Terminating employees within the usual course of business is rarely pleasant. But the additional stresses caused by the COVID-19 pandemic are forcing many businesses to engage in layoffs, sometimes even affecting employees that were a part of the business for years. Nonetheless, there may be no other way around the need to shrink operating costs than to reduce (or “offboard”) staff.
Ideally, regardless of the circumstances leading to the parting of ways, the process of transitioning employees out of your business should follow a predictable set of steps. The following answers to common questions about employee termination will help you ensure a tactful, respectful, and legally sound process.
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Do I need to provide written notice of termination?
Most states are at-will employment states, so advance notice of termination is generally not legally required, unless it is covered in the individual’s employment contract or a union/collective bargaining agreement.
Once the decision is made to terminate an employee, it is important to have a plan for communication. Even if your business typically terminates workers verbally, it can be helpful to provide written documentation, such as a Termination Letter, in order to ensure that you and the employee are on the same page.
While you may choose to communicate with the rest of your team about an employee’s departure, you are not legally obligated to do so. If you decide to discuss the termination, you should be careful to avoid making disparaging remarks or going into details that may cause defamation issues or privacy concerns.
When should our business give a terminated employee their last check?
An employee who is discharged, fired, furloughed, or laid off must still be paid all wages and unused vacation time earned through their last day of employment. Depending on which state you are located in and whether or not the employee quit or was fired, there are different guidelines for when the final paycheck should be provided. The timeline for the final paycheck can vary widely—from being issued immediately to being issued with the next scheduled payday—so it’s important to understand your state and local laws. If you have questions, ask a lawyer.
What are our obligations under COBRA?
The Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) requires employers with 20 or more employees to provide temporary health insurance benefits in some cases. Make sure your employees understand that even though they may remain on your company’s health plan, they may have to pay the full premium themselves.
Employers must notify their group health plan within 30 days of terminating a covered employee. The plan administrator then has 14 days to provide a COBRA election notice to the former employee and qualified beneficiaries. This notice outlines their right to continue coverage and how to do so. Employees have 60 days to decide whether or not to continue coverage.
An employer’s failure to comply with these guidelines can result in:
- Enforcement actions on behalf of the Department of Labor
- Fines or audits by the Internal Revenue Service
- Private civil lawsuits brought by the former employee or other beneficiaries
If you have questions about COBRA in light of a coronavirus-related layoff, an employment lawyer can help.
How should the workload be managed after a staff reduction?
As part of your offboarding plan, you’ll want to put in place protocols for when a new or existing employee is expected to take up the responsibilities of the one who is leaving.
If it’s a mutually agreeable parting of ways, then it is probably most preferable to have the departing employee begin training their replacement for anticipated work duties.
In addition to this training, the exit process may include having the employee fully document their work-related responsibilities and other relevant tasks that they complete on a regular basis. The initial job description may provide a helpful starting place, but in many cases the employee will have taken on additional tasks over time.
What should be done with company property?
Best practices suggest keeping a record of all company assets assigned or designated to each employee or independent contractor. This can be done in a physical or electronic file system, or kept within a specialized task management system for employee onboarding/offboarding.
Assets that need to be recovered or revoked at the time of offboarding may include:
- Tangible items. Keys, identification passes, access cards, laptops, mobile phones, specialized equipment, corporate credit cards, vehicles
- Intangibles. Email messages, documents, or any other confidentially protected material; access to digital platforms and accounts, such as corporate email accounts, productivity applications, and databases
Depending on the nature of the termination, you may want to arrange for immediate shutdown of accounts, or you may allow the employee to keep access temporarily to enable knowledge transfer or final communication with the team.
Why do exit interviews matter?
An exit interview or termination of employment survey provides one last opportunity for employers to glean information about what went wrong and what went right during the business relationship. It also provides the opportunity to improve or recalibrate expectations in the future. This is true regardless of the reason for termination.
If it’s possible to maintain a positive rapport with an employee that is leaving, an exit interview can additionally provide an opportunity for closure as a last step before parting ways.
When should we start thinking about the offboarding process?
No one wants to be pessimistic about a new hire, but offboarding should be at the front of your mind as early as the job offer. While it may seem contradictory to consider the worst-case scenario before an agreement has even been signed, an Employment Contract is likely to serve as your best insurance policy against relationships gone awry.
An effective Employment Contract will clearly define your work relationship including whether or not employment is at-will, and it will outline your policies for intellectual and physical property owned by the company. This information may help save time and attorneys fees later on if there is a dispute.
Ask a lawyer
Making the hard decision to lay off staff members is not one that many employers take lightly. If you’re planning or have recently implemented a workforce reduction, Rocket Lawyer is here to help. Get access to free legal advice and key documents for employers in the Coronavirus Legal Center for Business, or reach out to our Rocket Lawyer COVID-19 support team toll-free at (877) 885-0088, Monday through Friday, from 6 am – 6 pm PST.