WORKPLACE LAW -
Employment Termination Tips
Question:
I have a small business with 15 employees. Business is really slow because of the economy, and I have decided I need to let two of my employees go due to economic reasons. Their performance is fine, I just can’t afford to keep them. All of my employees are at- will, but I am concerned about them and how they will react to losing their job. What is the best way to handle this?
Answer:
The decision to terminate employment is difficult under any circumstances. There are entire books and training sessions devoted to this topic. Some general elements to keep in mind are:
1. Confirm the employees’ at will status. The California Labor Code states that an employment, having no specified term, may be terminated at the will of either party on notice to the other. Employment for a specified term means employment for a period of greater than one month. To overcome the presumption of at-will employment, a terminated employee must prove that an exception to the at-will rule applies, or that there was an employment contract for a specific period of time. If your employees are at-will, their employment can be terminated by giving them notice of the termination.
2. Prepare for the termination meetings. Most terminations are very stressful for the employer and the employee. It is important to treat the employees with dignity and respect when informing them that they will be losing their jobs. Decide where and when the meetings will occur. Time the meetings carefully, and meet with each employee in a private place.
3. Consider offering severance pay to the departing employees. This may not be feasible due to the economic conditions your business is facing. However, it is an option to consider to assist the employee during any period of unemployment. Depending on the circumstances, some employers offer severance pay or extended benefits in exchange for a waiver and release of claims that states they will not sue you over the termination. Obtaining a signed release is appropriate when the termination is risky.
4. Meet with each employee separately. As the owner of the company and the primary decision maker, it is important for you to hold the meeting with each employee. If you have a human resources manager, you may wish to have that person attend the meetings as well to give the employee the final pay and termination documentation. Be honest about the reason the employee is losing his or her job, and thank the employees for their service to your business. Keep the meeting short, but allow the employee to express his or her feelings. Empathy and courtesy will go a long way in lessening the impact of losing a job.
5. Explain benefits and take care of administrative matters. Offer the severance package if applicable, give the employee the final paycheck, provide the employee with a written notice of the change in the employment relationship, and the Employment Development Department (EDD) pamphlet “For Your Benefit.” If your employees receive health insurance as a benefit, give the employee the Health Insurance Premium Notice, and make sure you notify the carrier to send the employee a Cal-Cobra notice to allow the employee to elect to continue health insurance at the employee’s expense. Collect keys and other company property.
6. Communicate with the remaining employees. Many employers are reluctant to communicate with the remaining employees. You should be aware that your other employees will be watching, and if there is no communication they will be left to speculate about their co-workers. Informing the company’s other employees that the two employees are leaving their employment, without disclosing private information, will help reduce employee anxiety, reduce rumors and the spread of misinformation.
You should be aware that in some circumstances, California and Federal law require 60 days notice of “mass layoffs” and plant closings. However, terminating two employees in this situation will not trigger those advance notice requirements.
- - - - - - - - - - - - - - - - - - - - - - - - - -
Back to Menu- Work Place Law 2008 Articles