Contributed Column

Personnel Points

Terminating Employees

I have previously written in these pages about how to terminate an employee. Any time an employee leaves a company, there are a number of steps an employer must take to deal with that eventuality.

On Dec. 22, one of our employees tragically passed away, and on Dec. 31, another retired after 26 years with us. In both cases, we had to follow certain protocols to comply with the various laws involved. In a few instances, I had to contact our attorney to discuss what must be done.

Here’s a to-do list for you. I will start with the caveat that the list may not be exhaustive, but it does represent some of the most important things we had to do.

• We pay our employees paid time off (or PTO), instead of sick pay and vacation. At the date of termination, the company must pay the balance in the PTO account to the employee. In the case of our deceased employee, the payment would go to the estate.

• As a company, we have a blanket term life insurance policy on our employees. With the retiring employee, the benefit ceases or becomes part of COBRA (see below). In the case of the deceased worker, the insurance company pays the estate or beneficiary.

• Company profit sharing, 401K, and other similar benefits need to be addressed. In our company, withdrawals should be made near the end of the year to coincide with the annual valuation. The pension administrator should be able to handle the withdrawal for a deceased person provided there was a form designating the beneficiary. You need to be sure that your fund has enough free cash to provide for the cash-out.

• If the company has benefits, a COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985) letter is due to any employee who terminates for any reason. Your insurance carrier or attorney can assist you in the wording of the letter; you can also find sample letters online. But the letter must be sent, even in the case of the employee’s death, because family and two-person policies are affected.

• In our company, we have a termination checklist, as we have issued some credit cards to employees. We also have keys in employee hands and there may be other company property. A checklist will enable you to control that material and insure that you have it back.

• Become accustomed to doing an exit interview with terminating employees. This is difficult when an employee has been fired, but when employees quit, ask for the reasons in the exit interview. Find out the ways you can be a better employer and, perhaps, reduce your turnover in the future.

• Agree what will be said when there is a reference check and stick to that agreement. Caution: Most attorneys want you to limit what you say to dates of employment, position title, and salary to avoid future difficulties. Advise other employees and managers as to your reference policy, because recruiters regularly try to get around these policies by talking to supervisors directly.

• You may write a letter of reference, which can be a good compromise if your policy is to give only dates to people who call for a reference. The terminating employee should have a copy of your draft to be certain there are no problems with what you are saying.

These items are part of a comprehensive human resource management plan. Every company, large or small, has some form of HR management. As always, the bigger you get, the more comprehensive you need to be, but some of these things apply to everybody. •

Dave Mount is the owner of Westaff in Burlington.

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