You're Fired!

It’s a Donald Trump trademark. But is it the best way to let an employee go? Hopefully, you would tell someone the bad news in far less hostile, and more carefully considered, language. There are all types of terminations and they all come with various legal repercussions. Suppose you want to let an employee go due to an economic downturn. Is this a “layoff”? Are you planning to reduce your workforce by a significant number of employees? Perhaps it really is a “reduction in force.” Suppose you have an employee who is chronically late. Does that trigger a termination “for cause”? The words you assign to a termination can impact unemployment benefits and expose you to charges of wrongful discharge or discrimination.

Before You Act, Analyze
If you do need to reduce your staff by a significant percentage, you should seek professional assistance in putting together your reduction in force plan. To avoid discriminatory results, a good first step is a careful analysis of which functions you wish to cut. You will need to look at your employees’ job functions and the relative importance of certain departments to your company’s success.

Downsizing often requires legal compliance with state and federal laws, like the Fair Labor Standards Act and COBRA. You may wish to offer separation agreements. In particular, if you have a worker out on FMLA (Family and Medical Leave Act), the situation may call for special consideration. The appearance of age bias is another potential pitfall. If you terminate a group of low-performers that includes a disproportionate number of employees over age 40, that may expose you to claims of age discrimination.

Termination for Cause
When terminating an individual “for cause”, you should have documentation in the employee’s personnel file. This type of termination is not usually a surprise. Normally, the employee has been warned of conduct that is in violation of your policies and you should be able to demonstrate that you do have uniformly enforced personnel policies. If you are just plain annoyed or disappointed with an employee’s performance, that termination is usually not “for cause.”

What About Unemployment Benefits?
Whether an individual can collect unemployment benefits is up to the Division of Unemployment Assistance. The criteria the DUA considers includes if : (1) the employee voluntarily quit the job; (2) the employee’s conduct was willful misconduct against the employing unit's interests; or (3) the employee violated a “uniformly enforced rule.” A truthful answer to the Division of Unemploy ment Assistance is the best answer. For example, if you terminate an employee for chronic tardiness, then you should say that in the employer’s statement on the unemployment benefits form. Don’t create another reason just because you do not have a written rule about tardiness. You may be able to show that the employee knew that prompt arrival at the workplace was expected and that chronic tardiness would lead to termination.

At conclusion of employment another issue you’ll need to navigate is how much money you owe when the employee leaves. Employers must comply with state and federal laws when making final payments for wages, earned but unused vacations (PTO), bonuses, commissions and outstanding expenses. In Massachusetts, failure to make prompt and proper payments will subject you to a payment of treble damages.

This article may be considered advertising under the rules of the Massachusetts Supreme Judicial Court.