Firing an Employee? Make Sure You Stay Within the Law

The perks of being a boss or company owner come hand-in-hand with the less glamorous aspects of the job - and firing employees has to be one of the least loved parts of the role.

Monday, April 22nd 2013 in Legal by Austin Tighe
Firing an Employee? Make Sure You Stay Within the Law

The perks of being a boss or company owner come hand-in-hand with the less glamorous aspects of the job - and firing employees has to be one of the least loved parts of the role. Whether it's for financial, performance-based, or other reasons, a reality of business is that as new staff needs to be hired, current employees occasionally need to be let go. It's vitally important, however, that all firings be carried out within the confines of the law. Unfair dismissal is grounds for legal action against a company, and if the reasons or process behind an employee's termination are not legally sound, then your business may be put in danger.

Although reasons for firing an individual vary, it's crucial you know the reasons which cannot be used.

  1. Discrimination

    You cannot fire an employee - or even fail to hire one, for that matter - if your decision is based upon their race, age, gender, ethnicity, sexual identity, political beliefs, religion, or disability. Federal laws make it a clear crime if such distinguishing factors - with no bearing on an individual's ability to perform their tasks - are used as grounds for dismissal.

  2. Whistleblowing

    If an employee has reported illegal activity in your business - whether failure to follow employment law, discriminatory actions, harassment, or health and safety measures - it is illegal for you to fire them as a direct consequence. It is also illegal in multiple states to fire someone if they have testified against you in court for a non-business related matter. The basic rule is simple: an individual cannot be fired for following the law.

  3. Workplace Rights

    Employees have several rights to time off or time away from work which cannot be used as grounds for firing. Family or medical leave, military leave, and even jury service or time off to vote in elections are all protected and can't be used as ground for dismissal.

Presuming that the reasons for firing an employee are legitimate and legal, you will also need to ensure that you honor the contract or employment agreement of your own business. Although employment-at-will laws make it perfectly possible to fire someone without notice and with immediate effect, a company's contract can trump this, and require a period of notice be given, often in writing. If you are firing an employee, check whether their work contract requires you to operate within a certain time frame.

If the reasons for firing someone are based upon poor performance, it's well-worth documenting this issue over a period of time. This can then act as a fail-safe should you be accused of discrimination.

With legal discourse to fire someone assured, and notice either given or your right to terminate at-will invoked, you will also need to make sure you fulfill post-employment requirements. A company of more than twenty employees, for example, must continue to offer a temporary continuation of health coverage under a federal law, COBRA. Companies with fewer than twenty employees are not covered by this federal law, but may be subject to similar state or local laws. All companies must also make sure employees are aware of unemployment insurance options - i.e. you must specifically inform an employee of their options - and if you run vested 401(k) profit-sharing, employees must remain eligible even after they have been fired.

On a personal level, make sure to fire employees confidentially and avoid any sort of public or company-wide forum. Again, if the employee's work quality is the reason, keeping solid records - and making sure that they're aware of the possibility of losing their job - is general best practice. Notice of firing an employee should be professional, clear, and make dates and any other terms of the transition clear and concrete. As the business owner or boss, you will also need to plan ahead - final paychecks, severance packages (not required by law but written into some company contracts), unemployment insurance notifications and the like can take time and resources away from day-to-day business. Overall, ensuring your firing process is legal and streamlined is best for you, your staff, and your business.

About the Author

Austin Tighe Austin Tighe is an attorney with Feazell & Tighe LLP, a Texas-based law firm with offices in Austin, Waco and Santa Monica. Mr. Tighe focuses his practice on class actions, labor law, business litigation and a variety of personal injury matters. Full Biography