You actually begin laying the groundwork for successfully terminating an employee when you are hiring them. If you establish your employment relationship properly from the start, then you will face fewer possible challenges later on. The IRS considers most administrative professionals to be employees, rather than Independent Contractors. Inappropriately classifying an employee as an independent contractor is actually illegal. If you do so, you face a significant risk of being sued by the employee and could incur large fines from the IRS. Here is an example of how a real estate agent gets discovered and penalized for misclassifying their employee:
This contract should lay out the specific terms of their employment, including work hours, job duties and responsibilities, and all types of compensation and benefits that you are offering. The agreement must also include an employment-at-will clause. In most states, employees are presumed to be “at will”, which means that they can be terminated for any legal reason without warning. Illegal reasons for termination include discrimination on the basis of race, gender, or religion. However, if the contract does not specify that the employment is “at will”, then an employee can only be terminated for reasons that are stated in the contract.
Step One – Be sure to have figured out all the details of the termination ahead of time, including the dates and amounts of paychecks and information about benefits.
Step Two – Prepare for the conversation by writing down what you will say to your employee. For example, you might write, “I am sorry to let you know that as a result of company restructuring, your employment is being terminated. Here is your final check that includes payment through July 1, two weeks severance pay, and any vacation you have earned.” When you terminate them, have their final check ready to hand to them.
Step Three – Have another member of the management team present when you tell the employee that their employment has been terminated. Deliver this news in a private office area to protect the employee’s privacy and dignity.
Step Four – Answer any questions the employee may have about why they are being let go in a manner that is non-combative. Do not engage in a discussion about the specifics of why they are being terminated.
Step Five – Allow the employee a few minutes to express their emotional response to the news, and then walk them to their desk so they can gather their affairs. Ask them for their parking pass and key. Then accompany them to the door.
This post is intended to provide information and does not constitute legal advice. If you need legal or other advice concerning the matters discussed here, you should contact your attorney or CPA.
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