What Can Go Wrong Even After Employee’s are Gone: Preventing Problems With Former Employees 

By: Debra Dawahare
Wyatt, Tarrant & Combs

Debra Dawahare

    Even after an employer has terminated an employee on cordial terms, or for well- documented and legally defensible reasons, terminated

employees can cause difficulties for the employer. What follows are a seven suggestions for anticipating and minimizing such problems.

# 1 Have Your Ducks in a Row at the Termination Meeting
The termination should be brisk, to the point, and as private as possible. Although the law does not require a termination letter, many employees request them. The employer may wish to have a brief termination letter prepared for the meeting, stating the real reason for the employee's termination, and perhaps mentioning when and how the employee will be paid any earned wages. The employer should retrieve any company property the employee may have. If the employee owes the company money, arrangements should be made for repaying it, and any agreements about setting off sums the employee owes against wages the employer owes should, at a minimum, be reduced to a writing signed by the employee. If the debt is significant, the departing employee should be asked to sign a promissory note. Employers should think ahead to whether the departing employee is likely to be a future security risk, and take security measures appropriate to the level of risk involved.

# 2 Protect the Company from Competition and Disclosure 
   After the employer has decided to fire someone is not the best time to recognize that that person stands to take away significant clients, or possesses proprietary information. Non-compete and non-disclosure agreements should be in place well before the termination occurs. The departing employee should be reminded of them, and furnished with copies, at the termination meeting.

# 3 Be Sure to Pay All Compensation Owed, On Time 
   Earned wages must be paid within eighteen days. Employers may not withhold wages from departing employees for cash shortages, breakage, or losses due to acceptance of bad checks, default of a customer's credit, non-payment for goods or services a customer has received, lost or stolen property, or property damage. Commissions or bonuses should be paid as agreed upon. Accrued but unused paid time off should be paid in accordance with company policy. 

# 4 Make a Considered Decision Whether to Contest an Employee's Claim for Unemployment Benefits
   Unless the employee is terminated for clearly documented misconduct or failure to follow a known and uniformly enforced work rule, the employee will be eligible for unemployment benefits. So long as the employee who is not terminated under those circumstances has not misstated the reason for termination in his application for unemployment benefits, the employer is wiser not to expend the effort to contest the claim. An employer who wishes to contest a claim should be prepared to take the matter seriously, recognizing that the evidence submitted in the unemployment proceedings may surface in court later if litigation ensues. While the decision awarding or refusing to award benefits is not admissible in later litigation, the evidence adduced at the agency level is admissible. If an employer anticipates further difficulties with an employee who has sought unemployment benefits, the employer should retain all materials generated at the agency level, and should obtain copies of the taped record of any referee's hearings.

# 5 Remember That Loose Lips Sink Ships 
   Defamation is becoming the new "tort du jour" for disgruntled former employees, who frequently claim that the employer, though its managers or supervisors, said false things about the employee that harmed the employee's reputation and made it difficult or impossible for the employee to find a new job. Supervisory personnel should be cautioned not to discuss the fact of or reasons for an employee's termination with anyone except other members of management. Other employees can simply be told that the terminated employee is no longer with the company, and how his or her duties will be handled in the future. 
    Although Kentucky's new "truth in hiring" statute says that an employer who gives prospective employers truthful information about a former employee upon inquiry will be immune from civil liability for having provided such information, the statute does not abrogate common-law torts such as defamation (if the former employee contests that the information given was "truthful") or tortious interference with prospective business relationships (if the former employee claims that the former employer said or did something that damaged his job prospects). Employers should be cautious about giving references, and are still well advised to keep to a neutral reference policy, confirming dates of employment and positions held, but offering no further information. In discrimination cases, negative references that are arguably unfounded may give rise to retaliation claims, which are difficult to defend. The "truth in hiring" statute place no affirmative duty upon current or former employers to disclose any information to prospective employers. 

# 6 Hold on to Pertinent Documents for at Least
Five Years 
Kentucky's anti-discrimination statute and some common-law torts have five-year statutes of limitation. Employers would be wise to hold on to personnel files and other major records for at least this long.

# 7 Unless Company Policy Mandates Severance Pay, Don't Offer it Without Getting a Release 
   If an employee is terminated for reasons other than misconduct, the employer may want to ease the transition by offering severance pay. In exchange, however, the employer should ask the employee to sign a general waiver and release. Finally, it bears remembering that even though Kentucky's courts still recognize the "employment-at-will" doctrine, every termination should be we well planned and well documented as circumstances permit.        cl


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