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RISKVUE ARCHIVE | INDUSTRY WATCH > EMPLOYMENT PRACTICES LIABILITY (EPL)

Did We Cover Everything?
A Recommended Pre-termination Checklist For Employers

By Wendy A. Woldt, Esq.

There exist a number of issues that must be considered by an employer when terminating an employee in order to maintain the security of the employer’s property, as well as to ensure that the employer’s legal rights are protected. The following sample checklist is recommended as a starting point in this analysis.

Pre-Termination Concerns

  • Review employment offer letter or employment agreement ̵ Check to make certain the employee is not subject to any notice of breach/default/termination provision(s) or other conditions in connection with the termination of his/her employment. If so, make sure to comply with those provisions in effectuating the employee’s termination.
  • Review arbitration agreement — Check to make certain the employee has signed the Company’s employment arbitration agreement. If not, consider the feasibility of having the employee sign an Arbitration Agreement before his/her termination.
  • Review personnel performance reviews or disciplinary action plans/investigative reports — Check to make certain there is documentation supporting your decision to terminate the employee. Absent an egregious performance/attendance problem, i.e. embezzlement, assault, a repeated failure to come to work, etc., there should be written documentation supporting the termination decision, which documentation should memorialize the performance/attendance problem(s), the fact that the employee was given notice of the performance/attendance problem(s) and an opportunity to correct them, and a description of the means and methods implemented to address the performance/ attendance problems.
  • Review confidentiality/non-solicitation agreements — Check to make certain the employee has signed Confidentiality/Non-Solicitation Agreements. If not, consider the feasibility of having the employee sign an agreement before the termination.
  • Obtain and review time records — With respect to the termination of an employee who bills professional services to Company clients, make certain to obtain all his/her time records or billing sheets before providing him/her with notice of termination and/or condition separation payment on his/her submission of true and complete time records.
  • Plan how to prohibit employee access to:
    • Voice mail
    • Computers (stand alone and/or network computers)
    • Any online programs or service web sites that require passwords
    • Other company property, including company cellular phones, pagers, laptop computers, business cards, credit cards and telephone cards.
  • Prohibit access to the office building(s) and suite(s) ̵ Obtain all keys/cards providing the employee with after hours access to office building(s) and suite(s).
  • Advise building security of the separation — Advise Building Security that the employee “is no longer authorized to access the office building(s) or your office suite(s).” However, do not tell Building Security the reasons for the separation, unless the circumstances are such that you believe such communication is reasonably necessary to protect persons or property. (If necessary, provide Building Security with a photograph of the terminated employee.)
  • Organize the personnel file — Make certain the employee’s personnel file is complete, i.e., that it includes all written documentation supporting the termination decision.
    • Employee attendance records — If poor attendance was one of the grounds for termination, make certain to preserve all attendance-related documents in the employee’s personnel file.
  • Provide notice of continued group medical insurance coverage ̵ If you regularly employ 20 or more employees, provide the employee with COBRA notice; i.e., notice of his/her right to continue group health insurance coverage at his/her expense. This notice must be provided by the employer to the Plan Administrator within 30 days after the effective date of the termination. The Plan Administrator, in turn, has 14 days after receipt of notice from the employer to notify the employee of his/her federal COBRA rights. Under California COBRA law, employers with less than 20 employees must inform the insurance carrier of the employee’s termination. Once this notice is given, the carrier is responsible for giving the employee proper notice of coverage.
  • Calculate wages, accrued vacation and other paid benefits due through the last date of employment — An employee’s wages and other accrued employee benefits (such as accrued vacation pay) must be paid to the employee immediately upon his/her receipt of notice of his/her termination.
  • Calculate separation pay, if any — Separation pay is not required by law unless you have specifically agreed to pay the employee separation pay or have a custom or practice of making such payments under similar circumstances.
  • Cancel the electronic funds transfer authorization for payroll payments made to the employee, if any.
  • Consider your response to the employee’s request for a reference letter — In our experience, it generally is better not to provide a reference letter to an employee who is terminated for cause.

Termination Meeting

  • Implement a management team approach — Consider having another management employee present during the termination meeting to act as a witness to the events.
  • What to say/what not to say — You are not required by law to advise an employee of the reasons for his/her termination.
    • Experience has taught us that general statements in this regard are preferable; i.e., “Things just are not working out,” “Your skills do not appear to meet our requirements,” etc.
    • Less is more. Your comments should be kept brief. Listen to what the employee has to say. Try not to engage him/her in a discussion as to the reasons for his/her termination. After listening to what the employee has to say you may wish to respond, ?while we appreciate your comments, we have made our decision” or if the employee persists in objecting to his/her termination, ?we do not think a discussion of the reasons for your termination would be productive at this time.” Allow the employee to save “face” if at all possible during and at the conclusion of the termination meeting.
  • Consider offering the employee the option to resign — If you wish to do so, offer the employee the opportunity to resign his/her employment. (Most professional employees will accept this offer, because they do not want to have record of having been involuntarily terminated from a prior job.) For your information only, an employee who “voluntarily” resigns his/her employment is not entitled to unemployment insurance benefits. However, an employee “forced to resign” may be entitled to such benefits.

Post-Termination Meeting

  • Consider utilizing an exit interview — Consider having the employee complete an Exit Interview form after the termination meeting with the assistance of another management level employee, but only if you intend to respond to legitimate criticisms contained therein and/or want to be able to use the employee’s final remarks about his/her employment to establish an accurate baseline as of the date of termination should the employee subsequently make a claim against you based on facts not described in the Exit Interview form. (This oftentimes gives an employer grounds to argue that the employee’s claims were “thought up after the fact.”)
  • Provide written notice to the employee of the action taken ̵ Technically, when an employer terminates, lays off or places an employee on a leave of absence, the employer is required to give the employee written notice of the action taken. We generally recommend that an employer also provide such notice to an employee once his/her employment status is converted to that of independent contractor. In the case of termination or lay off, an employer also technically is required to give an employee the EDD publication, entitled: “For Your Benefit, California’s Programs for the Unemployed,” describing the employee’s rights to apply for unemployment insurance and other benefits once he/she is unemployed. A copy of this EDD publication is available on the EDD’s website, at http://www.edd.ca.gov/uirep/de2320.pdf.
  • Review the employee’s personal effects prior to his/her departure from the office suite/building — Depending on the employee’s access to confidential or proprietary information employee in gathering his/her personal effects or at a minimum, review them before the employee leaves the office building(s) or suite(s). 

ABOUT THE AUTHOR

Wendy A. Woldt, Esq. is the founding principal of Woldt & Associates in Los Angeles, California. She specializes in employment litigation and is a frequent author and speaker on California employment law issues.

riskVue | The webzine for risk management profesionals
April 2003



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