Termination of Employment (Employee)
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Is It Mandatory to Offer a Severance Package to an Employee Who Has Been Fired?
Generally, no. Companies do not have to provide a severance package to a terminated employee. Severance is not guaranteed to employees and almost never to contractors. In some circumstances, larger companies have written severance plans, but it is not the norm. Most of our corporate clients do not have a severance plan, and severance is purely discretionary to reduce legal risk and obtain a waiver of claims, or to provide a financial cushion until the employee can find subsequent employment.
In exchange for the severance compensation, the employee waives any and all claims arising out of their employment against the employer. It gives the employer peace of mind regarding the termination, and reduces the likelihood of a lawsuit by the employee…Read More
What Steps Should be Taken to Protect a Business From Employee Lawsuits?
To protect your company from employee lawsuits, I recommend obtaining an employment practices liability insurance policy (EPLI). This policy should provide some coverage for employee claims against the company.
I also recommend placing a litigation hold on business records pertaining to the employee’s threat. A litigation hold means that you’re ensuring that all of your corporate records pertaining to the situation are preserved and not destroyed. If the employee actually sues the company, all of your communications are discoverable in any subsequent lawsuit. I recommend communicating by telephone as opposed to email or any other written communication because you’ll have more confidentiality and less exposure to the company if you’re talking about the employee matter on phone calls. The phone discussion transcript generally cannot be printed and used as an exhibit against you at a deposition or in trial…Read More
What are the Options for Employment Dispute Resolution?
There are four options for employment dispute resolution: pre-litigation dispute resolution, mediation, arbitration, and traditional court resolution.
The major advantage to this type of resolution is that you don’t have to involve a third party like the EEOC, the courts, an arbitrator, or a mediator. The best way to resolve an employment claim is directly between employee and employer, because they’re the ones who are familiar with the working environment. They are best suited to resolve the case. Most of our firm’s cases settle before we get to the lawsuit stage because we can quickly get in, assess what the legal exposure is, work a solution with the other side, and get out. That is always my preference, because I find once you get a third party involved where somebody else is crafting your resolution, you can’t control the result, and you end up with unpredictable or unsatisfactory outcomes…Read More
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