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Legally Terminating Employees

Posted by Darryl V. Pratt | Jun 13, 2019 | 0 Comments

Most small business owners will occasionally have to face  the unpleasant task of firing an employee. Small businesses, in particular,  rely heavily on each employee. An underperforming employee may not only lower  the morale of other employees who have to pick up the slack, but may also  jeopardize the success of the business. When an employee must be terminated, it is important to ensure that it  is done legally.

At-Will Employees

Many businesses hire employees on an at-will basis, that  is, the employment contract specifically states that the employee is at-will  or does not specify that the employee has been hired for a specific term. In  this situation, employers have substantial flexibility in terminating  employees. At-will employees can be fired at any time, for any reason (except  an illegal one), and without prior warning. The employee is also free to quit  at any time. It is always important to document the incidents leading to or  reasons for the termination in the event the employee decides to file a lawsuit.

Note: Although it is not  legally required, it may be best for management to inform employees of the  problems with their performance and even provide additional training so they  can have an opportunity to improve. If the employee is able to correct his or  her deficiencies, this may spare you the emotional difficulty of the  termination and the expense of training a new employee. In addition, it may  enhance the morale of all your employees to know that you care enough to help  them succeed.

Contract Employees

If you have hired employees for a specific term (for  example, a year), it is generally a breach of contract to terminate them prior  to the end of the term unless the termination is “for cause,” that is, if the  employee has engaged in conduct specified in the contract as grounds for  dismissal. In this situation, it is important to comply with any standards set  forth in the contract regarding termination. If the contract requires certain  performance measurements, warnings prior to firing, or termination procedures,  you must strictly and consistently comply with them. Further, you should  carefully and thoroughly document every step you have taken to meet the  contractual requirements.

Illegal Reasons for  Termination

Regardless of whether an employee is employed at-will or  for a term specified by contract, there are certain reasons applicable to most  employers that are never permissible for termination: 

● Under federal law, it  is illegal to terminate employees based on discrimination regarding race,  gender, religion, national origin, sex, disability, age, or legal alien  status, or to fire them for asserting their rights under these laws. In  addition, most employers are prohibited under federal law from terminating an  employee for being pregnant or having a medical condition related to  pregnancy. Many states have similar laws, some with additional protected  categories, such as marital status or sexual orientation.

● The Americans with  Disabilities Act prohibits employees from being fired for having a disability.

● Under the  Occupational Safety and Health Act, employers may not terminate employees for  asserting that their work conditions do not comply with state or federal  health and safety requirements. 

● Under state law,  employers may not fire employees for reasons violating “public policy,” that  is, for reasons the state has deemed to be ethically impermissible. For  example, in many states, it is illegal to fire employees for refusing to  engage in an illegal act, complaining about the employer's illegal conduct, or  exercising a legal right such as taking family leave.

These are the most common bases for wrongful termination  lawsuits, but there are other federal and state laws that may apply in your  specific situation.

What's Next?

If you are concerned about  whether you have legal grounds for terminating an employee, we can advise you  about any steps you may need to take, as well as help you with any other  employment-related concerns. Call the Business Law attorneys at Pratt Law  Group at (972) 712-1515 today to discuss!

About the Author

Darryl V. Pratt

With over twenty (20) of experience as a dual-licensed Attorney and Certified Public Accountant, Darryl V. Pratt has practiced law in all areas of corporate and business law, non-profit law, estate planning, probate, guardianship, asset protection planning, bankruptcy (Chapters 7, 13 and 11), real estate, and taxation.

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