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termination policy

Tips for Creating Termination Policies for Your Business

Firing employees can be difficult and uncomfortable, but is nonetheless an important aspect of business operations. One way to simplify the process and minimize complications is to create the right termination policies for your business. Let’s now take a look at some important areas to cover so you can better manage employee resources and reduce the odds of problems arising.


Meeting Legal Requirements

Before diving in, you must first have an understanding of what’s legally required when terminating an employee. Without adhering to certain laws, you could find yourself in legal trouble with a lawsuit stemming from wrongful termination. One example of wrongful termination is firing someone based on discrimination relating to his or her race, gender, sexual orientation, religion, etc. Another is firing someone because they took off work for medical leave, family leave, jury duty or military leave. Also, you can’t fire whistleblowers that have exposed unethical or legal activity.

Besides this, you need to know which benefits your employees are legally entitled to. Some employees may be able to receive things like unemployment insurance, 401(k) plans and profit sharing plans. In some cases, terminated employees may still be eligible to receive temporary health insurance coverage as well. This guide from the SBA is helpful and will explain how to meet legal requirements in better detail. You may also want to consider getting liability insurance to protect your business from litigation.


Be Clear About What Warrants Employee Termination

When hiring new employees, it’s important that you’re on the same page right from the get go. Accordingly, it’s smart to create a list of criteria that serves as grounds for termination. This might include consistent poor performance, insubordination, misconduct and company downsizing where an employee’s position is no longer required. Doing so will ensure that everyone knows what’s expected of them and what behavior will lead to employees being fired. This should prevent unwarranted accusations and make it easier to terminate an employee who breaks the rules without unnecessary drama.


Employee Termination Notice

There are no definitive requirements in America from the Fair Labor Standards Act (FLSA) demanding that employers give their employees termination notice. However, you may want to consider developing some guidelines about termination notice. Giving notice when possible is beneficial because it can reduce hostility, improve your business’s reputation and create an overall better company culture. This is especially good when terminating loyal employees who have given several years of service so they can have time to find an alternate means of income.

You must also determine your policy about giving an employee their final paycheck. While there are no federal laws about immediately giving out a paycheck, certain states do have legal requirements. That’s why you should contact your state labor office via this resource and inquire into this detail.


Documenting Employee Performance

Another way to protect your business is to maintain accurate records of an employee’s performance and/or behavior. To prevent accusations of wrongful termination or other complaints, you should document as much as possible and keep it on file. According to the SBA, “despite the “at-will” policy, you should document instances of poor performance and tardiness, and maintain good records of employee performance reviews and any previous disciplinary interventions. This will provide legitimacy to your actions and prevent any complaints, lawsuits or accusations that termination was discriminatory.”

Creating termination policies is an effective way to prepare your business for when you must inevitably fire employees. This should make a tricky task somewhat simpler and hopefully keep your company out of any legal backwater later on.



Compliance Guidelines for Hiring and Terminating Seasonal Employees

It’s common for some businesses to experience spikes in demand during certain times of the year such as the holidays or summer. To keep up with demand, employers may bring on seasonal employees for a brief period and let them go once normal demand resumes. Because there can be confusion concerning this type of employment, it’s important for employers to understand federal and state laws. Here are some guidelines to streamline the hiring/firing process and ensure that your business remains compliant.


Hiring Seasonal Employees

Although they will only be with you for a short time, many of the same labor laws that apply to permanent workers also apply to seasonal workers. For example, employee discrimination and workplace safety laws are the same. When hiring minors under the age of 18, you will encounter the same restrictions where individuals 16 and 17 can’t perform dangerous duties. Minors age 14 and 15 have even more restrictions where they can only work limited hours. If you hire immigrant workers, you will have to follow the same protocol as you would for full-time employees.

You can learn more about the details concerning laws and regulations with the Employment Law Guide from the U.S. Department of Labor. Because there can be nuances with state labor laws, it’s also necessary to know the exact laws of your state, which you can find in this resource.

In terms of benefits, you are still legally required to offer certain ones to seasonal employees. Some of which include Worker’s Compensation Insurance and unemployment benefits. Worker’s Compensation can be through either a commercial carrier, a state insurance program or on a self-insured basis. Unemployment benefits differ depending upon your state, and this resource will let you know what’s required of you. Other benefits such as retirement, dental, paid leave, etc. are optional as long as a person has worked no longer than 120 days.

You must also withhold taxes the same way that you would for permanent employees and report them to the IRS. Finally, you are responsible for withholding Social Security and Medicare taxes from seasonal employees and pay a matching amount.


Terminating an Employee

Right from the get-go, it’s important to be up front with seasonal workers about the length of employment. You shouldn’t hint at the possibility of long-term work because it could cause issues when time for termination inevitably comes. According to Taxing Subjects, it’s smart to use a formal offer letter that “states the normal term of seasonal employment, but also should provide for early termination without cause or notice. The company should reserve its right to treat the employment as “at will” during the term and to terminate the temporary employee without cause or notice. The offer letter should also specify the firm’s expectations for behavior, dress, performance and adherence to company policies.”

One highly important thing to avoid is firing a worker based on any form of discrimination such as gender, race, sexual orientation, religion, etc. This can open a can of worms, and you can find yourself with an ugly lawsuit in some cases. Specific employment discrimination laws vary by state, but this guide from Nolo will get you up to speed for your state. Also, you should pay a terminated seasonal employee all due salary promptly to avoid any issues. Typically, you have three days after termination to do this.

Although many of the same laws that apply to permanent workers also apply to seasonal workers, there are a few small differences. Understanding how to approach this matter should keep your business compliant and prevent needless problems. Ultimately, this should provide your business with the manpower it needs and minimize any hassle.