Avoiding Risky Separations - Five Tips for Terminating Employees

Share Article

The economy is getting worse, more layoffs are on the way, so now, more than ever, employers need to know the legal and financial risks associated with laying off employees.

Past News Releases


With the U.S. unemployment rate already at 6.1-percent and anticipated to rise to 7.1- to 8.5-percent by the end of next year, layoffs and terminations are now a major issue for most businesses as they try to control costs. But companies, both big and small, need to be smart about how they handle these separations in order to protect themselves against costly legal actions.

"For those companies feeling forced to lay off or terminate employees, it is important to know how to manage the termination process in a way that doesn't expose them to legal and financial risks down the road," says Daniel R. Levine, a Florida Bar board-certified labor and employment lawyer and shareholder at the law firm Shapiro, Blasi, Wasserman & Gora P.A. in Boca Raton, Fla.

Levine, who has handled thousands of employment disputes over the last 14 years, offers five tips for companies anticipating future terminations:

1. "Get a Signed Release" - The importance of an agreement by the employee to "release and waive all claims" during the termination process cannot be overstated. This document can help shield the business against future civil suits. However, companies need to make sure to offer sufficient consideration for the release (see next point), is knowing and voluntary, and conforms with older worker discrimination guidelines.
2. "Consider a Severance Package" - Although times are tough, and companies who lay off employees are doing so to save money, it is not a bad idea to consider offering these employees some type of severance package in order to reduce their anger and resentment at being fired, and, consequently, their likelihood for pursuing legal action.
3. "Be Cautious with Unemployment Claims" - Many companies automatically challenge every unemployment claim after termination scenarios, a mistake which can easily lead to revenge-motivated discrimination suits. It is important for companies to examine each claim separately to evaluate the potential legal risks that denying it could create. Sometimes it's better to cut your losses by agreeing not to challenge these benefits.
4. "Avoid Classification Confusion" - Companies may be able to reclassify employees as "independent contractors," which will reduce the employee's cost to the company, in terms of benefits and payroll taxes, while also lowering the legal risks associated with terminating the employee should it be unavoidable later on. However, it is imperative to know the legal definition of an independent contractor. An independent contractor may technically qualify as an employee, which would expose the company to the same liability when terminating them down the line and also could cost the business a great deal of money/problems in terms of IRS issues.
5. "Create Goodwill" - Since there is always a chance a terminated employee will try to "get even" later on by suing the company, it makes sense to try to create some goodwill on the way out in order to reduce the employee's resentment. Companies can do so by (a) paying for accrued vacation/sick time; (b) explaining how the company's decision to terminate was a "financial decision," and not a personal one (assuming this is the truth); (c) depending on the circumstances, offering to write a letter of recommendation or serve as an employment reference; (d) offering job placement assistance; and (e) stating an intention to keep the employee at the top of the list for new hires, once the company gets back on its feet (assuming the decision was financial).

For more information, visit the Web site at http://www.sbwlawfirm.com


Daniel R. Levine is board certified in labor and employment law by the Florida Bar and a shareholder in the law firm Shapiro, Blasi, Wasserman & Gora P.A., in Boca Raton, FL. A leading expert in employment law, Levine has handled thousands of employment disputes over the past 14 years. Reference: http://www.sbwlawfirm.com


Share article on social media or email:

View article via:

Pdf Print