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Terminations: Wisely Managing Troublesome Employees

As a Nonprofit Director, you’re responsible for approving the hiring and firing of employees at the organization. Unfortunately, the process of firing employees doesn’t always go smoothly. So, what should you know about preventing unpleasant termination situations and any potential liability that comes with it? Here are several FAQs that provide helpful information on the process and reducing employer liability.

What is “at will” employment, and how does it work?

“At will” employment is a widely recognized common law doctrine defined as an employment relationship which either the employer or the employee is free to terminate at any time, with or without cause or notice.

Doesn’t that leave me open to discrimination suits?

Not if used properly. Many federal laws, statutes, and common law precedents have been instituted to prevent discriminatory firing including racial discrimination and whistle-blowing. Take a few minutes to read our FAQs on Employment Discrimination and How to Steer Clear.

How do I set up an “at-will” employment relationship?

This starts before even hiring. On the employment application form, there should be a prominent disclaimer stating that employees are free to resign at any time and are subject to discharge at any time, with or without notice.

This should also include that the employment relationship is not subject to provisions you don’t want to be a factor in the employment contract.

Can I inadvertently make any contractual obligations that limit my freedom to terminate employment at will?

Yes. An at will employment relationship may be altered inadvertently by certain statements (oral or written) of an employer that may be construed as giving rise to an implied employment contract which limits the employer’s right to terminate the relationship.

To prevent this, avoid any statement to prospective employees that might be understood to imply that the employment relationship will be for a certain time or conditioned on performance. Written employment agreements help.

A written agreement that clearly expresses the understanding of the parties that the relationship is at will, should make it difficult for an employee to later argue that an implied contract was created limiting your right to terminate at will.

What if I only want to hire an employee for a certain amount of time?

In this case, the contract should expressly give the employer the right to terminate employment at any time for misconduct and/or failure to meet performance standards. This way, the at will employment relationship is held intact. It is also important to seek legal counsel into such a contract.

What should I consider when thinking of firing an employee?

It’s important to consider three questions before firing an employee:
1) Will the employee have any basis for claiming that his or her termination violated federal or state laws limiting the employer’s right to terminate at will?
2) Will the employee have any basis for alleging that a contract has been formed, limiting the employer’s right to terminate at will?
3) Will the employee have a reasonable basis for perceiving that she or he has been treated unfairly, especially in light of any expectations that may have been created? If the answers raise any concerns, consult legal counsel.

What general guidelines should I follow during the termination process?

Keep all aspects of the process appropriately confidential. If the problem is due to unsatisfactory performance, ensure that the employee is given clear notice of the problem and how it should be corrected. Corroborate the supervisor’s evaluation with another manager.

Consult competent counsel to review the employee’s personnel record before finalizing the termination decision. Never make any deductions from the employee’s final paycheck without the employee’s written consent, unless approved by legal counsel. This list is not exhaustive.

Should I give the employee the opportunity to resign?

If the employee is being terminated because of unsatisfactory performance, this is a good idea. However, if the termination is due to serious misconduct (e.g., theft, assault on another employee), you should carefully consider what allowing the employee to resign might communicate.

When should severance pay be offered?

To ease the dislocation of dismissal and to enhance the perception of fairness, an organization may want to consider adopting a severance pay policy for employees who are fired (at least for those not guilty of misconduct).

When should a separation agreement be used?

Whenever you’re offering severance pay or other benefits that the employee is not entitled to by law, you should seriously consider requiring the employee to enter into a separation agreement as a condition to receiving the benefits.

How should I respond to requests for references?

You should establish a policy governing the release of information regarding former employees. If the only concern is minimizing liability, adopt a neutral reference policy whereby only the dates of employment and the former employee’s position are provided. To prevent defamation suits, this policy must apply to both satisfactory and unsatisfactory former employees.