Overview: Employee terminations are restricted for certain reasons or without proper procedures. While Title VII of the federal Civil Rights Act prohibits termination which discriminates against protected classes of workers, state law can be more expansive in creating classes of workers who are eligible for such protections, shielding employees who are not covered by federal law. Similarly, some states have broader restrictions against retaliatory terminations for certain types of protected activities, like filing workers' compensation claims and for blowing the whistle on unlawful or wasteful practices in the workplace.
Federal and state law also requires employers to utilize notification procedures when they plan to lay off large numbers of employees or close an entire facility. The federal WARN Act sets the minimum standard for covered employers, but some states impose even stricter requirements on employers based on the number of employees they plan to discharge.
Employees leave a company for other reasons as well, through retirement and resignations, some of which can be viewed as forced resignations or constructive discharges. Exit interviews and managing the exit process should be handled consistently and in compliance with federal and state law.
Trends: Employers are increasingly gravitating toward severance packages for employees terminated involuntarily in exchange for waivers or releases of claims against the employer. With these systems in place, employers can preemptively eliminate post-termination threats by providing outgoing employees with something of value. Employers must be prudent, however, in ensuring that such termination agreements are enforceable by crafting agreements in easily digestible language, providing valuable consideration in exchange for waivers and fully documenting the exchange.
Author: Michael Jacobson, JD, Legal Editor
The Securities and Exchange Commission (SEC) has issued a cease and desist order targeting provisions in severance agreements that limit an employee's ability to cash in on a whistleblower award.
Updated to reflect amendments to the severance pay and 'mass layoff' requirements, effective July 29, 2016.
Updated to include information on Gerardot v. Life Care Centers of America, which concerns wrongful termination in violation of public policy.
Updated to reflect a forthcoming amendment to the definition of 'just cause' concerning the usage of medical marijuana by employees and eligibility for unemployment benefits.
Updated to reflect forthcoming legislation clarifying that franchisors are not employers for purposes of disputes with franchisees or the employees of franchisees.
Enhanced to include regulations protecting franchisors from several types of employment litigation, effective May 10, 2016.
Updated to reflect forthcoming legislation that will protect franchisors from being sued as employers or co-employers when disputes arise with employees of franchisees.
Updated to reflect trade secret protections under the federal Defend Trade Secrets Act, effective May 11, 2016.
Guidance for HR on understanding and complying with federal and state law regarding legal and fair employee terminations.