When Workers Leave FAQ

What you need to know when an employee leaves -- including what to do about paychecks, severance, and references.

How do I give a reference for a worker I had to fire?

The course of action least likely to land you in legal hot water is to say as little as possible. Many employers adopt a policy of giving out only dates of employment, job title, and final salary to prospective employers. As long as you stick to easily documented facts and keep it brief, you will stay out of trouble.

If you decide to give more expansive references, use caution. If you make false statements about a former employee with the intent to harm his or her reputation, you might be sued for defamation.

For more information, see Nolo's article Giving References for Former Employees.

Am I legally required to pay severance to workers when they leave?

Probably not. Unless you lead your employees to believe that they are entitled to severance (through language in an employment contract, employee handbook, or oral promise, or by routinely paying severance to departing employees), you are probably under no obligation to do so.

However, many employers customarily offer severance pay to all long-term employees. A severance package helps ease the burden of being fired and may help the employee transition to a new job. A severance package may also help soothe the bad feelings of a fired employee. Not only will this ease your conscience when you have to fire employees, it will also make lawsuits from former employees less likely. After all, a former employee who has been rewarded for prior service to the company may not be particularly motivated to sue.

For ideas on whether to offer a severance package and what to include if you do, see Nolo's article Should You Offer Severance Pay?

Can we fire our employees for any reason, as long as they work at will?

Not quite. You may fire an at-will employee for any reason that isn't illegal. For example, you may fire an employee because you are restructuring, the employee was a poor fit, or you just didn't like the employee. However, you may not fire the employee for discriminatory reasons (because the employee is a particular race or religion, for example). You may not fire the employee in retaliation for reporting workplace problems. And, you may not fire the employee for exercising a legal right, such as the right to vote or take family and medical leave. For more information on illegal grounds for firing, see Nolo's article Illegal Reasons for Firing Employees.

How can I make sure I won't get sued by a fired employee?

Well, you can't be absolutely certain you won't get sued, no matter what you do. But there are steps you can take before you fire someone to make sure that you've considered all of the angles. For example, you should investigate the situation for which you're considering termination. You should review the employee's personnel file. And, you should run your decision by another manager -- or, in some situations, a lawyer -- before you carry it out. For more information on the steps to take before firing someone, see Nolo's article Should I Fire an Employee?

How should I decide which employees to lay off?

When you have to conduct a layoff, you should consider your company's plans going forward. Are you expanding in some areas and shrinking in others? Which jobs will be absolutely essential in the future? Based on this information, consider which departments can be safely cut and what criteria you want to use to decide whom to keep. Once you've come up with your layoff goals -- which departments will be cut, by how much, and according to what criteria -- then individual managers can begin applying those criteria to their staff to decide who will be subject to layoff.

For more information on deciding whether to conduct layoffs and whom to lay off, see Nolo's article Making Layoff Decisions. For information on actually implementing a layoff, see Nolo's article How to Conduct a Layoff.

Is there anything I can do to protect myself from lawsuits by former employees?

Yes. You can ask the employee to sign a release -- an agreement not to sue you for being fired -- in exchange for certain benefits. Some employers routinely ask employees to sign a release as a condition of receiving a severance package.

If you decide to seek a release from a departing employee, you will probably need the help of a lawyer. In some states, a release must contain specific language or a court will not honor it. And you will want to tailor the release to meet the needs of your company and the particulars of the employment situation.

For more information on releases, see Nolo's article Using Severance Agreements to Avoid Lawsuits.

To Learn More

For a complete guide to your legal rights and responsibilities as an employer, get The Employer's Legal Handbook: Manage Your Employees & Workplace Effectively, by Fred Steingold (Nolo).

Are there any rules about when I must give workers their final paychecks?

Yes. Most states have laws requiring employers to give employees their final paychecks very soon after termination -- sometimes on their last day of work. This may mean that you cannot wait for your usual payroll process to issue the final check. In some states, these deadlines depend on whether the employee was fired or quit. For a chart of each state's laws, see Nolo's chart Final Paychecks for Departing Employees.

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