Terminating_An_At_Will_Employee

Consultant’s Corner: Terminating an At-Will Employee

Question: If we hire an at-will employee and have to let them go is there any law(s) that we need to be aware of? Is this all based on our company policy? Are we supposed to keep the employee for a certain period of time?

We do not know the details of your company’s formal termination policy (if any) or whether your company has formal employment agreements with its employees, which could affect your notice and monetary obligations in employee terminations, but companies can generally terminate employees for lack of work due to a business slowdown or project completion or for other valid reasons.

While your state may be an “employment at-will state” which generally provides employers with discretion to terminate employees with or without cause, employers should always use caution to avoid committing a wrongful termination. While you may not be able to stop an employee from suing you (many people file unsubstantiated or frivolous lawsuits), you can greatly lessen the likelihood of a former employee suing you and winning a judgment with effective hiring procedures, timely employee performance reviews, formal steps of discipline, and other written policies and procedures that protect against non-compliance of labor laws. Wrongful terminations can be based on discrimination or other claims. Also, the state and federal governments do protect employees from discrimination and other wrongful terminations even in employment at-will states.

Labor laws, employment contracts, company policies, and other factors can influence employee discipline and termination. Some employee actions that violate company policy, like theft for example, are the basis for immediate termination, while performance issues are often handled with steps of discipline, whether required by law or not. As discussed in the information below, formal steps of discipline are not required but can be useful to help a potentially good employee improve their performance and avoid termination, which in turn saves you the time and cost of replacing the employee. Steps of discipline like other HR policies, if adopted, must be consistently enforced to avoid discrimination or other potential legal claims by employees. Performance related issues are best done with timely written reprimands to reinforce the policy. Termination for cause (fighting, drinking on the job, theft, etc.) can usually be immediate. For discussion with your lawyer, you can review wrongful termination and related information at the following websites:

Related: Progressive Discipline – Steps to Take Before Termination

Basic Steps to Terminate an Employee

How to Fire an Employee | About.com
Legal and Ethical Steps to Fire an Employee | About.com

Wrongful Termination

Wrongful Termination | About.com

Disciplinary Steps

Progressive Discipline: Steps to Take Before Termination | GoSmallBiz

Employee Handbook Information

Why You Need an Employee Handbook | GoSmallBiz

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Bill Wortman

About Bill Wortman

Bill Wortman is the Chief Business Consultant for GoSmallBiz.com, with over 40 years of business experience. In addition to 12 years consulting small business owners, Bill’s professional career includes a big-eight CPA accounting firm, national consumer finance, big-three automotive manufacturing, Arby’s fast food, marketing, and other industries. He’s held multiple executive-level positions and fulfilled the role of CFO at large, publicly held (NYSE, NASDAQ, and AMEX) corporations. In addition, he’s been an owner of private ventures involving residential real estate development and a General Motors new car dealership.