How to Handle an Employee Exit

This is the worst part.  Regardless of the circumstance, an employee exit can be full of emotion, difficulty, and risk.  In this resource, we focus on a number of practical tips to help guide you through an exit. Don’t worry, it’ll be okay!

The Employee Exit

Perhaps the riskiest phase of the employment lifecycle, employee exits signify an end to the employment relationship. Despite the elevated level of risk involved, the law has very few requirements for employee exits. Crazy, right? We’ll briefly break down the requirements and then go into a series of “best practices”. These best practices both nurture a smooth exit and minimize that dreaded wrongful termination claim.  For simplicity, employee exits can be broken down into voluntary and involuntary exits.

Voluntary Exit

Like the name would suggest, a voluntary exit is when an employee voluntarily quits or resigns.  Surprisingly, the law does not require much of anything in the event of a voluntary exit (aside from a final paycheck and accrued PTO payout, if applicable); however, there are a number of “best practices” that make the process more useful.  Typically, an employee gives some sort of notice when he or she wants to leave the employment relationship. Two weeks is the norm, but bear in mind that at-will employees need not give any notice at all.  

There are a few documents that you should keep during the period between notice and actual exit:

  1. The employee resignation letter (this can either be of the employee’s own making or a standard form that you have created);
  2. Some sort of “change in relationship” form that clearly signifies the end of the employment relationship and lists a reason or set of reasons, if applicable; and
  3. An exit interview and/or an exit questionnaire that allows the employee to express his or her concerns, complaints, or praises regarding the employment with you, which can be very useful information to better your own practices and company culture.

The completion/maintenance of these documents creates a paper trail, which helps minimize the risk of later problems. Additionally, it allows an employer to learn from the feedback of employees and improve the workplace.

Involuntary Exit

So, here it is, the stereotypical nightmare for all employers: when employees have to get fired or laid off.  We get it, sometimes it just isn’t working out.  But this is where a paper trail is vital to minimize the risk of disgruntled former employees.

At the outset, the law requires that all involuntary exits be in writing.  Which, I mean, duh! In addition, the law requires that fired or laid off employees be given access to unemployment benefits and health care (in certain circumstances).  This is where things get complicated and it may be best to consult your lawyer, but here is a helpful resource.   

But Wait, There’s More…

Just like the previous section, getting in the habit of forming a consistent paper trial is important.  The three documents list above should also be present when there is an involuntary exit.  

However, in addition to these three documents, the employer must give the employee written notification that may or may not list a reason for exit if the employee is at-will. 

The Department of Labor also requires that employees who are involuntarily exited and who were on employer-sponsored health insurance be given the COBRA election notice, which can be found and described further here.

With involuntary exits, it might be a good idea to put a severance agreement in place.  These types of agreements release certain claims, provide peace of mind regarding the risks associated with the exit, and help honor the employee’s service with the company and transition them into their next steps.

Also bear in mind that, if you put an NDA or other agreement in place during the onboarding phase, then you will have even more peace of mind that the employee is up-to-speed on their professional and legal responsibilities regarding the exit and your business’s intellectual property.

Employee Exits are An Opportunity

They are, among other things, an opportunity to evolve as a business and improve the employee experience for current and future employees.  We can’t all be perfect, but the exit process as we have described helps create a learning experience.  See, that wasn’t so bad, right?  As always, if you have any questions or need help with an employee exit, feel free to reach out.

By:  Zachary Avina, Updated- 12/29/17

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