Terminating an Employee

Introduction

Having to let go an employee is an unpleasant, but often necessary, part of running a business.
When it does become necessary, it is important that it be handled in a way that will free you of
any legal repercussions.

Under What Circumstances Can an Employee be Fired?

The basic rule is articulated under California Labor Code section 2922.

" 2922. An employment, having no specified term, may be terminated at the will of either party on notice to the other. Employment for a specified term means an employment for a period greater than one month."

Sounds simple, but today things are more complicated. The rules are quite different for
employees who have a contract for a specified term. The problem here is that a such a contract
can be oral, or even implied in cases where there is no express oral or written agreement. 
Careless employment practices can result in a lawsuit in which a court imposes upon the
employer an employment contract even when there was no intent by the company to enter into
one. This can make firing an employee risky, even in cases where you can demonstrate they are 
incompetent. Fire someone for the wrong reason or in the wrong way can result in losing such a
lawsuit and having to rehire the employee and/or pay a large money judgement to them.
Fortunately, there are, ways to reduce this risk. Several questions need to be asked when
considering a termination.

Is There a Written or Oral Employment Contract?

Written contracts can be a two edged sword. They can limit your right to fire, but also can spell
out an employee's obligations to the business. When an employee doesn't perform well, he or she
is likely in breach of the contract and you may then have the legal right to terminate the
employee. There are many legal subtleties in the interpretation of contracts so it is wise to
consult with a lawyer before firing an employee who has a written contract.

If there is no written contract, you still may be limited in your right to fire. There can be a
number of issues that need to be examined. There are many ways in which a contract might be
implied:

• In some cases, there really is written or oral contract that promises the employee a job for a fixed period of time.
• Your employee handbook may contain language a court might interpret to be a promise of job security.
• There might be other written policies or memos that make such promises.
• Causes for termination listed in an employee handbook or memo could be done in a way that limits your options.
• At the time of hiring, oral representations may have been made regarding job security.
• Companies sometimes have written or customary procedures that precede termination.

Are There Lawful Reasons for Firing the Employee?

Firing someone for the wrong reason or in the wrong way, can result in losing a subsequent
wrongful termination lawsuit. For example, if you allow some employees engage in prohibited
conduct, you'll be hard pressed to legally justify the firing of others for the same conduct.
Whatever the reason is for firing an employee, it's absolutely essential that you treat all
employees fairly and evenhandedly.

Because of the risk, and uncertainty, involved in this area of litigation, and to head off the
possibility that the employee may base a wrongful termination lawsuit on illegal conduct or
motives on your part, you are always in a better position if you can demonstrate real, and lawful,
reason for the firing.

Some Lawful Reasons to Support Firing an Employee:

• Disclosing company trade secrets;
• Poor job performance;
• Refusing to follow instructions;
• Abusing sick leave;
• Violations of law on the job;
• Being late or absent excessively;
• Violating company rules;
• Dishonesty;
• Endangering the health and safety of others.

Before You Terminate an Employee

Because firing an employee can have serious legal consequences, it is recommended that the
following steps be taken as a minimum:

• Verify that the firing wouldn't violate anti-discrimination laws or other statutes.
• Examine whether the firing would be a breach of written or oral contract, including assurances of job security and written company policies such as statements made in an employee handbook.
• Give the employee documented warnings that he or she faced being fired, unless there is extreme conduct that warrants immediate firing.
• Always follow your stated company personnel practices.
• Consistently follow the same procedures in similar situations.

A Final Word

As small companies become successful and begin to expand, the responsibility of employee
relations is often delegated to a ever widening circle of individuals. Because consistency in the
administration of employee relations is vital to protecting a companies legal interests, it is often
wise to engage an attorney for assistance in developing an employee relations plan for the
training of supervisory staff, including carefully drafted company policies and other written
materials. The investment of a few dollars early on can result in the savings of thousands, even
millions of dollars to a growing enterprise.

Copyright 1995 by Attorney Ken Koury.

Here are some ways to contact Ken.