Departing Employee FAQ
How can I protect myself against lawsuits by a former employee?
To protect yourself against a lawsuit by a former employee, consider having that employee sign a release from liability as they're departing. Include a clause where the employee grants you permission to provide information to their future prospective employers and promises not to sue you for providing such information.
In return for the release, offer some sort of benefit or benefits. A court is much more likely to uphold an agreement where the employee got something substantial in return for giving up his or her rights. Finally, check with an attorney in your state, as each state requires specific language to be in a valid release.
I just fired an employee, what do I tell the other employees?
In most cases, it's best not to tell other employees that you fired an employee, or the reasons behind the firing. Rather, tell other employees that you simply had to "let the employee go" or say that "so and so is no longer with the company" and don't go into any detail. Consider making a brief statement to the other employees, in a neutral tone that lets existing employees know who will be taking over the departing employee's duties.
Avoid the temptation to gossip or speculate and don't be spiteful towards the departing employee, no matter what they did. Gossiping or bad mouthing a former employee can land you in court for defamation, so play it safe and be professional.
Should I be careful in giving an employment reference for a worker I had to fire?
When you fire the employee, tell them up front that you won't be able to be a positive reference for them. This alone can avoid potential problems, since most employees will get the hint and not use you as an employment reference.
If you do end up serving as an employment reference for a former employee whom you fired, then the best practice is to keep your comments brief and factual. Telling a potential employer anything about the former employee that you can't verify as factually accurate is grounds for a defamation lawsuit, so be very careful what you say.
Do I legally have to give severance pay to employees when they leave?
Generally, there is no legal requirement to offer severance pay unless you've led your employee to believe that they are entitled to receive some form of severance. Common ways this can happen are promises made during an initial interview, employment contracts, talking about offering severance in an employee handbook or simply offering severance pay routinely to other employees. If you do routinely offer severance to employees but don't want to offer it for certain other employees, make sure you put it in writing, because offering severance in a routine fashion may create a legal basis for an employee to believe that he or she is also entitled to severance pay.
Many employers do offer severance pay for long-time employees because severance pay can help a fired or laid off employee make the transition to a new job much easier. Severance packages also reduce feelings of anger among former employees which can lead to fewer lawsuits and can also serve to soothe any guilt from employers for having to let employees go.
Are there any legal requirements about when I have to give employees their final paycheck?
Most states have laws that require employers to send out final paychecks by a certain date after an employee has been terminated. This may mean that normal payroll processing time would be too slow, so make sure that people in payroll are aware it's a final check that needs special attention and priority. Finally, in many states the time you have before the final paycheck is due is often based on how the employee was terminated, so check your state's laws to find out how long you have.