Terminating an Employee

Terminating an Employee by Alan Krystal

{4:24 minutes to read} While employers generally aspire to achieve a harmonious and long-term association with their employees, there will be times when employers will be forced to terminate an employee. When that happens, the affected employee will generally be upset and may be motivated to litigate if they believe that they were unfairly terminated.

In the absence of an employment contract, employment is “at will.” That means an employer can terminate an employee for any reason unless it can be established that the termination was in retaliation for an employee opposing or complaining about discrimination or harassment, or discriminatory and related to the employee’s:

  • Gender,
  • Age,
  • Religion,
  • Race,
  • Disability,
  • Sexual orientation, or
  • Other identified protected class.

If an employee does fall within a protected class (e.g., sexual orientation or identification, or pregnancy), there is the potential for litigation even if the employee was terminated for performance or economic issues.

Severance Pay or No Severance Pay?

The question that frequently arises is whether an employer should offer severance pay. In the event that an employer can establish that a severance was due to employee misconduct, it is generally not necessary to offer severance.

However, in the case where the termination was due to economic factors or performance-related issues, severance may be a good way to head off potential legal problems. The amount of severance to offer is generally tied to how long the employee worked for the company and their position.

In the event that a severance is offered, it is critical that there be a written agreement that contains the following:

  • A clear statement of the severance amount and when it will be paid
  • A statement that payment does not represent an admission of liability on the part of the employer
  • A release of all potential claims against the employer, including discrimination and civil rights claims
  • A statement that the employee will keep the terms of the agreement confidential, will not defame the employer, and will honor the terms of any existing non-compete or non-solicit agreement
  • A statement that the employee had the right to consult with an attorney prior to signing

In the event that the employee is over 40 years old, the agreement must contain a 21-day right-to-review period (or 45 days in the case of a group termination) and the right to rescind the agreement within 7 days after signing. Such language may be advisable in all cases to prevent allegations that the agreement was signed under duress.

If the termination was due to a layoff, the Older Workers Benefits Protection Act (OWBPA) requires the employer to inform employees in writing of the “decisional unit” –

  • The class or group of employees from which the employer chose the laid off employees
  • The “eligibility factors” for the termination program
  • Applicable “time limits”
  • The “job titles and ages of all individuals” eligible or selected, and not eligible or not selected, for the program

The severance agreement must also inform the employee that it does not waive an employee’s right to file a charge of discrimination with the Equal Employment Opportunity Commission (EEOC) or participate in an EEOC investigation or proceeding, although it does waive the employee’s right to receive any monetary compensation.

While a severance agreement may be a well-intentioned method of parting with an employee on amicable terms and preventing potential legal liabilities, those good intentions may be for naught if the agreement lacks specificity or is not compliant with applicable law. Therefore, an employer should always consult with an experienced attorney before proceeding.   

Alan Krystal


Alan Krystal

Alan H. Krystal, P.C.
631 780 6555