By: Anjana Puri
Let’s face it – running a business is tough, and its needs may change as the business develops. If you find yourself exploiting a different market than initially anticipated or losing money, you may have to reassess your staffing needs. In some cases, you may find yourself faced with the hard decision of having to terminate employees who have worked at the company for years.
While many employment relationships are “at will” (i.e., can be terminated with or without cause), in New York, an employer cannot simply terminate an employee by calling him or her into the company boardroom and yelling “You’re fired” (contrary to what we see on “Celebrity Apprentice”). Employers must provide the leaving employee with proper termination notice.
Termination Notice Needs to Be in Writing
New York Labor Law 195 requires written notice to be given upon the termination of employment by the employer within five (5) business days of termination. This requirement applies not only to those employees who are fired, but also to those employees who leave because they resign, quit, retire or are laid off.
Here are some items that need to be included in the notice:
- The rates and basis of the employee’s pay (whether employee was paid hourly, by shift, weekly, salary, commission or otherwise)
- Allowances, if any, claimed as part of their wage (including tip, meal, or lodging allowances)
- The exact date of termination
- The exact date of cancellation of the employee’s benefits
- The name, physical and mailing address and telephone number of the employer
After providing this notice, the employer must also obtain a signed and dated written acknowledgement of receipt from the employee. The employer must keep this acknowledgement in its files for a period of six (6) years.
Failing to comply with these notice requirements could result in the employer incurring fees and penalties.
Other Obligations to Keep in Mind
Providing adequate notice is not the only obligation the employer owes to the exiting employee. For instance, if the employer offered the employee benefits such as health insurance, the employer will need to comply with additional COBRA requirements, such as providing both the employee and plan administrators with written notice that the employee’s health insurance plan will be cancelled and the reason for cancellation.
However, the employee also has certain responsibilities upon termination. For instance, the employee may have to comply with certain provisions in their employment contract even after they are terminated, such as non-disclosure and confidentiality requirements.
These are only a few of the things to consider when terminating an employee. Employment regulations are constantly changing. An employment or business lawyer can help guide you through the process of terminating an employee and clearly outline the obligations of each party.