Sooner or later, most businesses have to make the tough decision to terminate an employee. In making and carrying out the decision, care should be taken to avoid common pitfalls.
Check the Employment Agreement
Colorado is an at-will employment state. This means in the absence of an employment contract, employees can generally be terminated for any non-discriminatory, non-retaliatory reason. When considering whether and how to terminate an employee, it is very important for employers to review their file and determine if the employee has an employment contract or is an at-will employee.
Employment contracts can be formed in many ways, and the document doesn’t need to contain the words ‘Employment Contract’ for it to be binding. Poorly worded offer letters, employee handbooks, or initial hiring documents can give rise to potential employment contract claims. It is critical to understand the playing field on the front end, before you make or implement any decisions.
Follow your Employee Handbook
If your business has an employee handbook or other similar document, it is important to consult and follow these policies.
Document Performance Issues
Good and effective documentation of employee performance issues can protect your business if claims are made down the line. Routine performance reviews are an effective tool. In addition, if any specific instances arise, they should be documented contemporaneously through written reports to the employee’s personnel file.
Do Not Discriminate
Under federal law, it is unlawful to terminate an employee based on race/ethnicity, disability, skin color, veteran-status, sex, age, country of origin, and religious belief. Colorado state law also prohibits discrimination based on sexual orientation.
When making the decision to terminate an employee, it is critical that employers do not run afoul of these state or federal laws.
Do Not Retaliate
Employers should not terminate employees based on their participation in legally protected activities, including filing worker’s compensation claims, activities that are protected by Colorado’s Whistle-Blower Statute, participating in civil rights litigation against an employer, reporting criminal activity, or other similar conduct.
Be Aware of Appearances
How the termination of an employee will be viewed often depends on the circumstances surrounding the termination. It is important for employers to be aware of the background and timing of the termination, and avoid terminating employees at times that may give rise to the appearance of impropriety. Even if your motivations are not discriminatory or retaliatory, the timing of an employment decision can look bad to potential fact finders down the line. It is important to look at the whole picture when weighing employment decisions.
When meeting with the employee for the termination, it is often a good idea to have two company representatives present. Be firm, direct, and respectful, and try to remain calm and composed. If stress levels rise, or the employee takes any action that is aggressive or inappropriate, adjourn the meeting.
Remember that the words you say and your actions will likely be admissible in any proceeding down the line. Take the high road and do not get pulled into a verbal fight.
It is also a good idea to have the company representatives take notes following the meeting, identifying how the meeting went and any critical events. This contemporaneous information may be important evidence if a legal proceeding is later filed against the company.
Severance packages are often a good idea. By offering the employee a cash payment in exchange for the severance agreement, employers can use this as an opportunity to soften the blow from the termination.
In addition, properly drafted severance agreements can provide a great deal of protection to the employer. It is often a win-win situation.
Pay all Wages Due
Do not withhold any wages which are owed to the employee. Like many states, Colorado’s Wage Claim Act affords the employee remedies against employers who wrongfully withhold wages from employees.
Care should be taken to ensure that all earned wages are paid in full, and that no past-due wages are used as a negotiating point for any severance agreement.
Any severance paid by the company should be over and above the wages already owed to the employee.
Author: Mark D. Changaris
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