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December 28, 2023 | BusinessEmploymentNew York

“You’re Fired!”: How To Legally Terminate An Employee in NYC

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Author(s)
David Fish

Senior Counsel

Joseph Ford

Client Coordinator

Navigating employee termination in New York City requires a careful understanding of state regulations and the intricacies of New York employment laws. Employees and employers should be aware of the “Dos” and “Don’ts” in the termination process to ensure their rights and business are protected.

Required Steps To Terminate an Employee in NYC

In New York, terminating an employee, regardless of the reason, involves specific steps to comply with state regulations.

  • Under N.Y. Labor Law, § 195(6), employers must give an employee written notice of the effective termination date and the termination of benefits, such as health and life insurance. This notice must be provided to the employee within five working days of termination.
  • Under 12 N.Y.C.R.R. § 472.8, employers must inform departing employees of their right to file for unemployment benefits using Form IA 12.3, available on the Department of Labor website.
  • Under N.Y. Labor Law § 191, employers are obligated to issue a final paycheck to departing employees on or before the next regularly scheduled payday. Commissions are also considered to be wages, and employers should have written agreements explaining how payments will be made after termination. Employers must adhere to the Labor Law for earned commissions, while unearned commissions depend on the employment agreement.
  • Accrued and unused paid vacation should be paid out at termination unless a written policy specifies otherwise. Employers must review and clarify their vacation policies to ensure compliance with state regulations.

Understanding and following these steps are crucial for employers to avoid liability and legal expenses.

Is New York an At-Will State?

In New York State, the employment relationship is governed by the “Employment-at-Will” doctrine, allowing employers to terminate employees for any legal reason or no reason at all. Employers commonly specify the at-will rule in offer letters, employee handbooks, or other documents to clarify that there is no contractual right to employment unless explicitly stated otherwise. 

Exceptions to At-will Terminations

While New York is an at-will employment state, exceptions to this rule include: 

  • Union Contracts: If an employee is a union member with a union contract (commonly known as a “collective bargaining agreement” or “CBA”), they are entitled to the protections outlined in the contract.
  • Employee Handbooks/Manuals: If an employer provides an employee handbook with rules governing termination or outlines specific steps before termination, the employee may have rights as detailed in the handbook. There are differing opinions on the enforceability of this, however.
  • Political Participation: Wrongful termination claims may arise if an employee is terminated due to lawful political or recreational activities.
  • Whistleblowers: Employees reporting violations affecting public health or safety, or refusing to participate in unsafe activities, may have legal claims against the employer.
  • Jury Duty: Employers cannot terminate an employee for attending jury duty, as it is a civic obligation.
  • Worker’s Compensation: Terminating an employee for filing a Worker’s Compensation claim or seeking disability benefits is considered retaliatory and can lead to legal action.
  • Human Rights Law/Discrimination Law: Federal and New York laws prohibit termination based on race, religion, gender, national origin, age, marital status, or disability. Additional protections exist in New York City for sexual orientation, arrest or conviction, partnership status, and being a victim of certain crimes, among several other protections.

Outside of these exceptions, New York employers generally have the right to terminate employees without repercussion. Consulting with an employment attorney can provide guidance on specific situations.

Are You Required To Pay Severance?

When considering employee termination, the question of severance pay often arises. New York law does not mandate employers to provide severance pay, except in specific situations. It is important to distinguish severance pay from earned wages; employers must pay earned wages, including commissions and guaranteed bonuses, promptly after termination, whether or not the employer or employee initiated the termination. 

Severance pay is a discretionary benefit sometimes offered by employers upon termination, often accompanied by a severance agreement where the employee agrees not to bring any legal action arising from the termination. The amount is generally based on the employee’s length of service. Sometimes an individual employment agreement or union agreement may entitle employees to severance pay, but the terms vary, and severance might not be available in cases of termination for cause. Employers may choose to offer severance, especially in large layoffs, to manage the company’s public image or enhance competitiveness in the job market.

Contact an Experienced Employment Attorney

If you are an employee who believes your termination was unjust, or an employer seeking to legally terminate an employee, it is best to seek guidance from an experienced attorney to protect your rights and interests.

 

 

Photo attached. Credit: Photo by Tim Gouw on Unsplash
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