September 4 Tip of the Week

“Termination Letters: Required or Not?”

One of the questions we often get asked at myHRcounsel is “I just terminated an employee; do I need to provide them with a termination letter?”  Sometimes this question is asked prior to the termination and other times it is prompted by a request from the terminated employee for a termination letter.  Most employers get nervous when an employee asks for a termination letter- that is understandable.  It is often difficult for employers to terminate even the most incompetent or obstructive employee and employers fear the wrongful termination claims that can arise when an employee is terminated.  Termination letters, as scary as they sound, are not necessary a bad thing and can be a useful tool when dealing with problem employees. 

            One of the most important things to note about a termination letter is that phrase can refer to a number of things.  Very few states require an employer to provide an employee with a termination letter that spells out the reason for the decision to let the employee go.  Most states, when they refer to termination letters, are referring to notices that must be provided to terminated employees regarding their right to file for unemployment insurance and the process by which that filing is accomplished.  New Jersey is one state that requires employers to notify both the employee and the unemployment insurance commission of an employee’s termination by sending the employee a copy of this form (https://nj.gov/labor/forms_pdfs/ui/BC10.pdf).  The requirement that this form be provided to the New Jersey Department of Workforce Development – Unemployment Division was added in 2021 and, more recently, a new law has been passed in New Jersey that requires an employer to provide additional information to the Unemployment Division that will allow the Division to have more information regarding the reasons for the employee’s termination, which will allow them to make a quicker determination as to the employee’s eligibility for benefits.  This new requirement will, in essence, be a termination letter in the sense that the employer will be providing the reasons for the termination to the Unemployment Division and the employee at the time of termination, information that was not previously required as part of the initial notice. 

            Employers should not necessarily shy away from providing an employee with a termination letter, because an effectively written termination letter sets the narrative for the reason for the termination and will become part of the documentation that the employer uses to defend itself against any wrongful termination or discrimination claim that is filed.  If the employer has documented the deficiencies with the employee’s performance or the issue that led to the decision to terminate and has communicated that information to the employee, the final termination letter simply will serve to underline the message that was given prior to and at the final termination meeting.  A properly worded, respectful termination letter can show that the employer tried to counsel the employee and improve the employee’s job performance, but the employee was not able to meet the expectations set for them. 

            The bottom line when terminating employees is that you need to make sure that you meet all of your legal obligations to the departing employee.  Those obligations include providing any required notices for unemployment insurance purposes, informing the employee of the effective date of any benefit cancelations and the right to continue those benefits under COBRA, and paying the employee in accordance with the final paycheck law of the state where the employee is located.  Terminating employees can be daunting; myHRcounsel is here to help you do it right.