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Employee Termination: Ten Steps to Remember

Texas is an employment at-will state.  Therefore, you would think that terminating an employee in Texas should be an easy proposition.  After all, you can terminate an employee for any reason, or no reason, as long as you are not doing so for an improper purpose (such as race, gender, etc.).

However, the employee termination process is riddled with risk, and proper planning should be given to the termination itself.  The following are ten simple steps to help ensure the process goes smoothly:

First, ensure that you have in fact documented the reasons for the termination, and that the reasons stated are factual and comply with your employment manual or other rules that are being relied upon for termination.  If you are concerned about potential liability, it is a good idea to consult with employment counsel to map out your strategy for termination.

Second, ensure you have all of the employee's performance reviews and other file materials gathered and preserved.

Third, plan the termination process to ensure that it does not become any more confrontational or humiliating than necessary.  The termination should be done in a quiet office, not in public.   There should be at least two people present to confirm what occurred.  A post-termination memo should be drafted and placed in the file, particularly if anything happened in the termination session that causes you concern, such as threats by the employee.  If you are concerned the employee may become volatile or create a scene, make sure you have taken appropriate steps in advance to deal with those situations.

Fourth, maintain and utilize a termination checklist.  The checklist should contain a list of all steps necessary to ensure a smooth departure from employment.  For example, the checklist should include obtaining keys, passwords and other information necessary to access or deny access; removing computer access both internally and externally immediately before or after the termination meeting; retrieval of computer, laptop, cell phone and other company property that was provided to the employee; review payroll records to confirm status of PTO days, insurance claims, loans, 401k payments, and other necessary financial matters.

Fifth, the employee should be provided as little detail given as possible.  The best practice is simply to advise the employee that a decision to terminate the employee has been made, but without stating any particular reason for the termination.  The employee will likely seek to obtain an answer to the "why" question, but resist the urge to explain.  The meeting should be as short as possible.

Sixth, take steps to maintain the company's trade secrets and proprietary information.  Ensure that the employee does not leave the premises with such information and if the employee maintains any such information at home, make arrangements to pick up the materials.

Seventh, you should determine whether a severance payment is going to be paid.  Does the company have a written policy on severance payments?  Are they always paid?  If not required, what are the criteria for determining whether to pay a severance, and the amount of the severance payment?  If severance is paid, determine in advance whether you are going to seek or require a release in exchange for such payment.  If you are concerned about potential liability, consider offering additional, separate consideration in exchange for a release.  Asking for a release is often seen by the employee as concern about potential liability, and frequently causes the employee to seek legal counsel.  On the other hand, providing payment without obtaining a release does not give the employer an incentive to make the payment.  The proposed release should be given to the employee to review later and decide whether to sign.  Do not ask the employee to read and sign on the spot.

Eighth, the termination process should be handled in a professional manner.  Use this opportunity to ask the employee about their experience with the company, and to find out about potential issues that may be lurking with other employees.  The employee may decide to seek legal advice if he feels the termination process was handled unprofessionally or done in a manner that was more confrontational than necessary.

Ninth, do not offer a reference letter or help in finding the employee other employment.  If suit is filed later this type of statement could be used against you.

Tenth, make sure the employee can leave the premises without embarrassment.  Unless absolutely necessary, avoid the necessity of having someone stand over the employee while he packs his belongings and escorting the employee to the door.  The embarrassment of such an event is one of the primary reasons an employee seeks to hire an attorney.  Terminating the employee at the end of a business day, preferably after everyone else has left the building, is preferable.

Terminating an employee is always a stressful event.  Keep the above steps in mind to make the process a little easier.