When an employee is really draining your company’s morale, time and money, the best option for the future success of your small business may be to hand out a pink slip. Removing a bad seed from your payroll seems like a win-win for your company, especially if that employee is woefully incompetent, the timing seems right and other employees are in favor of the act. However, what may seem like a good idea could end up costing your company a big chunk of change in litigation fees and penalties. Without the right research, you could open yourself up to a quagmire of troubles. Here are some considerations that you should be wary of before severing ties with your employees, for whatever reason. Follow this quick guide to ensure your company is in the clear.
Is your employee protected?
Be aware of company policies relating to discrimination based on race, gender, religion, disability, etc. It is particularly relevant if the employee has had a documented history of grievances filed with HR. In the case of disability, you are required by law to make reasonable accommodations. Employees who have filed complaints about the company’s procedures, health or safety concerns, as well as certain illegal activities may be protected under the law. Looking at an employee’s HR file becomes crucial in this regard. Also, the Older Workers Benefit Protection Act (OWBPA) protects against age-ism and requires a written agreement between both parties.
Is the termination in line with company policy?
Most employees are at-will, and this gives employers the right to terminate freely, but any other form of agreement poses issues. Employers typically keep handbooks that stimulate at-will procedures. Contractors, members of unions and individuals with other special terms of employment have different obligations that need to be met before termination. Research and ensure that policy is followed or you may suffer the legal ramifications.
Remember the benefits entitled to your ex-employees
You aren’t rid of your employees when you fire them. The law requires employers to make a number of concessions and notifications.
- You must offer to enroll your ex-employees to continued health coverage, also known as COBRA. Except for cases of termination for gross misconduct, it’s the law. Notify your healthcare administrator within 30 days of termination.
- You must notify your employees of their eligibility for unemployment insurance.
- Pension benefits exist beyond an employees termination. “Fired employees must remain eligible to receive vested 401(k), profit-sharing or pension benefits,” according to the Small Business Association.
Keep in mind that these are merely legalities. Consider competitive intelligence, retaliation allegations and a host of other red flags before firing. Bennet Pine of The Business Journals explains, “Overall, the most important thing employers can do to avoid liability and protect themselves when terminating an employee or employees is to plan ahead and be aware of the potential legal implications of their decision, particularly for legally protected employees.”
This article was written by Christopher Millard for Small Business Pulse