIT TO ANY DISCRIMINATION OR BIAS. I have seen this happen when an employer simply wanted to get the terminated employee out of the building and end the meeting. As you can imagine, it was not a good idea. Nonetheless, check out the terminated employee’s complaint and, if it has some merit, talk to an attorney.
- Arrange for personal item pick-up.Decide how workers will obtain their belongings after termination. Options include: walking employees back to their desks immediately after the meeting; or, arranging to meet with them at the office on the weekend. I recommend having another trusted employee collect the terminated employee’s personal effects during the termination meeting, and then returning these to the employee immediately following the termination.
- Give the employee a termination letter.It’s a good idea to give the employee a letter that officially confirms the termination and includes reminders of any post-employment obligations, as well as, benefits to which they may be entitled.
- Give employees their final paychecks.
- Check with Human Resource or an employment attorney to confirm deadlines for such final payment.
- Verify with an employment attorney if other benefits must be paid, such as unused vacation or sick time. If need be, make sure this amount is included in the final paycheck.
- Obtain and verify a current mailing address for issuance of tax information and other matters.
- If you are firing for cause, tell the employee. Don’t exaggerate and don’t sugar coat the reason for termination. It is better to be frank to avoid confusion or future complaints.
- Don’t be mean. Continue to treat the terminated employee like a human being, but do not make concessions or admission about any claims of unfair or inappropriate conduct on the part of the company. Although termination is hard on the company, it is often devastating to the employee. Treat the leaving employee like you would want to be treated.
- Refusing to fire an inept employee can have devastating effects on the morale of the company. It is often best for everyone involved to end an unproductive employment relationship. Nothing can sap the motivation of other employees more effectively than seeing an unqualified or unmotivated employee ‘getting away with it.’
This list is a good starting point to initiate termination of an employee. Although never pleasant, running a company often requires performance of this most unpleasant task. During my service in the United States Marine Corps, I picked up an important adage concerning leadership that is most applicable here: “Salvage the man when possible; replace him when necessary.” And when necessary, have a plan in place to make the process as painless as possible.
David P. Armbruster is a retired United States Marine, former prosecutor, and current litigation attorney who believes the law is intended to serve people not the other way around.