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EPLI: Terminating Employees in the Age of Lawsuits – Part I


EPLI Terminating Employees in the Age of Lawsuits – Part IBreaking up is hard to do, and this includes terminating an employee. But sometimes you’ve got to do it, as it’s absolutely necessary to the productivity and growth of a business. What’s important when firing an employee is that it’s done in the most ethical and professional way possible, and that certain protocols are followed. This not only lessens the blow to the terminated employee, but it also preferably leaves all parties on amicable terms, protecting the business from potential employment practices litigation arising from the termination.

Be sure when deciding to terminate an employee that the reason for doing so is permissible under state law. What’s more, there are certain issues that need to be identified before termination occurs, including:

  • Reviewing your employee handbook to ensure that certain policies would not prevent you from firing an employee. These include: employment at-will policies, progressive discipline policies, internal dispute resolution or arbitration policies, and termination policies requiring “just cause”. Ask yourself: Is there an employment contract in place? If a progressive discipline policy was established, is the process well documented? If not, can you show a valid reason for your failure to follow your own policy? For example, an employer might terminate a violent employee without warnings in order to protect other employees from harm.
  • Considering implied or oral contracts of employmen Will a termination cause a breach in an oral contract? An oral contract may have been created if the employee was told his or her job was secure, or that he or she would always have a job if he or she did a good job, or some other similar guarantee of employment. Evidence or indicators of job security for the employee include promotions, commendations, and lack of criticism of the employee’s performance.

Moreover, an oral contract can be created by anyone in the company with authority over the employee. This means that the company may be held to a supervisor’s promise to an employee of secure employment, even if the supervisor did not have the company’s authorization to make such a promise.

  • Being aware of state and federal laws protecting certain classes of employees and the regulations for each. For example, those protected under the Americans with Disability Act (ADA). Another area of concern includes whether an employee has filed a workers’ compensation claim. For example, in California, terminating an employee who has filed a claim, intends to file a claim, or has testified in a workers’ compensation hearing could be considered workers’ compensation discrimination. Also, firing an employee who has reported any illegal activity of the company to a state or federal agency could be seen as retaliation for “whistle-blowing.”

If you are unsure about any of these potential minefields, make sure to speak to legal counsel.

These are just some of the things to review thoughtfully when looking to terminate an employee. In our next blog we’ll look at the best way to go about employee termination. Of course, always ensure your business is also well protected with insurance coverage should a employment-related suit arise. This means having Employment Practices Liability Insurance (EPLI) in place. At Axis Insurance Services, we specialize in EPLI coverage and would be happy to review your insurance program and provide you with an analysis and recommendations. Give us a call at (877) 787-5258.

 

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Blogged on: September 14, 2015 by Mike Smith
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