We’d like to premise this by saying that every business who has a need for employees should begin working with a business lawyer or other professional sooner rather than later, in developing clear and specific actions or policies that deal with employee separation. This checklist is provided for entertainment/informational purposes only, and is not considered legal advice.
Unfortunately, employee separation is inevitable. You cannot always control how employees handle their termination or resignation, but you can control how your company handles it.
Documentation
Best practices should be to start the documentation well before the separation. Whenever there are issues that arise from poor performance, breaking work rules, misconduct, etc., you should document that. Although you are not legally required to, you should also use those opportunities to try and work out issues with the employee. Have conversations and offer a supportive role in helping to avoid or fix those issues.
Also, avoid using your documentation as a weapon. The sword has two edges. If an angry ex-employees believes you discriminated against them, and they can prove that you did not similarly document or take similar action against other employees, the documentation itself can be a way in which you have discriminated. It should also go without saying that documentation should be timely and real. Creating or fabricating documentation well after the events took place and representing that they were documented shortly after the event is not advisable.
Document preemptively in the following ways:
Have work place policies that spell out what you expect of employees. Make sure to have them sign a document that shows they have received the policy, read it, and understand it.
Create a formal system for feedback that shows you have tried to work with an employee who is demonstrating poor performance.
If there is a final incident that causes the balance to tip in favor of termination, document it extensively.
Handle “economic layoffs” fairly.
Outside conditions will create the need to let some workers go. This is unfortunate for everyone. However, be careful that you do not create a situation where it can be perceived that some of the laid off workers were let go because of a protected class. Consider the following factors:
“Responsibility Transference”
Some positions might carry more responsibility that can not be easily transferred to another employee. If you seek to lay off workers whose responsibilities are easier to transfer to another worker, make sure you create a fair environment for this assessment.
“Seniority”
Considered the most fair method by many, this policy (when followed strictly) makes cuts based on how long an employee has been with the company. Those who have been there the longest have a better chance of staying.
“Merit”
This is the most attractive option for an employer, but can also be one of the most dangerous. You may be in a situation where you do not want to let go of anyone, but if you HAD to, you’d rather get rid of the less productive individuals while keeping the more productive individuals.
Should you choose to go this route, just be sure that you are standing on a solid ground of documentation that shows you are making the decisions based off performance, and not for any other reason.
Of course, when the money gets tight and you start letting go of workers based on who you like or dislike personally, you are probably not making wise or fair decisions. At worst, you will certainly be increasing the likelihood of a lawsuit.
Other documentation:
For employees that resign, make sure you receive letters of resignation. It is a best practice to schedule an exit interview. Consider offering a separation package that includes a release stating they will not sue you.
Human Resource Considerations:
Calculate the employee’s final pay. Include earned but unused vacation time and personal pay. Try to pay out this money as soon as possible.
Unemployment & Health Care:
The California Employment Development Department requires that you hold SDI contributions. Additionally, you must inform employees of their SDI benefits. You can order these notices off of the EDD website for free. This includes
““Notice to Employees: Unemployment Insurance/Disability Insurance Benefits” (DE 1857A) – Advises employees of their right to claim Unemployment Insurance (UI), DI, and PFL benefits.
“State Disability Insurance Provisions” (DE 2515) – For new hires and again when the employee notifies the employer they need to take time off from work due to their non-industrial medical condition.
“Paid Family Leave insurance program” (DE 2511) – For new hires and again when the employee notifies the employer they need to take time off from work to care for a seriously ill family member or to bond with a new child.
COBRA
If your company has 20 or more employees (or 20 employees, at 50 percent of calendar days from the previous year) you must follow COBRA guidelines. This requires you to offer employees and their qualified beneficiaries the option to continue medical insurance coverage.
Return of Employer Property
Make sure you know if your employee routinely carries employer property, and have both parties sign and acknowledge what has been received.
As always, be sure to consult with an experienced business law attorney or employment law attorney before taking any action on matters like these. This blog is for reference/information purposes only and is not legal advice.