Severance & Resignation
Severance
Crazy as it seems, terminating an employee is perhaps the highest risk employment action any employer can take. It is the single event most likely to lead to an employment lawsuit. Typical claims made by terminated employees include:
- Wage and Hour Claims (no breaks, unpaid overtime, etc.)
- Wrongful termination
- Age discrimination (I was terminated because of my age)
- Gender discrimination (I was terminated because of my sexual orientation)
- Pregnancy discrimination (I was terminated because I was pregnant)0
- Retaliation
- I was terminated because I complained about something
- Sexual Harassment/Discrimination
Before terminating an employee it is a good idea to consider whether this kind of claim is likely. For instance, is the employee pregnant? Did the employee just recently complain about you doing something that he/she believed was improper or illegal (it doesn't matter if it was or not, it only matters if they brought it to your attention)? Is the employee "older" than other employees?
Even the worst employee in the world probably should not be terminated two days after she tells you she's pregnant! The optics are bad, and it is easy for the employee to assert that, whatever reason you are giving for the termination, its a pretext and the real reason is the pregnancy.
One way to protect yourself in a "high risk" termination is through a severance agreement. These agreements give the employee something of value in exchange for their waiver of claims and their statement that they have not faced improper actions. Its a give and take. To be effective you'll need to give something valuable. It may be 90 days of continuing health care, or one-month's pay. That's your call and it can vary depending on the employee and what you believe would be desirable to them.
Model Severance Agreement -- California
Model Severance Agreement -- Non-California
Resignation
Don't think that an employee quitting or resigning will always protect you from claims. One of the more common claims brought by ex-employees is "constructive termination." The claim is that the conditions were so bad they had no choice but to quit. Basically, you forced them to resign, perhaps by not doing enough to stop another employee for harassing them.
An employee may also claim that he or she was terminated and try to seek, for instance, unemployment benefits.
To address these kind of claims proactively Dr. Steinberg has developed the following Resignation Letter that he's making available here at no charge. Click the link below to download the model letter. Feel free to modify it to suit your needs.