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In order to handle challenging employment situations humanely while at the same time protecting the organization from liability, nonprofit employers should address the following eight questions when facing the need to terminate an employee:

  1. Is there an employment contract that limits/defines the grounds for termination?

    If so, an analysis should be done to ensure that the criteria are met.

  2. If the employee is at-will (not covered by an employment agreement), is there anything in the Employee Manual that requires steps to be taken before the employee may be terminated?

    For example, many Employee Manuals provide for internal dispute resolution or progressive discipline leading up to termination, requiring probation or suspension before the employee may be fired. All Employee Manual provisions should be reviewed to ensure they present no impediment.

  3. Is the employee a member of a protected class, and is there any reason to believe the recommended termination is connected to improper discrimination?

    In general, at-will employees may be terminated with or without cause, but they may never be terminated based on their membership in a protected class (such as race, gender, religion, or disability). Employers should be sure there is no improper motive in terminating an employee before moving forward with the termination.

  4. When must final pay be provided, and what must be included?

    Most states have rules around when final pay must be delivered to terminated employees. In addition, internal policies and/or state laws may dictate whether accrued, unused sick days and vacation time must be paid out with the final paycheck. Employers should ensure they are aware of, and compliant with the relevant deadlines and requirements.

  5. What information should be provided to the terminated employee?

    Many states call for employers to distribute information about applying for unemployment insurance benefits, and, depending on the particular circumstances, federal or state laws may require notification regarding a terminated employee's entitlement to continue health benefits. Employers should ensure all relevant information is timely provided.

  6. Does the employee have any employer property in his or her possession that must be returned?

    Employers should require terminated employees to return all tangible employer property as of the termination date, including such items as keys, laptops and documents. They should also take steps to eliminate the terminated employee's access to intangible items such as trade secrets and intellectual property. Where necessary, passwords should be re-set. Employers with particularly sensitive proprietary materials should consider having employees sign an NDA (nondisclosure agreement) upon hire, under which the employee promises in advance not to access or use sensitive information upon separation from employment.

  7. Should the employee be given severance pay?

    Employers should first determine whether there is any pre-existing promise of severance pay (typically in an employment contract, offer letter or Employee Manual). If a commitment already exists, the severance should be paid out. If no commitment exists, an employer is free to offer severance either as a gesture of goodwill or in exchange for a release of claims to be signed by the employee (or both). Where there is a pre-existing commitment to pay severance, a release of claims from the terminated employee can still be sought, but only in exchange for an additional amount over and above what is already due.

  8. Should the employer agree to give a reference?

    The safest course for employers is to have a blanket policy of not giving references - either negative or positive - to prospective employers of their former employees. This is because references could expose the former employer to potential liability for torts such as defamation or tortious interference with business relations, either directly, in the case of a negative reference, or by negative inference in the case of positive references (i.e., no reference for employee A can be considered negative where positive references are given for employees B and C). If prospective new employers ask, former employers should simply confirm dates of employment and position of former employees.

As noted, there may be a host of other circumstance-specific issues to address in connection with an employee termination, and employers are encouraged to consult with competent counsel for guidance in navigating these delicate matters.