Happy Friday! This Friday’s Five focuses on the termination process. Employers should develop a termination checklist to ensure all documents and contingencies are consistently covered during the process. Here are five pointers employers can use to start in developing their own checklist:
1. Final wages must be timely paid.
The employee’s wages must be paid at the time of termination. In addition, employers are required to pay the employee all accrued but unused vacation in this final paycheck. In addition, other items employers should review to ensure they are timely paid:
- Expense reimbursement for business expenses
- Commissions
- Non-discretionary bonuses or profit sharing agreements
2. Provide all required forms to employee at separation.
To the surprise of many employers, there are many forms that employers are required to provide to employees at the time of termination. Here is a non-exclusive list of some of the routine forms required:
- Notice to Employee as to Change in Relationship (required under California Unemployment Insurance Code 1089)
- For Your Benefit, California’s Program for the Unemployed (published by the EDD)
- COBRA and Cal-COBRA notices (can be obtained from health insurance provider)
- Health Insurance Premium (HIPP) Notice (for employers with 20 or more employees, the Department of Health Care Services requires this form)
Employers should take time to review their obligations and forms that are required for their particular industry or situation.
3. Communications about the terminated employee with others in the company and outside of the company.
In order to prove a libel or slander claim, the employee must prove: (1) false communication; (2) unprivileged statement of fact (not opinion); (3) it was made about the plaintiff; (4) published to a third party; and (5) caused damage to the plaintiff. More information about liable for slander claims can be read here.
Employers should take appropriate measures not to discuss the circumstances surrounding why an employee left the company with people within the company that do not have a need to know. In addition, employers need to be very careful in how they communicate with anyone outside of the company about the employee’s work at the company. To avoid any potential claims, many employers restrict what information they will provide for reference checks (even for employees who were good and left on good terms) to the employee’s dates of employment, and if authorized by the employee, the employee’s last rate of pay.
4. Consider if a severance agreement would be appropriate.
Offering an employee some severance pay may cost the company money in the short-term, but could save a lot of time and money in the long run. If the employer believes that there is a potential dispute with the employee, the employer may choose to pay some severance in exchange of a release of claims by the employee in order to avoid any potential litigation. If done properly, an employee’s acceptance of a severance agreement would effectively waive any and all claims against the company. If there is any potential for a dispute about any issues that arose during employment, entering into a severance agreement could be an effective way to avoid costly and time consuming litigation. I’ve previously written about five common questions about severance agreements here.
5. Have an attorney review the process.
If the termination has any type of complicated issue, of if the company is going to over a severance agreement, an employment lawyer familiar with the law should be consulted. It is also helpful to discuss a termination with an employment lawyer to see if there are any other potential issues that the employer may not have considered, and develop a strategy to deal with the issues at the time of termination, and not during litigation.