The Four Things You Should Do Right Away to Terminate an Employee
Hal Lancaster once wrote that "getting fired is nature's way of telling you that you had the wrong job in the first place." Most employers will surely agree that these words of wisdom generally offer no consolation to an employee who is being terminated. Therefore it is imperative that employers understand how to comply with state and federal laws.
Although there are numerous factors that should be taken into consideration when terminating an employee, the following four areas are generally the most time-sensitive, and should receive primary attention.
Prohibitions on Termination
The Utah Antidiscrimination Act provides several reasons for which most employers may not discharge, demote, or terminate any person. These reasons include race, color, sex, pregnancy, childbirth, or pregnancy related conditions, age (if the employee is over 40), religion, national origin, or disability. Title VII of the federal Civil Rights Act of 1964 also prohibits discriminatory employment practices, including termination, based upon race, color, religion, sex (including pregnancy or pregnancy-related conditions) , or national origin. Other federal statutes add age (if over 40), disability, and veteran status to the list of federally prohibited reasons for terminating an employee. Various other state and federal statutes and regulations prohibit terminations in retaliation for such things as certain whistle-blowing activities or for exercise of certain specified federal rights (for example, for taking leave under the federal Family and Medical Leave Act). In other words, an employer who intends to terminate an employee must have a valid reason other than those listed above for terminating the employee.
Final Paycheck
Under Utah law, when an employee ceases his or her employment, all unpaid wages become due immediately, and must generally be paid within 24 hours. The employee is required to make a written demand for the unpaid wages, but it is in the employer's best interest to pay all wages to the terminated employee at the time of termination.
COBRA
In connection with the final paycheck, employers with 20 or more employees should provide the terminated employee with information as to his/her rights under "COBRA." This federal law allows a terminated employee, among others, temporarily to continue health insurance coverage under the terminating employer's plan at the terminated employee’s expense. Notice of an employee’s rights under COBRA must be provided by the employer’s group health plan administrator within 14 days of notice of the qualified event, and must give the employee at least 60 days to elect to participate. As noted above, it is good practice to provide the notice in connection with the employee’s final paycheck whenever possible.
Agreements Between the Parties
An employer may find it advisable to enter into one or more agreements with the terminated employee. For example, if an employee is being terminated for wrongdoing, an employer may consider a separation and release agreement, with mutual releases of claims and liability. This type of agreement can be used as a carrot and a stick if the employer has civil or criminal charges that it may bring against the employee. Such releases should be carefully considered and drafted. If an employee had access to sensitive, confidential, or protected information, a confidentiality agreement may be in order. Under certain circumstances, a non-competition or non-solicitation agreement might be appropriate. Employers may also want to consider agreements clarifying intellectual property rights, if such agreements are not already in place. Numerous other types of agreements might be called for, depending on the particular facts and circumstances.
Any such agreement should take several steps to ensure that the terminated employee cannot later claim any malfeasance, duress, or other misrepresentation in connection with the execution thereof. The most obvious of these steps is to ensure that any agreement does not violate public policy (e.g., it should not require an employee to violate the law, or to waive rights the employee cannot legally waive – such as the right to seek unemployment compensation). The best way to do this is to ensure compliance with all applicable state and federal statutes, and appropriate case law interpreting those statutes.
It is also good policy to give the employee time to review the agreement, with counsel if the employee so chooses. Some laws, such as the federal Age Discrimination in Employment Act, require that the employer be given a certain amount of time to consider and execute the agreement, and then time in which to cancel or annul the agreement after he/she has executed it.
In this age of litigation, employers need to take preventive steps to protect themselves. You may be terminating an employee who has caused you a significant amount of heartburn. By taking the time and effort to comply with applicable laws, you can make it more likely that the heartburn ends at termination.
Timothy S. McCoy concentrates his practice on corporate litigation matters, with an emphasis on labor and employment law. He can be reached at tmccoy@vancott.com or by calling (801) 237-0474.
Although there are numerous factors that should be taken into consideration when terminating an employee, the following four areas are generally the most time-sensitive, and should receive primary attention.
Prohibitions on Termination
The Utah Antidiscrimination Act provides several reasons for which most employers may not discharge, demote, or terminate any person. These reasons include race, color, sex, pregnancy, childbirth, or pregnancy related conditions, age (if the employee is over 40), religion, national origin, or disability. Title VII of the federal Civil Rights Act of 1964 also prohibits discriminatory employment practices, including termination, based upon race, color, religion, sex (including pregnancy or pregnancy-related conditions) , or national origin. Other federal statutes add age (if over 40), disability, and veteran status to the list of federally prohibited reasons for terminating an employee. Various other state and federal statutes and regulations prohibit terminations in retaliation for such things as certain whistle-blowing activities or for exercise of certain specified federal rights (for example, for taking leave under the federal Family and Medical Leave Act). In other words, an employer who intends to terminate an employee must have a valid reason other than those listed above for terminating the employee.
Final Paycheck
Under Utah law, when an employee ceases his or her employment, all unpaid wages become due immediately, and must generally be paid within 24 hours. The employee is required to make a written demand for the unpaid wages, but it is in the employer's best interest to pay all wages to the terminated employee at the time of termination.
COBRA
In connection with the final paycheck, employers with 20 or more employees should provide the terminated employee with information as to his/her rights under "COBRA." This federal law allows a terminated employee, among others, temporarily to continue health insurance coverage under the terminating employer's plan at the terminated employee’s expense. Notice of an employee’s rights under COBRA must be provided by the employer’s group health plan administrator within 14 days of notice of the qualified event, and must give the employee at least 60 days to elect to participate. As noted above, it is good practice to provide the notice in connection with the employee’s final paycheck whenever possible.
Agreements Between the Parties
An employer may find it advisable to enter into one or more agreements with the terminated employee. For example, if an employee is being terminated for wrongdoing, an employer may consider a separation and release agreement, with mutual releases of claims and liability. This type of agreement can be used as a carrot and a stick if the employer has civil or criminal charges that it may bring against the employee. Such releases should be carefully considered and drafted. If an employee had access to sensitive, confidential, or protected information, a confidentiality agreement may be in order. Under certain circumstances, a non-competition or non-solicitation agreement might be appropriate. Employers may also want to consider agreements clarifying intellectual property rights, if such agreements are not already in place. Numerous other types of agreements might be called for, depending on the particular facts and circumstances.
Any such agreement should take several steps to ensure that the terminated employee cannot later claim any malfeasance, duress, or other misrepresentation in connection with the execution thereof. The most obvious of these steps is to ensure that any agreement does not violate public policy (e.g., it should not require an employee to violate the law, or to waive rights the employee cannot legally waive – such as the right to seek unemployment compensation). The best way to do this is to ensure compliance with all applicable state and federal statutes, and appropriate case law interpreting those statutes.
It is also good policy to give the employee time to review the agreement, with counsel if the employee so chooses. Some laws, such as the federal Age Discrimination in Employment Act, require that the employer be given a certain amount of time to consider and execute the agreement, and then time in which to cancel or annul the agreement after he/she has executed it.
In this age of litigation, employers need to take preventive steps to protect themselves. You may be terminating an employee who has caused you a significant amount of heartburn. By taking the time and effort to comply with applicable laws, you can make it more likely that the heartburn ends at termination.
Timothy S. McCoy concentrates his practice on corporate litigation matters, with an emphasis on labor and employment law. He can be reached at tmccoy@vancott.com or by calling (801) 237-0474.
Copyright 2006. Published for general informational purposes only, and should not be construed as legal advice. If you need legal advice please consult with your attorney.