Four Ways to Make Terminations Less Stressful

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In the 2009 movie Up in the Air, George Clooney and Anna Kendrick play corporate downsizers—HR consultants that companies across the country hire to terminate employees for them. The practice wasn’t exactly common at the time, and fortunately never took off, but it was believable.

Terminations are nerve-wracking. You’re doing something that’s going to cause another person incredible stress and financial hardship. It’s not easy to do, even when it’s deserved.

Nothing you can do will make terminations entirely stress-free. But terminations are often far more challenging than they need to be. No, we don’t recommend flying in Anna Kendrick and George Clooney to conduct your terminations, as tempting as that may be. But good preparation and the right attitude will make a big difference. Here are four general practices we do recommend:

Know Your Compliance Obligations Ahead of Time

Look up applicable laws regarding termination procedures and paperwork, accrued paid leave, severance pay, COBRA, and final paychecks before conducting a termination meeting. If you’re laying off a number of employees, you may have specific notice obligations under the federal Worker Adjustment and Retraining Notification Act (WARN) or a similar state law. You don’t want to miss any steps or deadlines. If the employee works in a different state, refer to that state’s laws.

You should also understand how antidiscrimination laws work in practice and take steps to reduce the likelihood that the terminated employee will file a discrimination claim. While at-will employment allows either the employer or the employee to terminate the employment relationship at any time, with or without notice and with or without cause, it does not permit you to terminate employment based on the employee belonging to a protected class (e.g., race, sex, religion, national origin).

Along similar lines, screen the termination to make sure it’s not based on a protected activity. Myriad state and federal laws protect employees from being discharged for certain reasons. For example, Section 7 of the National Labor Relations Act entitles employees to talk about their wages or complain about working conditions with each other. A handful of states prohibit employers from terminating employees for engaging in lawful activities outside of work. Reporting unsafe working conditions is protected. And don’t forget about the many leave laws that vary from state to state: from sick leave to military leave to school-involvement leave and more, you may be surprised by the types of absences that are protected.

There’s even some risk when the termination is for cause. A terminated employee could claim your reasoning is just for show, and they were actually terminated for an illegal reason. That risk grows exponentially when you don’t provide the employee with a sensible reason for the termination or when you’ve been inconsistent in applying your discipline policies.

Consequently, the safest way to terminate employees is to communicate performance issues to them, give them a chance to improve, and have documentation that justifies the legitimate business reasons behind the termination. This documentation would include policy violations, instances of poor performance, and any disciplinary or corrective action taken. The documentation should indicate that the company communicated the issues to the employee. The more you can do to show you had a legitimate business reason and gave them an opportunity to improve, the harder it will be for an employee to fill in the blank with their own illegal reason for termination. The termination will be less risky, and you’ll feel better about the decision because you treated the employee fairly.

Approach Terminations with a Positive Mindset

Painful as they are, terminations can be a good thing. Yes, even for the terminated employee. Let’s say you have an employee who’s continually struggled to meet your performance expectations. Guidance and training haven’t proven fruitful. No amount of coaching has or would enable them to do the job better. There’s no other job in your organization they could do. So now you have a choice. You can keep them on, tolerating subpar performance and accepting its consequences for your organization, or you can let them go. In this case, letting them go is probably the better option for both parties.

You’re not doing this struggling employee any favors by keeping them in a position where they can’t be successful. You’re also setting them up for failure in future roles. Months or years of experience listed on their resume may help them land a future job, but if it’s a job they actually can’t do, their future employer will have the same choice you’re facing. And the employee will be no better off.

This employee has their own hard choices to face. They may need to develop skills beyond what you can provide, rethink what kind of work they’re suited to do, or make better choices about their future. Whatever the case, if you allow them to coast along, they’ll never thrive. Termination is in the employee’s best interest in these types of situations. We wouldn’t recommend telling the employee this, but it’s something to keep in mind when making this difficult decision.

In the case of layoffs, where the employee is not at fault, figure out a few ways you can help them land on their feet. Provide a severance if that’s an option. Remind them that they can apply for unemployment. Help them update their resume. Inform them of any opportunities you know about and facilitate networking connections if you can. In short, make the layoff meeting a productive discussion about their future. That’s going to be a hard discussion, no doubt, and it’s possible the employee won’t want to hear it. You can honor that too.

Be prepared for strong emotions like sadness and anger to surface during the termination meeting so that you can respond with confidence. While there’s a fine line between allowing space for initial processing and unnecessarily prolonging the meeting, you can acknowledge and validate the employee’s feelings without changing the end result. Although escalations into violence are rare, review your company’s procedures ahead of time for dealing with such situations.

