Best Practices for Handling Employee Terminations
Terminating an employment relationship is a delicate process. When done incorrectly, it can lead to legal disputes, damage to your company's morale, and harm to your business's reputation. For employers, understanding the proper procedures is fundamental to protecting their company.
Seeking legal advice before pursuing a termination decision can help you comply with state and federal laws, minimize risks, and focus on running your business.
Led by Hessam Parzivand, an attorney with a unique background in human resources, The Parzivand Law Firm, PLLC, provides business owners with critical support for employee terminations. With a commitment to providing personalized legal counsel, the firm delivers practical solutions tailored to your needs. The firm proudly serves businesses across Stafford, Sugar Land, and Fort Bend County.
How to Prepare for a Lawful Termination
A well-prepared termination process begins long before the final conversation. Having clear, documented policies and consistent practices in place is your first line of defense. This preparation shows that your decisions are based on established company standards, not personal feelings or discriminatory reasons.
Gather Relevant Documentation
Consistent documentation is the backbone of a defensible termination. Every step of an employee's journey, from performance reviews to disciplinary actions, should be recorded. This creates a clear paper trail that can justify the termination of an employee. The key documents you should keep records of include:
Performance appraisals: Regular, honest, and documented performance reviews provide a history of the employee's contributions and areas for improvement.
Disciplinary notices: Any warnings, whether verbal or written, should be documented. Include the date, the specific issue, the company policy that was violated, and the employee's response.
Improvement plans: For performance-related issues, a formal performance improvement plan (PIP) demonstrates that you provided the employee with an opportunity to correct their behavior. Be sure to document the plan's goals, timeline, and outcomes.
This collection of documents serves as objective evidence that the termination was for a legitimate, non-discriminatory reason. Without it, you can be left with a "he said, she said" situation that is difficult to defend.
The Importance of Maintaining Consistency
Company policies should apply fairly to all employees. If you terminate one employee for an oversight that affected another employee, you open the door to claims of discrimination or favoritism. Your employee handbook should clearly outline your expectations for conduct and performance, as well as the consequences for failing to meet those standards.
By consistently enforcing these rules, you can build a culture of fairness. It also makes termination decisions more straightforward because they are based on a predictable application of company policy. Review your disciplinary procedures regularly to make sure they are applied consistently across all departments and positions.
An Overview of Texas Employment Laws
Texas is an "at-will" employment state. This doctrine gives employers and employees the right to end the employment relationship at any time, for any reason, or for no reason at all, provided the reason is not illegal. While this seems to give employers broad authority, the "illegal reason" exception is significant.
Federal and state laws protect employees from termination based on membership in a protected class. These classes can include any or all of the following:
Race
Color
Religion
Sex (including pregnancy and sexual orientation)
National origin
Age (40 and over)
Disability
An employer cannot terminate someone for discriminatory reasons. For example, firing an employee shortly after they announce they are pregnant could lead to a pregnancy discrimination lawsuit. Similarly, terminating an older worker and replacing them with a much younger one could raise questions of age discrimination.
Furthermore, you cannot fire an employee in retaliation for engaging in a legally protected activity. This includes filing a workers' compensation claim, reporting workplace safety violations, filing a discrimination or harassment complaint, and serving on a jury.
Even in an at-will state like Texas, a termination must not violate these important protections. An attorney can help you review the circumstances of an employee's termination to identify and address any potential legal risks before you take action.
How to Conduct a Termination Meeting
The termination meeting itself is often challenging. How you handle this conversation can have a lasting impact on the departing employee and your remaining team. Your goal should be to be direct, respectful, and professional.
Who Should Be Present in the Meeting?
It is a good practice to have two company representatives in the meeting. Typically, this would be the employee's direct supervisor and a representative from HR or upper management. This arrangement provides a witness to the conversation and helps keep the discussion professional and on track. The supervisor can address performance or policy issues, while the second person can handle the administrative details.
What to Say in the Meeting
Keep the conversation brief and to the point. State the purpose of the meeting at the very beginning. For example, "We have called this meeting to inform you that your employment with the company is ending, effective today."
Provide a simple, factual reason for the termination that is consistent with your documentation. Avoid getting into a lengthy debate or argument. This is not a time for negotiation. Be prepared to listen to the employee's reaction, but do not get drawn into an emotional exchange. Maintain a calm, compassionate, yet firm demeanor.
Be prepared to discuss the practical details of the separation. This includes information on the final paycheck, unused vacation time, health insurance continuation (COBRA), and the return of company property, such as laptops, keys, and security badges. Having a prepared folder with all the necessary paperwork can make the process smoother. Also, arrange for a discreet and dignified way for the employee to gather their personal belongings.
Post-Termination Considerations
The termination process does not end when the employee walks out the door. There are several steps you will need to take to protect your business and manage the transition following an employee's departure.
The Final Paycheck
Texas law requires that a terminated employee receive their final paycheck within six calendar days of their last day of work. If an employee is paid on a commission basis, the terms of the commission agreement will dictate when those payments are due. Failing to provide the final paycheck on time can result in penalties.
Severance Agreements
While not generally required, offering a severance agreement can help mitigate legal risk, especially in terminations with a higher risk of litigation. A severance agreement is a contract in which an employer provides a departing employee with pay and benefits in exchange for the employee's promise not to sue the company.
An employment lawyer can help you draft an enforceable severance agreement that is tailored to the circumstances of the termination and complies with all legal requirements, such as those in the Older Workers Benefit Protection Act (OWBPA) for employees over 40.
Communicating with the Team
Your remaining employees will want to know what happened. While you must respect the terminated employee's privacy, you must also manage your company's internal communications. A simple, professional announcement is usually best. State that the person is no longer with the company and briefly explain how their duties will be handled in the interim. Avoid sharing details about the termination itself. Instead, reassure your team and outline how to move forward.
Contact an Experienced Employment Law Attorney in Stafford, Texas
With a background in human resources, The Parzivand Law Firm, PLLC, offers knowledgeable, accessible services for employee terminations. Whether you prefer to connect in person, by phone, or via email, Attorney Parzivand is dedicated to providing dedicated legal support at every step. Contact The Parzivand Law Firm, PLLC, today to discuss how to protect your business.
With offices in Stafford and Houston, Texas, the firm serves clients in Sugar Land and Fort Bend County. Reach out today to schedule an initial consultation.