Terminating an Employee

Terminating an Employee https://wahospitality.org/wp-content/uploads/2015/04/Fired-940x198.jpg

Employers must take a great deal of care when terminating an employee. This summary outlines some of the legal claims that can result from terminations and some suggestions to follow during the termination process. This summary does not constitute legal advice—if you have specific concerns, consult an attorney.

In general, unless otherwise agreed to or modified by the statements or conducts of the employer, the employee/employer relationship can be described as “at will.” This means that either party may terminate the working relationship for any reason or for no reason. This sounds simple, but in practice, termination can be complicated. Court decisions, federal and state laws, and even some municipal codes have carved out exceptions to the at-will doctrine.

These exceptions are briefly summarized below.


Exceptions to the At-Will Doctrine:

  • Discrimination – Anti-discrimination laws prohibit employers from terminating an employee based on certain personal characteristics, including race, national origin, religion, gender (including pregnancy), age (40 years and older), disability, and sexual orientation (including gender identity).
  • Express Employment Contact – An express employment contract is a written or oral agreement by two or more parties to enter into an employment relationship. If the terms of such an agreement provide for a specific period of time and/or require “just or good cause” for dismissal, the at-will doctrine will not apply.
  • Example: A restaurateur hires a chef for six months by verbal agreement. Three months later the owner changes the menu and wants to dismiss the chef. The owner cannot do so unless the employee agrees because the parties expressly agreed that the job would last six months.
  • Implied Contract – Employers cannot terminate an employee if doing so breaks an implied contract with the employee. Implied contracts frequently arise when written materials, such as employee handbooks, contain specific promises of treatment in specific circumstances and are circulated without sufficient disclaimers that the contents do not constitute a contract. To protect yourself from creating an implied contract, consult an attorney any time you implement an employee handbook or similar written materials.
  • Example: A new employee is given an orientation packet containing restaurant policies. It states that new employees are hired subject to a three-month probation period. This statement may imply that the employer must have “good and just cause” to terminate the employee after the probation period ends.
  • Public Policy- Employers cannot terminate an employee if doing so would violate public policy. Examples include:
  • Performing a public duty or obligation, such as reporting for jury duty or delivering court-ordered testimony.
  • Whistle blowing, including reporting conditions that may be dangerous to health, safety, and general welfare.
  • Refusing to commit an illegal act.
  • Filing a workers’ compensation claim.
  • Emotional Distress/Defamation – If termination occurs in such a way as to cause severe distress to the employee, particularly if other employees are present, the employer may find itself liable to the employee for intentional infliction of emotional distress and/or defamation. Employers can reduce this risk by minimizing any potential embarrassment of the employee, and by discussing termination details only with those who have a “need to know.”
  • Example: On termination an employee was physically marched off the premises by two security guards. The court ruled the employee had a claim for emotional distress because of the humiliation she was subjected to.
  • Implied Covenant of Good Faith – If an employer owes a benefit to the employee based on either an implied or express employment contract, the employer may not terminate the employee to deprive the employee of that benefit.
  • Example: An employee is promised a bonus based on meeting a sales or performance goal. The employer cannot terminate the employee to avoid paying the promised bonus.


Procedures for Terminating an Employee

Notice need not be given ahead of time. While there is no definitive procedure to follow when terminating an employee, keep the following in mind to minimize the legal risk associated with a dismissal.

  • Have more than one manager present to avoid later disputes over what was said.
  • Document what is said to the employee and his or her response.
  • Communicate the reasons for dismissal in an honest and clear manner.
  • Avoid accusations. Use phrases like, “We have reason to believe you have done ‘X’ illegal activity”.
  • Keep the meeting brief and to the point. There should be no doubt that the employee is being terminated.
  • Terminate the employee in a private setting to minimize any potential embarrassment.
  • Conduct the meeting with dignity and respect. No matter what the circumstances, termination is distressing and traumatic.
  • Do not communicate the reason for termination to other employees or to outside parties.
  • References to any employee’s future employer should be limited to: the dates of employment; the employee’s position; his or her ability to perform the job; the diligence, skill, or reliability with which the employee carried out his or her job duties; and any illegal or wrongful act committed by the employee, if related to job duties. Retain a written record of the identity of the person or entity to which information is disclosed for a minimum of two years from the date of disclosure. The employee or former employee has a right to inspect any such written record upon request, and any such written record shall become part of the employee’s personnel file. This reference policy should be consistent for all employees— both those who have been terminated and those who have voluntarily resigned.
  • Pay termination wages on the next regularly scheduled payday.


Tips for Avoiding Potential Lawsuits

  • Keep Thorough Records – Employers can protect themselves against potential claims by keeping well-documented records of all employees, especially of disciplinary actions. Write up any warnings that have been given, including dates and the names of those present. Record when employees were trained on cash procedures, care of equipment, locking up for the night, etc. Your records should substantiate that all employees were trained on correct procedures, that all employees were treated equally, and that individual performance issues were promptly addressed with an opportunity for correction of such issues.
  • Adopt an Anti-Harassment Policy – Harassment is any unwelcome conduct based on an employee’s membership in a protected class (e.g., race, national origin, gender, age, disability, religion, and sexual orientation), that either (a) culminates in a tangible employment action (such as termination or demotion), or (b) is sufficiently severe or pervasive to create a hostile work environment. An employer may be legally liable for harassment by both employees and non-employees. However, employers may limit their exposure by adopting, disseminating, and enforcing an anti-harassment policy. Among other things, an effective anti-harassment policy should be written and well disseminated; include a definition of workplace harassment; discuss harassment by all potential actors, including supervisors, co-workers, and non-employees; encourage employees to report harassment right away; create multiple paths for reporting, including a path outside the supervisory chain of command; and assure that inquiries and necessary corrective action is taken promptly. Employers who wish to adopt an anti-harassment policy should consult with an attorney.
  • Get Legal Advice – It is always in the employer’s best interest to consult an attorney before terminating an employee. Termination can result in expensive litigation if it potentially constitutes wrongful termination under the various federal, state and local laws that regulate employment. If you have any concern at all about the possible consequences of terminating an individual, consult your attorney first.

If you have any further questions about this topic or others, see the Department of Labor & Industries’ Help for Small Business page at http://www.lni.wa.gov/Main/SmallBusiness/.


Rev. 12/31/17


This article is an excerpt from the Handbook for Excellent Restaurant Operations (HERO), published by the Washington Hospitality Association.  Want a hard copy of the whole manual?  It’s one of the many benefits of becoming a member!  Find out more about joining the Washington Hospitality Association here.

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