Don’t Let Terminations Be a Surprise

Have you ever gotten an email from a boss saying something cryptic like “We need to talk”? You may immediately begin to worry. Are you in trouble? Are you getting fired? Until you have that talk, you can’t breathe a sigh of relief.

Why would your mind go there? It might be because you’re not clear on what could get you into trouble at work and you don’t feel safe. Vague out-of-the-blue messages are seldom a good idea. They’re a terrible practice when people believe that they could realistically lose their job for reasons unknown to them. That belief puts people on edge, inclining them to assume the worst when their manager reaches out without any context. Surprise terminations encourage everyone to adopt that belief and incentivize a culture of fear.

Terminations should never be a complete surprise. Yes, at-will employment allows you to terminate employment for any reason or no reason at all (as long as it’s not an illegal reason), but please don’t fire someone for any reason or no reason at all.

Clear rules and consistent practices are your friends here. Inform employees what’s expected of them and what could result in their dismissal—the employee handbook is a good place to do this. Enforce your rules consistently, not willy-nilly. If you let employees get away with policy violations, but then suddenly switch to strict enforcement, you’ll only create confusion and fear. You don’t need to follow the same process for every kind of offense—some behaviors may warrant immediate termination, for example. But don’t bend the rules for some employees and not others.

A coaching culture can also be your friend, especially with employees who are struggling to perform to expectations. If managers regularly work with employees on improving their performance and enhancing their skills, they’re in a good position to spot signs early on that a struggling employee may be more successful and happier doing something else. In some cases, good coaching means guiding an employee out of the organization. A loss is a loss, but guiding employees toward more suitable work elsewhere is usually much smoother and less disruptive than an involuntary termination. Plus, they leave with goodwill towards you. In situations where termination is the right call, if managers have had conversations with employees ahead of time about the consequences for failing to improve, they’ll have softened the blow when it eventually comes.

Lastly, don’t hide bad financials from employees. If business is slow and a layoff is possible, employees need to know so they can make informed financial decisions and contingency plans. They’ll be extra angry if they feel they’ve been lied to or misled. In an age where companies go viral on the internet for poorly conducting layoffs, it’s in your interest to be transparent and honest.

Stay Organized

Develop a checklist ahead of time of things that need to be covered. This list might include specific equipment and keys that need to be returned, passwords and access cards that will need to be disabled, coverage of the employee’s workload until a replacement is hired, notification to coworkers, vendors, and customers, COBRA information, a current address for W-2s, and what you’re going to say during the termination meeting.

Checking off boxes may feel impersonal, but the day of a termination is at the very least challenging for all involved, and at the worst chaotic, especially if you’re disorganized. Keeping the process smooth and orderly is both kind and professional.

Article content provided by My HR Support Center

The American Rescue Plan Act

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The American Rescue Plan Act (ARPA), which is the latest bill to address the ongoing economic impacts of COVID-19, has been signed into law. Most aspects of the law do not directly affect the HR function, but two of those that do—optional extension of sick and family leave and establishment of COBRA subsidies—are outlined below.

OPTIONAL EXTENSION OF SICK AND FAMILY LEAVES

Part of ARPA is an extension of the current tax credit scheme for Emergency Paid Sick Leave (EPSL) and Emergency Family and Medical Leave (EFMLA) under the Families First Coronavirus Response Act (FFCRA). The FFCRA required many employers to provide EPSL and EFMLA in 2020, but became optional when it was previously extended to cover January 1 through March 31, 2021.

The new extension under ARPA takes effect April 1, 2021, and lasts through September 30, 2021. Like the current version, it remains optional. In addition, tax credits are available but only to employers with fewer than 500 employees and up to certain caps. To receive the tax credit, employers are required to follow the original provisions of the FFCRA. For example, they can’t deny EPSL or EFMLA to an employee if they’re otherwise eligible, can’t terminate them for taking EPSL or EFMLA, and have to continue their health insurance during these leaves.

Emergency Paid Sick Leave (EPSL) Changes

Here are the key changes to EPSL, in effect from April 1 through September 30, 2021:

  • Employees can take EPSL to get the COVID vaccine and to recover from any related side effects.
  • Employees can take EPSL when seeking or waiting for a COVID-19 diagnosis or test result if they’ve been exposed to COVID-19 or if the employer has asked them to get a diagnosis or test. (Previously, time spent waiting on test results was not necessarily covered, which seemed like an oversight.)
  • Employees will be eligible for a new bank of leave on April 1. Full-time employees are entitled to 80 hours while part-time employees are entitled to a prorated amount. Unused hours from before April 1 will not carry over.
  • Employers can’t provide EPSL in a manner that favors highly compensated employees or full-time employees or that discriminates based on how long employees have worked for the employer. (Be aware that any inconsistencies in the granting of leave could potentially lead to a discrimination claim.)

