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Posts in Termination of Employees.
January 6, 2014
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As a business owner, it is inevitable that there will come a time when, for some reason or another, you will need to terminate an employee. In many circumstances an employer will use a severance agreement to obtain a release for any potential liability under which a severance amount will be paid. As with many employee-employer issues, there are certain potential pitfalls that surround severance agreements that an employer needs to take into consideration when offering severance.

Potential Pitfalls in Offering Severance Agreements

Put the Agreement in Writing:  This first issue seems like an obvious requirement, but in the event an employer is offering severance payment it is the best business practice to put it in writing that contains a release for the employer.  Unless agreed to otherwise, an employer is under no obligation to offer severance pay.  In the event the employer wants to pay such amounts, it needs to get the agreement memorialized in writing.

September 5, 2013
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Employers frequently use severance agreements when terminating an employee or when an employee resigns with the hopes of reducing potential liability.  In our practice, we often advise employers to offer severance pay that is memorialized in an agreement containing a general release, covenant not to sue and often indicates that the employee is resigning.  Since an employee has no legal entitlement to severance pay, the majority of the time, he or she accepts the offer and typically the employer does not hear anything else from the employee.  However, this is not the case with all employees and it is imperative employers understand the benefits and downsides to severance agreements and how the EEOC and Virginia Unemployment Commission view these agreements.

In practice, severance agreements significantly reduce a company’s liability exposure by minimizing the risk of litigation and administrative proceedings.  Offering pay that an employee is not already entitled to will often placate an otherwise disgruntled employee by providing additional financial assistance.   Typically a severance agreement will offer severance pay, include a confidentiality and non-disparagement clause, a general release by the employee of all claims and often indicate that the employee is resigning from his or her employment. 

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Terminated employees qualify for unemployment benefits when they are unemployed without fault on their part.  Recently the Virginia Court of Appeals determined that fault can include conduct that occurs outside of the workplace.

The Case

The case is Francis v. VEC & Wal-Mart Associates, Inc.  Francis was employed by Wal-Mart from 6/2006 through 4/2008.  During her time with Wal-Mart she had no workplace discipline issues.  Outside of work she was charged with felony welfare fraud.  Even though she was not required to do so, Francis disclosed the charges to her superiors.  Her superiors rewarded her openness by suspending Francis and eventually forcing her to resign in lieu of termination.

GavelIn our last two posts, we discussed terminating an employee and the importance of documentation. Earlier this week, in an opinion issued by the 4th Circuit Court of Appeals in Richmond, Virginia, Employers were provided with another example of why documentation is so important in the employer/employee relationship.  

The Case

The facts of the case are fairly straightforward: (1) Employee was terminated due to poor performance; (2) At the time she was terminated she was also pregnant; (3) Employee filed a lawsuit claiming pregnancy discrimination under Title VII. 

Stick figure pink slip (00092262).JPGThis is part II of my post from Friday.  The following procedures provide a basic template that you can tweak to fit your company.

Step One—Verbal Warning.  Have the employee’s supervisor discuss with the employee the problem that has occurred and the corrective measures that need to be taken. Have another manager sit in on the meeting. Make notes to the file documenting the meeting and problems and have both managers date and sign the entry.

Step Two—Written Warning. Have the employee’s supervisor draft a written warning that states the nature of the violation and the plan for correcting the behavior.  Have the supervisor discuss with the employee the problem that has occurred and the corrective measures that need to be taken. An additional step that might be appropriate is putting the employee on a probationary period. Have another manager sit in on the meeting. Make additional notes to the file documenting the meeting and problems and have both managers date and sign the entry.  Also have the employee date and sign the written warning.

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Do you have an employee whose performance isn't cutting it? If so, you will want to read this two part series on considerations and steps to take before terminating an employee.

Many employers terminate employees without following some basic procedures that take little effort on the part of the employer but can prevent major headaches later.   Following these rules prior to termination can help employers avoid problems post-employment and can provide a full defense to an employee’s claim of wrongful termination.

If you have an employment agreement with the employee, you will need to follow the provisions governing that agreement.  However, the majority of employees are employees at-will and therefore the following steps and procedures are highly recommended for employers.