Terminating an employee is never a pleasant task. Certain legal obligations and restrictions come into play when a company fires, lays off, or otherwise ends the employer-employee relationship. For example, if you sign an employment contract with an employee, your rights and obligations regarding his or her employment will be determined by the terms of the contract. That means that if you terminate the employment before the agreed upon term, you could face a breach of contract lawsuit. Of course, the contract may provide for specific instances in which the employment can be terminated.
There are several laws that come into play when it comes to terminating employment. Understanding a departing employee's COBRA insurance rights, when it's illegal to fire an employee, how to issue a final paycheck, and other aspects of employment termination can help you avoid legal and regulatory exposure. FindLaw's section on Employee Termination provides articles on legal primers, tips, and resources about ending the employer-employee relationship.
Although most employers implement an "at will" employment policy, firing an employee for the wrong reason could negatively impact an employer. Although at will employment means that an employer can terminate an employee at any time and for any reason, the reason for termination cannot be retaliatory, discriminatory, or for any other illegal reason. Federal and state wrongful termination laws address various reasons that cannot be the basis for terminating an employee, whether he or she is at will or working under an employment contract.
The most common wrongful termination laws are ones that involve discrimination or retaliation. It is illegal under federal law to fire an employee because of his or her gender, race, disability, national origin, religion, or age (if the person is 40 years old or older). An employer is also not allowed to fire an employee because she is pregnant or has a medical condition that is related to pregnancy or the birth of a child. Some states have expanded their "protected classes" to include more characteristics, such as sexual orientation.
Retaliation is another illegal reason to terminate a person's employment, and could result in a wrongful termination lawsuit. Basically, retaliation occurs when an employer terminates an employee because he or she asserted his or her rights under state or federal anti-discrimination laws. For example, if a female employee is fired for complaining that she is not paid the same amount for the same position as her male counterpart, she may be able to file a wrongful termination lawsuit based on retaliation. It's also illegal to fire a person in retaliation for him or her making a complaint regarding an Occupational Safety and Health Administration (OSHA) violation.
Hiring an Employment Law Attorney
As a small business owner, you will most likely need to terminate employees from time to time. Whether you need to fire or lay off an employee, it's important that you abide by applicable employment laws. In order to make sure that your employee termination policies and practices are in compliance with federal and state laws, you should consult with an employment law attorney in your area.