Emergency Family and Medical Leave (EFMLA) Changes

Here are the key changes to EFMLA, in effect from April 1 through September 30, 2021:

  • EFMLA can now be used for any EPSL reason, in addition to the original childcare reasons. This includes the two new EPSL reasons noted above.
  • The 10-day unpaid waiting period has been eliminated.
  • The cap on the reimbursable tax credit for EFMLA has been increased to $12,000 (from $10,000). This applies to all EFMLA taken by an employee, beginning April 1, 2020. This change accounts for the additional 10 days of paid time off—the daily cap of $200 remains the same.
  • The law isn’t clear as to whether employees are entitled to a new 12-week bank of EFMLA. We anticipate that the IRS, DOL, or both will provide guidance on this question soon. It is possible that an employee will be entitled to additional unpaid protected time off, even if they already received the maximum reimbursable amount during previous EFMLA leave(s). We will update our materials if and when new information is available.
  • Employers can’t provide EFMLA in a manner that favors highly compensated employees or full-time employees or that is based on how long employees have worked for the employer. (Again, be aware that any inconsistencies in the granting of leave could potentially lead to a discrimination claim.)

Reasons for Using EPSL and EFMLA

Starting on April 1, employees can take EPSL or EFMLA for the same set of reasons, which is a useful simplification. The following are acceptable reasons for taking these leaves:

  1. When quarantined or isolated subject to federal, state, or local quarantine or isolation order
  2. When advised by a health care provider to self-quarantine because of COVID-19
  3. When the employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis; seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID-19 because they have been exposed or because their employer has requested the test or diagnosis; or obtaining a COVID-19 vaccination or recovering from any injury, disability, illness, or condition related to the vaccination
  4. When caring for another person who is isolating or quarantining on government or doctor’s orders
  5. When caring for a child whose school or place of care is closed due to COVID-19

Employees and employers will—in most cases—want to exhaust EPSL first, since it has a higher tax credit, except when used to care for others.

Tax Credit Review

The tax credits available between April 1 and September 30 are the same as under the original FFCRA, except for the increased aggregate cap for EFMLA. Tax credits are available as described below, regardless of how much EPSL or EFMLA an employee used prior to April 1.

  • The credit available for EPSL when used for reasons 1, 2, or 3 (self-care) is up to 100% of an employee’s regular pay, with a limit of $511 per day.
  • The credit available for EPSL when used for reasons 4 or 5 (care for another) is up to 2/3 of an employee’s regular rate of pay, with a limit of $200 per day.
  • The credit available for EFMLA for any reason is up to 2/3 of an employee’s regular pay, with a limit of $200 per day and a cap of $12,000 per employee.

Employers can also claim a credit for their share of Medicare tax on the employee’s wages and the cost of maintaining the employee’s health insurance (qualified health plan expenses) during their absence.

COBRA SUBSIDIES

Another important aspect of the law employers should understand is the creation of COBRA subsidies.

Employees and families enrolled in the employer’s group health plans may lose coverage if the employee’s work hours are reduced or employment is terminated. They can elect to continue coverage under COBRA, but the high premium cost can make it difficult to afford this coverage.

ARPA provides a 100% COBRA subsidy if the employee’s work reduction or termination was involuntary. The subsidy applies for up to six months of coverage from April 2021 through September 2021 (unless the individual’s maximum COBRA period expires earlier).

For group plans subject to the federal COBRA rules, the employer will be required to pay the COBRA premium but then will be reimbursed through a refundable payroll tax credit.

Employers with fewer than 20 workers usually are exempt from the federal COBRA rules, but their group medical insurance plans may be subject to a state’s mini-COBRA law. In that case, it appears the subsidy will be administered by the carrier. The carrier will pay the premium and then be reimbursed by the government.

Employers will need to work with their group health plan carriers and vendors on how to administer the new subsidy provision. Although it takes effect April 1, 2021, employees who were terminated earlier but are still in their COBRA election window also are included. Federal guidance is expected to be released by April 10, including model notices that plans can tailor for their use.

Note that the COBRA subsidy doesn’t apply during FFCRA leaves because employees are entitled to maintain their health insurance during those leaves on the same terms as though they had continued to work.